The strong momentum that developed on Wednesday following the Fed interest-rate decision continued for most of the day on Thursday, before finally slowing a little in the final hour.
The strong report from Meta Platforms (META) boasted big-cap technology and sent the Nasdaq 100 (QQQ) up 3.6%, while the Dow Jones finished slightly negative. Breadth didn't reflect the QQQ strength with just 5,300 gainers to 2,900 losers, but there were some aggressive pockets of momentum. The action was quite frothy in the Nasdaq as bears were trapped and underinvested bulls were making some panic buys.
The big question now is whether we will see some sort of consolidation or pullback to contend with the overbought technical conditions that have developed. It just happens we have some big earnings reports on Thursday night to serve as potential catalysts.
Both Amazon (AMZN) and Alphabet (GOOGL) have reported and are trading slightly lower initially. Both stocks traded up sharply during the regular session, and neither had great upside surprises in their reports. This is a perfect setup for some sell-the-news, but Apple (AAPL) is the Big Kahuna and will determine the overall market direction. It will need a strong report to bring in some new money.
As I discussed earlier, markets that are this strong tend to stay sticky to the upside. Those that missed out or are underinvested want to buy dips. They don't like chasing strength, but the emotions shift quickly if there are even just minor pullbacks.
The financial media will be slicing and dicing the big reports that are hitting this evening, but the only issue that really matters is whether the big move in the month of January has already discounted good news. The sell-the-news reaction to this evening's reports is already starting to heat up.
Have a good evening. I'll see you tomorrow.
(Amazon, Alphabet and Apple are holdings in the Action Alerts PLUS member club. Want to be alerted before AAP buys or sells them? Learn more now.)