Steve Sosnick on Earnings Season, Market Momentum, and Quality Stocks

Market Momentum and Trade Talks

• 📈 The market is currently driven by positive vibes and momentum, with any news related to trade being interpreted favorably.
• ⚠️ Despite positive interpretations of some trade talks, a 10% tariff on Canada went largely unnoticed, highlighting the market's bias.

Thematic Stocks vs. Quality

• 🎯 There's significant activity in thematic stocks, with companies like Beyond Meat, Reggati, and Oaklo showing high trading volume.
• 💡 Conversely, 'quality' or 'old economy' stocks like Coca-Cola and Dr. Pepper are showing encouraging reactions to earnings news, indicating latent demand.
• 📊 The debate continues on whether to return to quality stocks, especially given high short interest, versus riding the current momentum.

Earnings Season Performance

• 💰 This earnings season, stocks are being rewarded for good news and sometimes the market is willing to overlook negative results, as seen with Tesla.
• 📉 While estimates have come down, a significant majority of S&P 500 companies have beaten bottom-line estimates.

Volatility and Market Outlook

• ⚠️ The VIX 9D, a measure of short-term volatility, remains low, suggesting expectations of limited fireworks despite major events like the Fed meeting and big tech earnings.
• 📈 Today's market movement, a nearly 1% gain, is characterized as 'socially acceptable volatility', with downside moves being the primary concern for investors.