Are We Back to a "Risk On" Environment?

Last week the S&P 500, DJIA, NASDAQ, and Russell 2000 traded higher for the second consecutive week. But what was more impressive is how many stocks shook off bad earnings reports from some big tech names. 

Here's what I'm talking about. While META -23%, AMZN -13%, GOOG -5% fell flat on their face last week on disappointing earnings, most stocks didn't care and traded higher in the face of some very negative reports.

When stocks shake off bad news, it's time to take notice.

I don't know if we have put in a major bottom but I do know that we could be getting a tradable rally like we saw in the summer. That bear market rally took the S&P 500 and NASDAQ higher by 20% and many individual stocks much, much higher.

As an example, here's last week's top performing industries...

So, is it back to "buy the dip"? Is it a "risk on" market?

Here's what happened the last couple weeks that helped spark a rally. 

Did the Fed tip their hand with these comments that where quoted in the Wall Street Journal - from fed governor Christopher Waller - "We will have a very thoughtful discussion about the pace of tightening at our next meeting."

Is a "pause" from the Fed in the works?

Junk bonds/High Yield snapped back nicely after breaking support. This tells me that investors are more comfortable taking on risk.

The US Dollar finally eased up on it's parabolic ascent taking some pressure off of risk assets like equities.

The VIX finally broke below 30 signaling a reduced amount of fear in the market.

Semiconductor and Transportation stocks got back above some key levels indicating that we may have seen a false breakdown.

Crypto was trending last week and into the weekend. We haven't seen this in months and is another sign that we could be back to "risk on".

What do you think? Time for a year end rally?

Let us know what you think.

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Nothing in this blog post should be considered investment advice and is provided for educational and entertainment purposes only. The commentary and information represent the opinion of the author and are not recommendations to buy or sell any security or investment product. The author may or may not hold positions in the securities and investments mentioned. Full disclaimer here.