The market overall had quite the day yesterday and how about that NASDAQ? Hitting a 14-year high is quite impressive, given that the index fell so far from grace in 2000, just 14 short years ago. Perhaps the NASDAQ is providing a clue as to where the money is beginning to flow. Better yet, a clue as to where the money is returning.

It appears today is a follow up day for the bulls. Right out of the gate, the market is pushing hard into the green. So much for the various floors in the recent downturn. Now, the chartists are talking about ceilings, levels that provide resistance to yet even higher highs.

As I have said many times, more often than not, no one truly knows what inspires the market. Recently, the consensus has been the market drivers are geopolitical events in Russia/Ukraine, Gaza, and Iraq. On the surface, I suspect this is true for the summer time market, but, it is never wise to look past the fundamentals when assessing the market.

  • So with earnings season coming in stronger than expected and today’s economic data showing some improvement in housing and no uptick in inflation at the consumer level, the bulls appear to have retaken control of the game.

Recently and coincidentally, the fundamentals have been solid as the bad geopolitical events unfolded, and yet the market took a hit. Simply, the market needed to rebalance and the geopolitical events mentioned provided a reason for the market to rebalance. Now, with more data and more earnings in, it is time to look back at the fundamentals, which is exactly what the market is doing.  

  • Based on talks between Russia, Ukraine, and European leaders, it appears that the situation in Ukraine may be resolved in the near term without further interruptions in economic activity.

We will see if the Putin is ready to surrender. My guess is he needs a way to save face before he can outright give up. His way out just might be the huge humanitarian convoy parked at the border between Ukraine and Russia. If he can get that rolling, he can show the world he never meant any harm. As well, if he can let the Ukrainian army crush the rebellion, he can then end the economic war with Europe and the US.

In the meantime, one of the truly big bell whether stocks reported earnings today, and it seems the market fundamentally likes what it sees.

  • Home Depot (HD) reported Q2 earnings per share of $1.52, which was above the FactSet estimate of $1.44.
  • Revenues for the quarter were reported at $23.81 billion, which was above the estimate of $23.60 billion.
  • The company guided full year EPS to $4.52 compared to the prior level of $4.42 and FactSet estimate of $4.41.
  • The company said same-store sales comparisons came in at +5.8%, well ahead of the FactSet estimate of +4.5%.

Folks, the housing market is doing just fine and the US consumer is doing just fine. What’s not to like about the current state of economic affairs in the US and the market itself?

Trade in the day; invest in your life …

Trader Ed