/ April 14 / Weekly Preview
-
Monday:
N/A
---
Tuesday:
PPI MoM (1.2% exp.)
---
Wednesday:
Fed Speakers
---
Thursday:
Initial Jobless Claims (215K exp.)
---
Friday:
N/A
-
Monday:
Goldman Sachs Group, Inc. (The)
---
Tuesday:
J P Morgan Chase & Co
Johnson & Johnson
Wells Fargo & Company
Citigroup Inc.
BlackRock, Inc.
---
Wednesday:
ASML Holding N.V.
Bank of America Corporation
Morgan Stanley
---
Thursday:
Taiwan Semiconductor Manufacturing Company Ltd.
Netflix, Inc.
---
Friday:
N/A
Q1 Earnings Season Starts
Got a question about the markets, your investments, or a topic you’d like us to discuss in an upcoming article? We read every message and may feature your question in our daily write-ups!
Email: andrei@signal-sigma.com
Follow & DM on X: @signal_sigma
The stock market exhaled a sigh of relief following 5 consecutive weeks of losses which weighed on investor’s risk appetite. The ceasefire announcement and a surge in equities meant that — at least for now — the correction is over.
Last week started off with lots of churn and little conviction. By Tuesday, the S&P 500 swung by more than 1% intraday before settling with a 0.08% gain as Pakistan urged a two-week extension to Trump’s deadline. Then, Wednesday arrived.
President Trump posted that he had agreed to suspend attacks on Iran for two weeks. That’s all that investors wanted to hear. Both the S&P 500 and the Nasdaq popped more than +2.5%, while WTI oil collapsed -16%. Yields also retreated to 4.25%, along with diminishing prospects of rate hikes.
SPY recaptured both the 50-DMA as well as the 200-DMA in the same session. It seemed that markets have simply made up their mind, despite ongoing conflict risks. JPMorgan’s Jamie Dimon warned the conflict is expected to make inflation “stickier” and rates “higher than markets expect.”
Both the March CPI (0.9% MoM) and February core PCE (0.4% MoM) came in well above the Fed’s 2% annual target, without the full impact of the oil shock being captured. The conclusion is that the Strait of Hormuz must reopen, oil must hold below $90 and inflation expectations need to normalize.
Going purely on quantitative data, perspectives now turn bullish. Today marks the 5’th consecutive session of SPY trading above its 200-DMA (after previously breaking the level) — in the vast majority of cases, forward returns are notably positive (and above average), with the event marking the end of the correction phase.
Technically speaking, markets have almost fully recovered, with SPY only showing a modest -1.09% drawdown at the moment. Resistance lies at $695 (M-Trend), while support stands at $656 (near the 200-DMA and S1 level). The VIX collapsed from 31 to ~19.5, back below 20.
Since we’re now trading at similar prices to late October, the time discount of nearly 6 months is making the market significantly cheaper. However, binary risks still remain. The Hormuz Strait can either be open or closed. Oil can trade on a whim, and a huge gap could get filled on SPY at $658 if conditions deteriorate.
The fact that all of the 3 moving averages have been reclaimed is undoubtedly good news though.
As time goes on, investors will shift focus from geopolitics to earnings and company guidance. The economic calendar is absolutely dense. Netflix sets the tone for mega-cap tech in terms of reporting, while many of the big banks will provide a reading on the economy. Jamie Dimon’s macro commentary carries as much weight as the numbers, when JPM releases earnings today.
Net interest income trends, loan‑loss provisions, and shifts in consumer credit quality will reveal whether the March shock left lasting scars on Main Street. Wells Fargo will comment on consumer‑banking, while Johnson & Johnson will serve as a healthcare‑sector barometer. Wednesday’s slate — Bank of America, Citigroup, and Morgan Stanley — will complete the megabank earnings wave. Collectively, the six megabanks’ reports should indicate whether the “soft landing” narrative survived Q1 or whether mounting credit stress, upcoming CRE maturities, and consumer deterioration are surfacing in provisions.
Today’s March PPI provides an upstream inflation signal. February ran hot at +0.7%, and feeds directly into the PCE calculation that the Fed watches. We’ll also be getting March Retail Sales data, revealing how the consumer reacted to $100 oil.
In other words, we’ll know if the financial system is absorbing the oil shock. Enterprise, our core asset allocation model, is rebalancing its portfolio today and reducing the cash allocation from 30% to 20%, in what can be described as a bullish transition. Both equity and treasuries positions are increasing.
Sentiment is still notably bleak. After a period of “limit down” readings, fear persists as negative headlines take their toll on investor psychology. The AAII Sentiment Survey confirms our own metric, with bullish sentiment is at just 35.7%, below the historical norm of 37.5%. Bears are at 43%, far above the historical average of 31%.
When the bull-bear spread shows this degree of negative divergence, 12-month forward returns have historically been robustly positive. Markets often move contrary to prevailing sentiment, and current investor sentiment remains more fearful than optimistic.
Goldman Sachs added an interesting note on retail investors in particular:
“We are now seeing early signs of retail capitulation across both cash and options. Last week, retail flows were net sellers across both platforms – an infrequent occurrence that has only been observed 18 times since January 2020 (most recently the week of April 7-11, 2025). Historically, forward returns following these signals have been positive on average, with performance improving over longer horizons. S&P 500 returns have been positive ~82% of the time by T+60, with average returns of +4.1%, and average positive returns of +6.9%.”
As such, the rally that we’ve just seen was primarily driven by institutions, not retail.
Our Trading Strategy (Sigma Portfolio)
Q1 Earnings Season will take over from geopolitics as the primary catalyst for markets. FactSet estimates Q1 year-over-year earnings growth at 13.2%, up from the 12.8% expectation at the start of the year, with nine of eleven sectors projected to show positive growth. Barclays recently bumped its full-year 2026 S&P 500 EPS forecast to $321, projecting 15% to 16% annual growth.
If these projections hold up and company guidance reveals that corporate America is absorbing the oil shock, we will most likely see further gains ahead. For instance, when U.S. forces entered Iraq, the S&P 500 had already sold off aggressively on the uncertainty. Once the conflict began in earnest and earnings season confirmed business resilience, the index gained more than 25% in the following six months.
Such a track record is confirmed by our various studies, so the natural move here is to hunt for the next entry point and strategically increase equity risk exposure. When everyone is negative about everything, the market tends to find something to latch onto.
Disclosures / Disclaimers: This is not a solicitation to buy, sell, or otherwise transact any stock or its derivatives. Nor should it be construed as an endorsement of any particular investment or opinion of the stock’s current or future price. To be clear, I do not encourage or recommend for anyone to follow my lead on this or any other stocks, since I may enter, exit, or reverse a position at any time without notice, regardless of the facts or perceived implications of this blog post. I currently do not own or plan to own any position, long or short, in the securities mentioned.
I am not a financial advisor licensed in the United States. Nor am I providing any recommendations, price targets, or opinions about valuation regarding the companies discussed herein. Any disclosures regarding my holdings are true as of the time this article is written, but subject to change without notice. I frequently trade my positions, often on an intraday basis. Thus, it is possible that I might be buying and/or selling the securities mentioned herein and/or its derivative at any time, regardless of (and possibly contrary to) the content of this blog post.
I undertake no responsibility to update my disclosures and they may therefore be inaccurate thereafter. Likewise, any opinions are as of the date of publication, and are subject to change without notice and may not be updated. I believe that the sources of information I use are accurate but there can be no assurance that they are. All investments carry the risk of loss and the securities mentioned herein may entail a high level of risk. Investors considering an investment should perform their own research and consult with a qualified investment professional.
I wrote this blog post myself, and it expresses my own opinions. I do not have a business relationship with any company whose stock is mentioned in this blog post. The information in this blog post is for informational purposes only and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
The primary purpose of this blog post is to share industry expertise and research and receive feedback (confirmation / refutation) regarding my investment theses.