(Click on image to enlarge)

It’s been quite a rally the last few weeks as Trump has walked back the outrageous tariffs he announced on Liberation Day and 4 of The Magnificent 7 have reported solid earnings over the last week. 5,500 represents a significant technical level for the S&P 500 and the bulls seem to be winning the battle at that level. Indeed the Futures are currently rallying hard in the wake of solid results from Facebook (META) and Microsoft (MSFT) Wednesday afternoon. But I’m still not convinced we’re out of the woods….

For one, 1Q25 earnings from Tesla (TSLA), Google (GOOG/GOOGL), Facebook (META) and Microsoft (MSFT) have been “good not great” to quote Gene Munster on GOOG/GOOGL. I think the GOOG/GOOGL report last week was a 5.5 out of 10 and the stock performance since then reflects that. After a surge higher at the open Friday, shares are now right where they were before the report.

I wonder if something similar isn’t going to transpire with META. META’s 2Q25 Revenue Guidance of $42.5-$45.5 billion represents only a 12.6% increase at the midpoint. I also thought MSFT’s report was “good not great”. Let’s see what Apple (AAPL) and Amazon (AMZN) have to say after the close Thursday. I’m especially interested in AAPL which I’ve been bearish on for a while due to its lack of growth.

5,500 is a significant technical level for a number of reasons, one of which is that it represents a 50% retracement of all of the losses since the Feb 19 high. 50% is a logical place for a bounce to stall out but markets frequently overshoot. A 61.8% retracement – the Fibonacci number – would be about 800 points or 5,650. I think that’s where things get really interesting and we may very well see it Thursday morning. On this score, it’s worth watching CNBC’s interview Tuesday with technician Jeff DeGraaf who thinks this is a bear market rally.

More By This Author:

Chris Begg On Value Investing 3.0
GOOG Earnings, Breakout Pending, 1998 Analogy
Bull Or Bear? CMG Earnings, Gold Reversal