Dear Sheryl,
The stock market is still trying retest its lows. As we discussed in the November 19 Special Market Podcast, the Nasdaq attempted to retest its October lows and fell short yesterday. But the index successfully retested these lows in trading this morning. The S&P 500 has also nearly retested its recent lows, given today's pullback. The good news is that these retests are happening on low volume and selling pressure is drying up. To further discuss today's market gyrations and my outlook going forward, I recorded another podcast. You can listen to today's Special Market Podcast here. Interestingly, the stock market action over the past two days points to a strong turnaround. According to the folks at Bespoke, when the S&P 500 is down 1% on Monday and opens down 1% on Tuesday morning-exactly what has happened this week-there has historically been a strong upside reversal. There have been 14 instances when this scenario has played out. In 10 of the 14 instances, the stock market ended the day higher. On average, the S&P 500 has gained 2.12% from open to close on Tuesday in these 14 instances. That's where we are right now. The S&P 500 and Nasdaq have both rebounded from their lows this morning, and are starting to firm up. Now moving forward, stock picking will be king. It will be more important than ever to be focused on the best stocks in certain sectors. Energy, retail and healthcare/medical stocks will have the best earnings going forward. Many tech stocks will have good earnings, but tech is still fighting a currency headwind. So, as things rebound in the upcoming weeks, I'll be tidying up our Buy Lists. We will be looking to sell our more volatile stocks into strength, as well as loading up more on dividend growth stocks. Dividend growth stocks have exhibited relative strength recently, and should emerge as an oasis, given they yield more than banks and Treasuries. I should also add that the Federal Reserve will play a key role in the stock market's rebound in the upcoming weeks. We need the Fed to state in December that inflation has cooled, it's taking a more neutral stance and it doesn't need to raise rates. If this happens, the stock market will surge higher. For my complete thoughts on today's market action, my take on the Fed and Treasury yields, as well as what sectors we should focus on in the coming weeks, please listen to my Special Market Podcast now. Listen to today's Special Market Podcast now. If you encounter any technical issues with playing the recording, please contact my customer service team, and they'd be happy to get you squared away. I'll be back in touch tomorrow with your Growth Investor Weekly Update. Remember, we'll be posting a brief update around 12:00 p.m. EST due to the Thanksgiving holiday on Thursday. Sincerely, Louis Navellier
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