Every day, I am reminded the world is populated with good, not-so-good, and some outright bad people. The young men who indiscriminately planted lethal bombs at the Boston Marathon are explicit examples of the latter, while those who rushed into harm’s way on that day to help others are splendid examples of the good people out there. Those in the “not-so-good” camp, well, mostly, I can do without them if they choose to express their not-so-good nature.

For example, from time to time, I receive emails from folks who don’t like what I write. These folks are seemingly compelled to write nasty things about me, or, more likely, my understanding of the market. When I receive one of these emails, I always wonder why these people feel compelled to express their dislikes in such powerful terms. No matter, they do, and I just keep on doing what I do because the not-so-good folks out there don’t affect my sense of what I do. I understand they are just unhappy people who find some consolation in trying to inflict that unhappiness on others. And that, my friends, is my soap-box delivery for today …

There are those pundits out there who are compelled to suggest the market is not what it seems; it is actually an aberration, that its upward momentum is somehow flawed. Occasionally, one or two of these folks come around. Despite all odds, they change their thinking. There could be many reasons for the change, but one under-appreciated reason is simply powerful – the tape is what it is.

When earnings season began this past week, the usual voices of doom told us (again) that this quarter would mark the end of the bull rally, that earnings would come in weak.

  • Earnings season has been largely positive, with 68.4 percent of S&P 500 companies that have reported results through Wednesday morning beating expectations, according to Thomson Reuters data through Tuesday morning. Since 1994, 63 percent have surpassed estimates on average, while the beat rate is 67 percent for the past four quarters.

My guess is that when the last report comes in, earnings will be in line with historical averages this quarter. Now, even with this, the naysayers will argue the following, as if it changes the reality of the tape.

  • Revenues, however, have been disappointing, with only 40.1 percent of 119 reported companies having topped expectations, well short of the 62 percent average since 2002 and the 52 percent beat rate for the past four quarters.

My response is “So what if revenue is light?” If you go back and look at 2012, the above is a common theme. Projections are just projections and percentages don’t tell the complete story. What matters is that companies are making money and the market likes that. What matters more is that the market likes the future, and that is why the tape is what it is.

The reality is if the market believes life is good out there, the price-action will reflect that. The same is true in the other direction. My advice? Don’t fight the tape. Believe it when the market tells you it wants to go up. Let the pundits have their say, but at the end of the day, what they say does not matter at all. What matters is … if the market believes ….

Oh, and one more thing …

  • The number of Americans filing new claims for unemployment benefits fell last week by a surprisingly large 16,000, a sign there is still gas in the tank for the labor market’s recovery despite signs of slower growth.

Trade in the day; Invest in your life …

Trader Ed