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“No price is too great for a work of unquestioned beauty and known authenticity.” – J.P. Morgan
We’re still far from the peak of earnings season, but today has been the busiest day of the season so far. Of the six companies that have reported this morning, all six of them topped EPS forecasts while five out of six beat revenue expectations. Some of the largest banks and brokerages have been the headline reports this morning with Goldman Sachs (GS), JP Morgan (JPM), and Wells Fargo (WFC) all blowing away forecasts. Of the three, GS is the only one trading meaningfully higher while JPM is actually lower. As is typically the case with these big beats from the financials, there’s usually a ‘yeah but’.
Besides earnings, the economic calendar is light today with Import Prices the only report on the calendar. That will leave plenty of time for investors to watch the debut of Coinbase (COIN) to the public markets. The listing couldn’t come at a better time for the company as crypto-currencies have been on absolute fire with both bitcoin and ether trading at record highs and riding what looks to be their seventh straight day of gains. In the words of J.P. Morgan, no price these days seems to be too great for crypto assets. They may not have ‘unquestioned beauty’ but they do have ‘known authenticity’.
Read today’s Morning Lineup for a recap of all the major market news and events including a recap of the biggest overnight events including some key earnings reports, European Industrial Production, as well as the latest US and international COVID trends including our vaccination trackers, and much more.
We’ve been talking a lot lately about the market’s consistent gains during the trading day. One index which hasn’t been nearly as strong is small caps. The Rusell 2000 is currently more than 5% from its record high as a number of stocks in the index work off some of the big gains and overbought conditions from earlier this year. The chart below compares the Russell 2000’s price to its cumulative A/D line over the last year. Along with lower prices, breadth in the Russell 2000 has also been on the weak side. Would we prefer to see stronger breadth? Of course. On the flip side, though, there’s no indication in breadth that suggests material additional weakness underneath the surface.