Good Wednesday morning. Bad things may happen at extreme overbought levels, but not when we’re in a bull market melt-up phase. As we see it, that’s exactly where we are, as we head into Q2 earnings. Dips will be short-lived, followed by dramatic moves higher. 

For more than 15 years the VRA’s primary "market direction” indicator has been the relative strength chart below; the Semis to the S&P 500. 

From exactly the 4/7 bear market lows, we see that the semis have led the markets higher. Until and unless this most important repeating pattern is broken, stocks are headed higher. We own the king of the semis Nvidia (NVDA).

In yesterday’s Letter we explained why Wall Street analysts couldn’t be more wrong about Q2 earnings, with a current estimate of just 4.9% earnings growth. Tariff confusion has resulted in significant earnings cuts from Wall Street’s analysts. Over the last 2 quarters (both at least largely “Trump quarters”), earnings results were more than solid, t...