Earnings Season Could Be the Fuel for a Market Melt-Up

by | Oct 14, 2024

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As we move into the thick of earnings season, all eyes are on how this market will respond. The big question isn’t just whether companies will beat or miss expectations — it’s whether those reports will be enough to fuel the market’s next leg higher. 

We’re in a critical spot right now, teetering between a late-cycle expansion and a potential reset into mid-cycle territory. And that makes these next few weeks crucial.

Historically, earnings season can provide the catalyst for a significant market move — either higher or lower. What’s interesting about this moment is the broader context. We’ve seen the major indices like the S&P 500 and Nasdaq grind higher, shrugging off macro concerns like inflation and geopolitical uncertainty. 

But the real test lies ahead…

If earnings come in strong, particularly from key sectors like Tech, Financials and Consumer Discretionary, we could be looking at a full-on melt-up scenario. That’s not just optimism talking. If the reports show continued growth and stability, the market could very well push beyond all-time highs, leaving bearish sentiment in the dust. 

It’s not unprecedented for a bull market to extend itself in the later stages of a cycle, especially if the data supports it.

On the flip side, weak earnings would likely trigger some much-needed pullbacks. But let’s be clear… 

These dips might only offer buying opportunities for a market hungry for gains. Even in a late-cycle scenario, the market has a way of extending itself beyond what most would consider rational. Earnings could be the injection of confidence that keeps this market moving higher, defying those who are betting on a downturn.

The key is to watch the heavy hitters. 

Tech giants like Apple (AAPL), Microsoft (MSFT), and Nvidia (NVDA) will set the tone. If they exceed expectations, they could lift the broader market with them. Add in financials, which are historically reliable during earnings season, and we might see enough momentum to push past any near-term resistance levels.

Ultimately, this earnings season could either confirm that we’re in a late-cycle extension, where the market keeps pushing higher until it finally runs out of steam — or it could signal a reset back into mid-cycle territory, offering even more room for growth. 

Either way, it’s a time to stay nimble and look for opportunities. 

As always, we’ll take it one report at a time, but don’t be surprised if we see a market melt-up in the coming weeks. When the data aligns, this market has a way of running, and earnings season might be just what it needs to kick things into high gear.

I’ll see you in the markets. 

Chris Pulver
Chris Pulver Trading

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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk. 

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