Microsoft and Alphabet’s disappointing quarterly results have had quite a bit of an impact on those companies and the stocks of those close to them, but Big Expensive Tech’s fortunes don’t determine the tone of the tape and neither does it. right for most of the year. A market that bottomed out (currently) in dramatic fashion on a bad inflation report nearly two weeks ago reversed higher on FAANMG earnings miss, speaking of a more nuanced market, a market that The market is driven by macro expectations and with most stocks having been revalued severely below the course of the past year. At the broad S&P 500, it counts the continuation of a strong rally that took the index above the 50-day average and headed for a potentially tougher test between 3,900 and 4,100, the top of the range after April. This move looks a bit aggressive right now and it is likely to be overbought after Wednesday on a short-term basis. But the sharp bounce off the significant low (September 13 low at the 200-week moving average) provides good momentum and is overbought in line with a potential bottom – not yet confirmed. Proved but possible. Other components: Discarded sentiment and positioning coming into October, seasonal strength, especially in midterm election years, an economy that has not yet registered full signs of recession , companies are navigating things well, and the Federal Reserve may be moving toward a point in time to slow down/pause interest rate hikes. Obviously a lot is given as fuel, but a lot has to go with that flame as well. The Bank of Canada with a smaller-than-expected rate hike on Wednesday gave the Fed pause on hopes of a move. The dollar uptrend has now cracked and Treasury yields are fading. To be sure, the market can only withstand a certain amount of severe shortfall because of the massive index components. If Apple, Amazon, and Meta talk bad and make it seem like the underlying momentum is picking up, that’s going to be a tougher test. But as noted, GOOGL valuation has pretty much compressed into the report, and even as the stock fell Wednesday, it’s just back where it was trading a few days ago. A dangerous word in investing, granted, but “yes” seems to apply to this response. The “average stock” smoked up (the average drop for S&P 500 members from top to bottom was 35%, for Nasdaq it was 50%). But on balance, rankings and profiles have been seen as a better group than the growth giants that led the market higher into the late-2021 peak. This is the S&P 500 index versus the Nasdaq. 100 this year, a large 13 percentage points spread and is a “typical stock” that tends to be more stable than its mid-June low. META has been underperforming both before and since the results. result of GOOGL, a stock damaged by lack of funding and many questions about strategic blunders affecting investor perception. Not suggesting that we should expect a quick turnaround, but it’s interesting to see what Netflix looked like not that long ago. True, the stock has begun to build on the latest upbeat results more than the META has so far. But it is worth recalling that the rubber band is pulled quite tightly on the META – it is possible to break or pull back. Market breadth on the NYSE was quite strong again, increasing by 80% + volume one day. The VIX is finally warping, doing so in a delayed spike/retreat mode indicates a release of stress. The rally plus various stock-specific actions allowed some air to escape the VIX.