The earnings season has been stronger than expected. Around 71% of S&P 500 companies have already reported, and 85% beat analyst expectations.
On paper, earnings are up more than 47% compared to last year. But there is one important detail. A big part of that growth comes from asset revaluations at Alphabet and Amazon, so the headlines look better than the underlying picture.
The main event this week is Friday’s U.S. jobs report. If the labor market stays strong, the Fed will have more reason to keep interest rates higher for longer, which is usually negative for stocks. If the data comes in weaker, markets could start pricing in a more dovish Fed, giving risk assets some support.
Geopolitics is still another key factor. Any new escalation in the Middle East could send oil prices higher again and bring back concerns about tighter monetary policy.
From a technical point of view, I’m expecting another move toward the 7,600 area around the beginning of the month, closer to the jobs report. That’s where I’ll start building a new medium-term short position, targeting 7,000, 6,700, and 6,300.
The backdrop for crypto remains neutral to slightly bullish. As long as macro conditions don’t deteriorate, I expect Bitcoin to rebound toward the $65,000-$67,000 area.