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Markets have had a good run so far this year, led by tech giants. Markets have cheered the enormous cost-cutting initiatives amongst tech giants and pivot to a focus on profitability. Monday marked the lowest volume for the S&P 500, as investors await to see the results of Microsoft and Alphabet in after-hours on Tuesday. Tech typically leads the market (higher or lower), so investors are waiting to see where is tech headed next. Going into this earnings there are 3 important elements: (1). 75% of firms are beating earnings so far (positive).  (2). Bearish positioning in S&P 500 futures is enormous (positive). (3). Volatility has come down by a lot (Some will say this is positive suggesting a bull market, but it also means it leaves markets more vulnerable (slightly negative).

Investors face a busy week ahead in markets with many mega-cap US companies reporting such as Alphabet and Microsoft on Tuesday and Amazon on Thursday. So far, Q1 earnings are performing well with 75% of firms beating EPS consensus, by an average of 5.3%. EPS are being revised higher, suggesting worst may be in the past. In Big Tech, so far markets have already cheered at their enormous cost-cutting initiatives. We will know more about US inflation on Friday with PCE data for March. A very small decline is expected for Core PCE. Lastly, interesting to point out that the Leading Economic Index (LEI) fell for a 12th straight month, still yet WITHOUT a recession, which is unprecedented.

The S&P 500 continued to climb as investors “buy the dip” despite recession risks. A buy-the-dip strategy in the S&P 500 this year would have been very successful, versus in 2022 it would have been a "sell the top" regime. Could it continue? 

A JPM survey found the the percentage of investors who plan to increase exposure to stocks keeps falling. This is a contrarian neutral to positive signal. Prior low readings (see June or Dec'2022) were followed by market bounce. On the contrary high readings were followed by selloffs.