Looking for a catalyst? Q1 earnings are here…

Simply put, stocks in the first quarter were on fire! This was the best Q1 for stocks in over a decade. The Dow Jones Industrial Average (chart) gained over 8%, the Nasdaq (chart) climbed a whopping 18+%, the S&P 500 (chart) +12% and the Russell 2000 (chart) finished the quarter up 12.06%.

These are the best first quarter gains for the key indices since the 90’s. Who would of thought as 2011 ended with the European crises at a breaking point, that our markets here and markets abroad would behave in the manner that they did? I think for the most part we can thank the federal reserve and central banks from around the world for their incessant accommodative monetary policies. One thing for sure is when interest rates are near or at zero,  you are going to be in a bull market regardless of whether or not the economy is expanding. I have got to believe that the short sellers are crying foul from the standpoint that a rising tide lifts all boats and certain stocks or sectors don’t belong elevated the way they are. Nonetheless, there is massive liquidity in the system which certainly bodes well for equities.

The million dollar question now is can this bull keep running? Look no further for that answer other than the upcoming first quarter earnings reporting season. If corporate America can pull off yet another solid earnings reporting season, then we could indeed see the markets continue their march north. However, if top line revenues do not begin to show growth, and companies continue rely on cost cutting measures and other efficiencies to improve their bottom lines, this could be the one catalyst that provides the correction in the markets that most pundits have been anticipating. Good luck to all.

Have a great week 🙂