Gene Peroni's Daily Podcast

It may be “missioned accomplished” and an “all clear” as the market continues to recover from its recent lows. 

The Nasdaq falling yesterday, underperforming other of the major market indices; at face value it looks like a harsh retreat, but it’s really just a reaction following its rally back up to its November peaks as of Wednesday’s closing. 

A number of the higher momentum growth stocks have moved back above their 50-day moving average levels; this is encouraging but I think the easy recovered gains have been realized. 

The Dow and the other major market indices may be in the initial stages of forming reverse “head and shoulders” patterns.

Statistically, the market retreat appears to be relatively moderate; the Dow has declined just 7% from its all-time highs to its recent intraday lows. 

The VIX moving to higher high intraday on Friday and those highs cleared the peaks that we saw earlier in the week last week. 

The Dow pivoting from the 34,000 area; that is a level that I’ve mentioned for many months as a longer-term support line — not an exact line, but an approximation. 

The Dow is now down 7% from its record-high level set on November 8 to where it finished yesterday at the 34,000 area; that’s an area I’ve been calling the longer-term support area. 

Stocks up this morning with the Dow up over 300 points, so that could drive it back into the upper part of that support band of between 34,500 and 34,700. 

Dow and other market indices down this morning and could retest its Friday lows.

Some market watchers have been calling for a significant decline for months and even they were likely surprised by Friday’s market route. I’ve been saying that I believe the market is entering a more vulnerable stage. 

News of a new COVID-19 variant out of South Africa sending tremors through the markets in the U.S. and internationally. 

In yesterday’s update, I mentioned that early December could bring some volatility and correction to the market, but it looks like that might be starting early, helped by concerns about rising interest rates. 

It would seem with the re-nomination of Fed Chair Powell to another term that growth has been dealt a serious blow. 

This summer we were hearing calls for a 10–20% decline in the market, but it seems the timeliness of those calls has since passed. I think December could be a vulnerable period for the market, because… 

I’ve revised my ultimate Dow target to 45,000 for this bull market cycle. This revision was based on a number of factors… 

The book, “Dow 36,000,” was published at an untimely point in September 1999, just months before the infamous tech bubble and the dawn of a bear market that would continue until early 2003. 

The Dow moving above the 36,000 level and breaking into uncharted territory. My revision for Dow’s ultimate target is now 40,000. 

Biotechnology one of the better performing sectors in yesterday’s trading. I think there’s a couple of reasons for that… 

I pulled one of my daily reports from early November 2016 in which I discussed the Dow testing support at the 18,000 level and today I’m discussing the Dow at the 34,500–34,700 level. 

The big market stories this morning are Apple and Amazon; each reporting disappointing results after yesterday’s close and each getting punished to some degree this morning. 

The stock market performance has been pretty good in identifying which companies and sectors would be most likely to report better-than-anticipated earnings. 

As we move into the thick of the 3rd quarter earnings season, I think that a case can be made that the relative strength patterns that we saw in stocks in the 3rd quarter are correlating to some degree with the earnings results & comparisons.

From my technical vantage point, I’m always on the lookout to observe whether a pullback — large or small — has had a positive of negative on the longer-term outlook for the stock market. 

The 10-year Treasury recovering sharply from its August lows and now trading near its April peaks.