You’ve probably noticed by this point, but I tend to let the technicals lead my thinking when it comes to the stock market.
That doesn’t mean I ignore the fundamental picture.
I just believe that “markets move first and reasons follow later.”
Here’s an example:
Stocks bottom (on average) nine months before earnings in bear markets.
I’m not saying fundamentals are unimportant.
They’re very important.
My point is that the market will anticipate the improvement of companies well ahead of their quarterly numbers hitting the wire.
We know this is the case. The data shows it. Again, take a look at the chart above.
So where am I going with all of this?
As I look around at how prices are moving today, it makes me encouraged that the fundamental picture on a go-forward basis is improving.
That’s because there are breakouts happening everywhere.
I’m going to take you through some of the notable ones I’m seeing.
The S&P 500, Nasdaq 100, and Dow all made new highs on Friday.
Tech, Financials, and Comm Services all made new highs on Friday.
The ratio between equal weight tech and the equal weight S&P 500 made a new high on Friday.
Forward 12-month earnings estimates for the S&P 500, Nasdaq 100, and Dow all made new highs on Friday.
As with every cycle, markets are doing what they do: moving first. We’ll see what reasons follow later.
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