CFRA's Sam Stoval: Market pullback is 'healthy & normal'

Market Overview - Stocks are experiencing a decline, with November on track to be the worst since 2008, indicating significant market challenges for bulls [1] - The market closed below the 50-day moving average, raising concerns about technical damage and weak breadth [1][2] Technical Analysis - Historical patterns suggest that after recovering from a 19% decline earlier in the year, the market typically sees a further advance before entering a new decline of 5% or more [2][3] - A decline of about 9% from the October lows could be consistent with historical trends following a post-correction recovery period [5] Market Breadth - Currently, only 27% of the S&P 1500 subindustries are above their 50 and 200-day moving averages, indicating a weak market breadth [5] - A significant oversold condition is suggested when this figure drops to around 10% [6] Employment Data and Federal Reserve Outlook - Positive employment data could bolster market sentiment, with expectations for a potential Fed rate cut in December [6] - A weak jobs report that does not indicate a recession could provide the Fed with the confidence to act, as bull markets typically do not end due to age but rather due to fear of recession [7][8] Valuation Concerns - The S&P technology sector was trading at a 73% premium to its 20-year average forward PE on October 29, which has since decreased to a 58% premium [9] - Even when considering a five-year average, the sector still shows a 14% premium, indicating potential overvaluation that may need correction [10]