Momentum Monday – Strong Start of Earnings Season

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The latest earnings season has just begun. So far, it is passing with flying colors. Most financials rallied in the two weeks preceding their earnings reflecting rising interest rates and expectations. This time around, we did not see the usual “buy the rumor, sell the news” event. In fact, most financials continued higher post their reports. Add to that the high-volume breakouts in aluminum producer Alcoa and transportation company J.B. Hunt, and it seems the market is forming a new narrative – earnings growth is catching up with high valuations and some stocks might actually be not as expensive as previously thought. 

In the meantime, crypto is on fire and becoming more mainstream with every passing week. Bitcoin passed 60k in anticipation of the launch of its first ETF. Ethereum is approaching a potential breakout near 4k. No one really knows how to value them and therefore they can be worth anything – this is a good quality to have when there’s plenty of liquidity and risk appetite going around and a terrible weakness when everyone suddenly decides to run for the exits. As a result, most crypto-related stocks are rising to the occasion – MARA, RIOT, COIN, HUT, BTBT, BLOK, MSTR.

In other words, market breadth is improving as more and more industries are starting to break out. Most tech stocks report earnings in the next 3 weeks or so. If they don’t disappoint, I won’t be surprised if we see new all-time highs in the indexes.

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