Well, You Don't See That Every Week

A Rare Signal Just Flashed (and It’s Bullish!)  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

May 03, 2025 WEBSITE | UNSUBSCRIBE

Well, You Don't See That Every Week Wall Street spent the week walking a tightrope, dangling between political drama, economic landmines, and market euphoria. But when the dust settled, investors weren’t just still standing — they were smiling. Despite a surprise economic contraction and mounting pressure from Washington, the market found its footing and managed to notch a second straight week of gains. It wasn’t just blind optimism, either. Beneath the surface, technical signals and strong earnings suggested there’s more fuel in the tank. But that also means we should be more cautious than ever. Here’s how it all unfolded, why it mattered, and what we’ll be watching next. A Rare Signal Just Flashed (and It’s Bullish) Let’s start with something you don’t see every week — or every year, for that matter. The market just triggered a Zweig Breadth Thrust, a rare technical signal that has historically marked the beginning of new bull markets. What is it? In simple terms, it measures the ratio of advancing stocks to declining ones over a 10-day period. When that number jumps from below 40% to above 61.5%, it signals a sudden shift from pessimism to aggressive buying. And that’s exactly what happened this past week. As Enrique explained on Monday, it has only occurred 18 times since World War II. Each time, the market rallied significantly over the following months. It’s a sign that the rally isn’t just being carried by the big names. It’s broad-based, with money flowing into many sectors and not just the usual suspects. As Enrique put it, “This signal is no joke. Every time we’ve seen it in the past, it’s pointed to strong returns ahead.” And when you pair that with the macro headwinds we’ve been facing, it becomes even more powerful. A rally fueled by breadth is healthier and more sustainable than one riding the backs of just a few mega-caps. So while many investors are still wary, the breadth thrust tells us something under the hood has shifted.

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Big Tech Is Still the Market’s Engine (for Now) If breadth got things started, Big Tech took the wheel and floored it. As Greg covered yesterday, this week saw some of the most anticipated earnings of the season. And the tech giants didn’t disappoint. Microsoft (MSFT) posted explosive results, driven by strong demand in cloud computing and artificial intelligence. It was truly a declaration of dominance. They even announced they would spend $80 billion on infrastructure to meet AI demand. That’s a blueprint for global scale. Facebook’s parent company Meta (META) also delivered strong earnings and upbeat guidance. And just like that, the tech-heavy Nasdaq Composite surged 1.5%, and the S&P 500 climbed for the eighth straight day. These tech giants are some of the best companies in the world. As Enrique reminds us constantly, you want them in your corner in a market as uncertain as this. However, the market is always teeming with other opportunities if you know where to look. Earlier this week, Ian revealed the name of a metals and mining stock based in South Africa that he believes could be your next 10x trade. If you’re willing to look outside of the mega-cap names that everyone already follows — and you should be — then this absolutely deserves your attention. Tariffs, Trade, and a Shocking GDP Contraction Then came the gut punch: the U.S. economy contracted by 0.3% in the first quarter. It was the first decline in economic output since 2022. Most analysts weren’t expecting it, and markets briefly wobbled as recession fears came flooding back. But as always, the devil is in the details. This contraction wasn’t due to weak consumer spending or business cutbacks. Quite the opposite. Consumer spending rose 1.8%, and business investment was also solid. What tanked GDP was a sharp rise in imports, which mathematically subtracts from growth. And those imports were front-loaded in anticipation of new tariffs. That’s right; companies were panic-buying ahead of the next wave of U.S.-China tariffs, which distorted the data. Strip that out, and the economy looks far more resilient than the headline number suggests. Still, the warning signs are real. One company hit particularly hard by the tariffs was Becton Dickinson (BDX), a major medical device maker. The company slashed its profit outlook and its stock plunged 18%, the worst one-day drop in the S&P 500 this week. Trade wars have real-world consequences, and this week’s GDP print was a sobering reminder. At the same time, strong consumer demand and business investment suggest the economy isn’t falling off a cliff. It’s stumbling, not collapsing. Trump vs. Powell: The Fed Standoff Escalates As if the markets needed more drama, Trump upped the ante in his ongoing feud with Federal Reserve Chair Jerome Powell. In a series of public comments, Trump criticized Powell for not cutting rates fast enough, even claiming, “I think I understand interest [rates] a lot better than him.” That comment came early in the week, and it sent shockwaves through financial markets. On Monday, stocks fell sharply, and the U.S. dollar index dropped to its lowest level in over three years. Investors were spooked not because of rate policy itself, but because of the prospect of politicized central banking. But markets have a short memory. By midweek, sentiment improved as whispers of progress on U.S.-China trade talks began to circulate. While the details remain vague, reports of back-channel discussions between the two countries gave traders hope that the tariff spiral might be halted before it does too much damage. The big picture: we’re at an inflection point. Rate cuts are expected later this year, but how and when they come could be shaped by both market data and political pressure. Looking Ahead Whether this week’s optimism had legs would come down to Friday’s jobs report. Any sign of labor market weakness could have sent the market back into risk-off mode. But numbers came in strong, with a steady unemployment rate and nearly 40,000 more jobs added in April than expected. Now, the path forward hinges on three things: Whether the Fed sticks to its expected rate-cut trajectory (despite political pressure). Whether consumers keep spending in the face of higher prices and tighter credit. Whether trade tensions cool enough to allow businesses to plan ahead without tariff-related distortions. For now, the bulls have momentum. The Zweig Breadth Thrust tells us that participation is widening. Big Tech has reignited interest. And even with a negative GDP print, the underlying economy is still humming in key areas. But nobody should mistake this for smooth sailing. We’re in one of the most complex market environments in years, where every data point feels like it could tip the balance. This isn’t a market to chase. It’s one to study. The signals are real, but so are the risks. Stay tuned. The story’s just getting started. Until Monday, Nick Editor, Truth & Trends

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