Boom-bust views - of this economy and/or market are misplaced. This is not that. It might work its way into such a posture, but with the majority not merely bifurcated, but juxtapositioned relative to the S&P (led by meg-caps mostly), it is a fairly unique status that suggests any mania portion is ahead, not behind. That does not mean S&P won't have a hiccup on the way to broader highs.

Freepik

Of course, S&P 5000 (or thereabouts) essentially fulfills the most optimistic of all Wall Street views for this year, generally targeted for late this year, not now. Hah. Well here we are, in my forecast run-up from an earlier tax-gain January 'stumble' with firmness into early-mid February. So is it sustainable? Ah ha. A lot of fairly lame earnings reports after the Close, and that's forewarned based on the air-pockets that preceded, so wouldn't be surprised at another round.

The answer is, presuming a friendly Fed (Wednesday), which is no automatic presumption this doesn't lead to another corrective 'stumble' or hiccup after it is out of the way. What earnings numbers will reveal this week is 'guidance', a far more important tool to contemplate versus just pattern or reported results.

One of the graphics shared relates to 'price/revenue' and that's often ignored in-favor of PE multiples. Take Apple for-instance, it's slowing growth-curve for now suggests the 'bar is high' to imagine a multiple expansion. Nothing totally certain in such analysis, for-instance I've sold real estate in the past based on 8-10x returns (cash-on-cash) and thought I did well. Then price doubled again denoting you never know for sure: so I made money but left a lot on the table.

Because the bulk of S&P companies are emerging from slow times into more robust growth, and the bulk of small-caps are barely starting to show life signs (in some cases), plus it's an Election Year, so perhaps even higher looms, but likely not in a straight line. We could even temporarily top within a couple days but find that it's truly an interim hiccup with higher prices in late Winter/Spring.

So many believe the handwriting is on the wall for a top, it helps avoid such a characteristic, but only for awhile. That's because 'if' you can pop this (just as a for-instance) in a rush over S&P 5000, you'll get a bearish capitulation and a short squeeze, and that could set-up a decline in February, before higher later in an ideal situation. You've already seen big-cap 'air-pockets', you've heard a lot about phones becoming more popular in the 'flip' variety (especially China, which hurts Apple's market-share) and variable related to the AI 'semi-craze'.

Market X-Ray: 

S&P probing blow-off characteristics, even before the varying reports after today's Closing Bell. Not surprised at all, but also unwilling to go short a market like this, especially with a comparatively friendly Fed backdrop.

Speaking of, whether it's slower EV take-up, Walmart announcing a 3x1 split, or buybacks, many variables still persist, including Washington testimony we'll get tomorrow, or the buyback windows that are being entered. A mixed bag.

So tomorrow we get the FOMC decision (probably neutral as much as they're able to be without purposely derailing things), and more big-cap earnings.

Bottom-line: 

Not surprised at the revenue short-falls or earnings guidance being conservative, actually expected that this year. That's a fairly reasonable concern in an environment which is conducive for a favorable economy, while the residual effects of a 'tax code' change that impacted small companies has really not been appreciated (it can effect even expensing some costs in a year in which spent, although I'll not attempt delving into accounting).

Anyway I think the tax aspects contribute to holding back small stocks, while a mindset focused solely on big-caps does the same thing in a different way. It's likely that changes somewhat in the next couple months, but the dynamics for sure are still mixed.

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