We are getting a string of earnings disappointments in tech, EBAY, INTC, MSFT, GOOG, etc. We haven't seen action like this in quite a while. Even when earnings were mediocre last quarters, stocks tended to trade higher after earnings. It is getting to the point where on a micro level, the profits are not justifying the macro trade of long US equities. But the irrationality should continue because earnings haven't gotten bad enough. There is still plenty who view the 2nd half as being stronger which I highly doubt.
We made a small break of the May 22 high and are trading back below it thanks to disappointing tech earnings. The capital spending is just not there for tech to go much higher. At some point, the music will stop. Perhaps with the decreasing appetite for riskier bonds from investors, you may shut off the corporate bond window which has been fueling a significant portion of these stock buyback programs. Without the continuing stock buybacks, stocks will have a hard time going higher.
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