[Altos Weekly Traders Edge] Earning Season Takes the Wheel...Details Inside

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Initial forecasts suggest that S&P 500 companies stand to deliver a substantial increase in earnings compared to this time last year. Positive earnings reports, coupled with a steady stream of analyst upgrades, set the stage for sustained market momentum. One of our analysts points out that, despite a strong first quarter, economic growth indicators were exceptionally robust. This suggests that the anticipated earnings surge might exceed expectations. Tech's Resurgence, Market-wide Expansion The tech sector, the powerhouse of recent quarters, is projected to post another period of impressive profit growth. Critically, the outlook for cyclical and economically sensitive sectors is also improving. This points to a healthier, more broad-based rally as formerly lagging sectors gain traction. Valuation: A Balanced Perspective While valuations remain above their historical averages, a rising tide of corporate profitability helps mitigate concerns about a potential bubble. Even as investors express increased interest in the stock market, there's little to suggest the kind of euphoria that typically precedes a correction. Our team emphasizes that unless there's a negative surprise in earnings or a shift in the macroeconomic picture, current sentiment is unlikely to trigger a significant sell-off. The Fed Factor Naturally, there's always an element of uncertainty surrounding potential changes in Federal Reserve policy. Recent statements hint at the possibility of higher interest rates persisting longer than anticipated, temporarily denting earlier optimism. However, the broader consensus among our analysts is that the market can withstand these policy adjustments, provided the underlying growth story remains intact. Investor Confidence: Cautious Yet Optimistic Amidst the volatility, investor confidence is high, fueled by bullish earnings forecasts and a positive outlook for the global economy. A notable uptick in stock allocations suggests a growing appetite for risk, although buying activity may temper as the earnings season reporting intensifies. The Big Question: A Sustainable Rally? The path ahead hinges critically on delivering strong earnings growth. Any signs of weakness in this area could prompt reassessments and market volatility, as stretched valuations demand a continued flow of positive news. For now, the outlook remains cautiously optimistic. We advise closely monitor both earnings results and shifts in the macroeconomic view to maximize the market's potential in the coming months. - The Team at Altos Trading In the next article: As earnings season takes center stage, analysts weigh the market's reliance on continued growth against the backdrop of elevated stock prices. Sponsor Sponsor Tackle the Cost of Living Crisis with a Unique Trading Strategy Here’s one BIG reason why so many folks feel like they need to extra income right now.]( Since the pandemic, the cost of living has gone skyward. It's out of control! In fact, in just the last year alone we saw the average cost of a new mortgage go from $1,427 all the way to $2,047 a month. That's nearly a $600 increase every single month! Learn how this legendary Trader has been using this Trading Technique to target extra income on the weekends if you [follow this link.]( By clicking the link above you agree to periodic updates from Diversified Trading Institute and its partners ([privacy policy]( On the Other Hand, Are Stocks Poised for a Correction? The stock market's impressive rally has raised a critical question: Are elevated valuations and evolving interest rate expectations setting the stage for a significant pullback? Market sentiment remains a curious mix of bullishness and caution, and our analysts have several insights to share. Stretched Valuations: A Heightened Sensitivity Analysts highlight how current market valuations – often exceeding historical averages – create added vulnerability. Economic reports that fall short of exceptional or surprising geopolitical events could trigger noticeable downward adjustments. This sensitivity shouldn't necessarily be interpreted as a sign of weakness in the broader market, which remains robust overall. Yet, it's a factor investors should be mindful of. The Earnings Factor: Growth Expectations Under Scrutiny The upcoming earnings season casts a long shadow. Many analysts expect companies to deliver positive growth, but the emphasis is on the degree of that growth. Market pricing already reflects considerable optimism, so any indication of slowing earnings could dampen investor enthusiasm, even if results remain within the realm of 'healthy'. Those companies reliant on interest-sensitive financing might be particularly exposed to changing investor sentiment. A Reset Might Be Healthy A potential market correction isn't universally viewed as a negative development. One of our analysts suggests that after the substantial gains seen since late last year, a market reset might serve to establish a firmer foundation for future growth. Of course, such corrections are seldom pleasant, but they are a recurring feature of market cycles. The Influence of AI, Inflation, and Interest Rates Rising enthusiasm surrounding AI-related technologies and a sense of moderating inflation have fueled much of the market's recent buoyancy. However, one analyst notes that the persistence of inflationary pressures lessens the likelihood of immediate interest rate cuts. This shifts the focus even more squarely onto earnings as the catalyst for further gains. Ultimately, the direction of interest rates remains a central concern. Some analysts believe a strong sense of alignment exists between current market expectations for rate reduction and what the Federal Reserve is likely to do. The Fed, they suggest, is poised to enact cuts, particularly as substantial corporate debt refinancing looms on the horizon. Prudence and Portfolio Strategy While a possible pullback raises natural concerns, our analysts stress that attempting to perfectly 'time the market' is often futile. Instead, they advise a robust portfolio strategy that builds in resilience and the ability to weather periodic volatility. Diversification takes on even greater importance when markets appear richly valued. Key Takeaway The path ahead for U.S. equities requires careful consideration. Stretched valuations, tempered interest rate expectations, and the outcome of the earnings season will collectively shape investor sentiment and market dynamics. Sponsor [New Customers earn 5.25% APY* (variable)]( Store your money with Cash Reserve, a high-yield account built for peace of mind. New customers earn 5.25% variable APY*—that’s 13x higher than the national savings rate. ** Plus, your money’s FDIC-insured up to $2M†at our program banks and no limits on withdrawals and transfers. **The national average savings account interest rate is reported by the FDIC (as of 5/15/23) as the average annual percentage yield (APY) for savings accounts with deposits under $100,000. [Sign Up Now!]( Disclaimer: The Altos Trading Alert Newsletter is published as an information service for subscribers, and it includes opinions as to buying, selling and holding various stocks and other securities. However, the publishers of the Altos Trading Alert Newsletter are not brokers or investment advisers, and do not provide investment advice or recommendations directed to any particular subscriber or in view of the particular circumstances of any particular person. Altos Trading, including its owner, does not participate in any trades issued through the alert services. Subscribers to Altos Trading or any other persons who buy, sell or hold securities should do so with caution and consult with a broker or investment adviser before doing so. Trading securities and options involves risk. Prior to buying or selling an option, an investor must receive a copy of Characteristics and Risks of Standardized Options. Investors need a broker to trade securities and options, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Performance figures are based on actual recommendations. Due to the time critical nature of trading, brokerage fees, and the activity of other subscribers, there is no guarantee that subscribers will mirror the performance of the service. Performance numbers shown are based on trades subscribers could enter based on the trade alerts. Altos Trading, LLC assumes no responsibility for any losses incurred by any individual or entity as a result of trade alerts or strategies taught through courses or coaching services. 7154 W State Street Suite 169 Boise Idaho 83714 USA Disclaimer: The Altos Trading Alert Newsletter is published as an information service for subscribers, and it includes opinions as to buying, selling and holding various stocks and other securities. However, the publishers of the Altos Trading Alert Newsletter are not brokers or investment advisers, and do not provide investment advice or recommendations directed to any particular subscriber or in view of the particular circumstances of any particular person. Altos Trading, including its owner, does not participate in any trades issued through the alert services. Subscribers to Altos Trading or any other persons who buy, sell or hold securities should do so with caution and consult with a broker or investment adviser before doing so. Trading securities and options involves risk. Prior to buying or selling an option, an investor must receive a copy of Characteristics and Risks of Standardized Options. Investors need a broker to trade securities and options, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Performance figures are based on actual recommendations. Due to the time critical nature of trading, brokerage fees, and the activity of other subscribers, there is no guarantee that subscribers will mirror the performance of the service. Performance numbers shown are based on trades subscribers could enter based on the trade alerts. Altos Trading, LLC assumes no responsibility for any losses incurred by any individual or entity as a result of trade alerts or strategies taught through courses or coaching services. 7154 W State Street Suite 169 Boise Idaho 83714 USA [Unsubscribe]( | [Change Subscriber Options](