Does anyone remember the stock market correction from, oh, just a month ago?

The Nasdaq fell 10% at its lows.

The S&P 500 dropped around 12%.

In early February I wrote: “In nearly three decades as an investor, I’ve yet to see a raging bull market like the one we’ve experienced come to a ‘full stop’ ending, and plunge permanently off the cliff in the age-old style of Wile E. Coyote.”

Five weeks later, and where are we?

The Nasdaq’s at new all-time highs. Give the S&P 500 another week and it will likely get there as well.

So what gives?

The Expectations Game

At this point, it’s all about the next couple of earnings seasons, which is when companies report their quarterly results.

The first quarter’s earnings season starts in April. Goldman Sachs expects S&P 500 firms to report profit gains of 17% for the period.

I’ve seen other estimates suggesting profits for these same companies will notch an 18% jump in the second-quarter earnings, and a rise of up to 19% in the third.

So, as I’ve said last week:

As companies report better-than-expected quarterly earnings, the fear of rising interest rates may give way to what we call “FOMO” — the fear of missing out — on higher stock prices. In other words, don’t be surprised if stocks plow even higher from here in coming weeks and months.

On the other hand, it also raises the stakes in a huge way.

Investors’ anticipation of those yet-higher quarterly profits is so strong, it won’t take much to put the kibosh on the market’s rally.

Whether it’s rising energy costs, a spike in interest rates toward 4% or (with all the talk of tariffs) a slowdown in trade — any of those headlines would force Wall Street’s strategists to rejigger their earnings estimates to a lower set of numbers, setting up a downturn in stocks as well.

It’s the nature of investment banks and the talking heads on CNBC to want higher and higher stock prices. It’s not their money at risk.

That’s why I think what I wrote during February’s sell-off still makes a lot of sense.

“Don’t think of it as saying: ‘Get out now.’ Instead, think of it as an extended warning.”

“It’s a red flag about interest rates, market risks, and the need to shift your portfolio toward value-laden investments that can withstand higher rates or benefit from them.”