Tech Stocks Rally Ahead of Big Earnings Week

Technology Sector Performance & Valuation - Technology sector earnings have re-accelerated, returning to the top quartile historically [2] - Technology valuations are now in the top quartile, matching high earnings growth [3] - Historically, high growth and high valuation environments have been more predictive of positive outcomes than low growth and low valuation scenarios [3] - Technology sector operating margins are increasing, unlike the negative margins seen in the 2000 tech bubble [6] - Technology sector CapEx, when divided by sales or free cash flow, shows no anomalies, supporting the high growth/high valuation narrative [7] Market Dynamics & Tailwinds - Recovering median earnings in economically sensitive sectors like technology are a positive setup [9] - Lower oil prices act as a tax cut, benefiting the technology sector through cost to margins and potentially lower inflation [10] - US earnings, particularly in technology, are accelerating while European and emerging markets are decelerating [12] - Since 2010, international stock outperformance has had a 0% odds of continuing, highlighting that cheap valuations don't always guarantee future success [14] Risk Assessment & Indicators - Public credit markets, specifically high yield credit spreads, should be monitored for signs of stress, but currently, credit spreads are well-contained [16][17] - The market may be able to "climb the wall of worry," suggesting resilience despite potential bubble concerns [17]