The market struggled on Wednesday and Thursday with several economic reports, but a better-than-expected report from Netflix (NFLX) on Thursday night set the stage for a strong bounce with big-cap technology leading the way.
The producer price index, retail sales, and unemployment reports produced a mixed response. Investors weren't quite sure whether bad news is good news. Was the news anti-inflationary or recessionary? Fed members still sound relatively hawkish, but the market keeps looking for reasons to be more optimistic and find some good excuses. Many bulls are determined to fight the Fed, and they sometimes win the battle.
The earnings from Netflix helped to lift some of the short-term gloom, and the market also liked that big technology names like Alphabet (GOOGL) , and Microsoft (MSFT) are proactively addressing their bloated headcount. That doesn't mean they will have good earnings in the next couple of weeks, but they can report that they are addressing expenses.
The rally on Friday came on better than three-to-one positive breadth, but major strength was relatively narrow with our old friends, the FATMAN names, leading to the upside. Pockets of momentum were otherwise fairly narrow, and it wasn't the sort of euphoric buying we often see during counter-trend bounces.
Next week, earnings season heats up fast, and Netflix (NFLX) has raised the expectations' bar somewhat. Plenty of strategists are looking for a retest of the market lows before this bear market finally ends, but after action, as we had on Friday, the mood is quite upbeat.
Have a great weekend. I'll see you on Monday.