Gene Peroni's Daily Podcast

I want to re-state a comment I made yesterday: I had said that opportunities in the core momentum leadership categories might not surface until later in the 2nd quarter or later, but… 

Just 2 sessions left in the 1st quarter of 2021, and the Dow is in the lead by a big margin compared to the NASDAQ. 

March has proven to be a tricky month for stocks, especially when monitoring the day-to-day movements and trying to anticipate the market’s general course. 

It’s been another week of volatility and I think that translates to reactivity with investors reacting to day-to-day events; market likely in a trading range over the short run going into the earnings season. 

Yesterday’s rally failure in the Dow might have been a bit more ominous technically, were it not for the calendar as we’re nearing the end of the 1st quarter. 

It was about a year ago that the Dow had fallen about 20% from its highs, for some that meant that the market was in a bearish trend; but it was soon after that the market pivoted and never really looked back. 

In the last several sessions we’re seeing the seesaw rotation between cyclicals, financials, and the core momentum areas (consumer discretionary, healthcare and technology). 

I think it’s quite constructive that we’ve had a pullback in a number of momentum areas. 

As we’re nearing the end of the quarter, we’re seeing some portfolio shuffling in anticipation of 1st quarter earnings season. 

New record highs for the Dow and some of the other major indices, but not the big fanfare and not the changeover from optimism to euphoria. 

Happy St. Patrick’s Day! What had been aggressive rotation early in the quarter, now seems to be more portfolio shuffling in anticipation of the 1st quarter earnings season. 

When it comes to momentum, biotechnology is arguably at the head of the class. It has been a leadership category for some time. 

DJIA up 7.10% year to date, that compares to the Nasdaq up just 3.35%. What a change from last year. 

Aerospace & Defense and Agriculture are two distinctly different businesses but they both have in common improving relative strength trends. 

Sharp reversals that we saw in momentum areas earlier this week may be reinforced by what we’re seeing this morning. 

Sizable gains in some of the market’s high-flying groups, including biotechnology and technology; may have marked the end of the freefall in these groups and other momentum areas. 

Some market observers are sounding the death knell for growth based on the rigorous, unrelenting selling in some of the momentum categories. I think that’s a bit premature, however. 

At the beginning of this year I had forecast that the major market indices would probably track closer to one another, and so far this year that seems to be what is happening. 

Earlier last month I had predicted that the Dow might be in for a retest of its January lows due mainly to technical factors –  season, cyclical events and so on. 

Momentum categories remain under pressure and yesterday’s session pulled down a lot of categories. 

For some time now I’ve been mentioning how the traditional cyclicals are showing improving relative strength; I think this is substantive. 

I think with recent volatility, we’ve seen a lot of sawtooth behavior among the major market indices, especially the Dow; this might reduce the impact of the cyclical event. 

Interesting action in the VIX last week. In Tuesday’s session when the Dow fell sharply almost 400 points and then reversed course, there was very little movement in the CBOE VIX. 

Given this week’s heightened volatility, it’s probably worthwhile to refer to the VIX – which at times can reflect complacency, fear or even panic. 

A mighty rebound following the prior day’s reversal; this is something that we’ve become accustomed to in this bull market cycle.