VRA Investment Letter: 3-Day Winning Streak Challenged by Google's Miss. Dips Will Be Short. Market Turning Point as Everyone Waits for “The Flush”.

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Good Thursday morning. Our 3-day streak of solid gains will be challenged today on the back of Google’s earnings miss last night. GOOGL is trading down 11% on the news. Microsofts beat hasn’t been enough to offset it (MSFT +2%). 

Once again, our primary liquidity tells led higher (semis & gold miners). As we’ve been covering, because most everyone feels the exact same way…”we’re going to wait until after the midterms to start buying again”…it's very likely that this now majority view will be the wrong view. A true contrarian is bullish here. The path of least resistance is higher and we expect dips to be short-lived. 

How we’re playing it; because we are well positioned already, we see no need to rush in and add to our positions, however we will be adding to them on a final "flush” on US-Iran kinetic action). Again, it’s likely that the markets will rally into the midterms, defying what the majority expects. However, following the midterms, we would expect some selling pressure to kick back in as the world prepares for fresh military action against Iran. 

But know this; should a deal be reached, avoiding fresh strikes, the markets will soar 10-15% inside of a week. True melt-up action. Most importantly, there’s one thing that we absolutely do not want to do...and that is “sell”. 

VRA Bottom Line; the fundamentals are as solid as we’ve ever seen. The technicals are washed out, with key sectors trading at major support levels. Sentiment is full-on bearish, giving us a near-perfect contrarian set-up for our markets to rip higher into year-end. 

Once again, here’s the data that matters most: From now through the next 15 months, since 1950 the S&P 500 has put up an average gain of 29.9% with profits in 19/19 years. We’ve never had analytics this compelling…and just as we’re about to leave the most volatile month of the year (where lasting bottoms have taken place, over and over and over again)

In this week's VRA Podcasts, we've covered the key takeaways of where things stand today. Key takeaways:

  • Earnings keep beating: with about 24% of S&P 500 companies reported, 83% have topped EPS estimates, well above the 5- and 10-year averages. Revenue growth is 12.7%, a third straight quarter of double-digit gains, with all 11 sectors growing revenue.

  • VRA came into 2026 calling for 30% earnings growth against a 14% Wall Street consensus. Through Q2, S&P 500 earnings growth is running at 34%, before what is typically the best quarter of the year.

  • This isn’t the dot-com era: the forward P/E is 18.7, below long-term averages, versus a reading of over 150 for Cisco during the dot-com era. Nvidia’s forward P/E keeps falling even as the stock climbs.

  • The market doesn’t peak until earnings peak, and the market top usually comes 2, 3 or even 4 quarters later. With earnings still rising, we continue to see the path of least resistance as higher.

  • Prices are climbing while sentiment stays fearful: the S&P 500 is less than 2% from an all-time high, yet AAII bears have outnumbered bulls in every week but 2 over roughly 3 months. Semis rose more than 3%, the Nasdaq 1.18% and transports 1.7%, back above their 200-day moving average.

Over the years we’ve talked often about the long-running PSYOP of Negativity that’s been in place and I see this AI fear-mongering propaganda much the same way. The world’s largest, most successful and connected companies are each committing trillions of dollars to the AI boom, but instead we’re supposed to listen to financial mainstream talking heads and Trump-hating permabears? Not us. Capitulation is close. 

My Thoughts on the Innovation Revolution: 

I’m regularly amazed by the number of people I talk to that have very little knowledge, or even an inkling, of how the lives of billions will soon change with autonomous transportation, Robotaxis and robotics (namely Optimus). Tesla will be the biggest winner here. 

Within 8-10 years, many…then most…will realize there’s no need to own a vehicle (though many will keep one for independence). Car payments, insurance payments and upkeep will largely disappear as household expenses. We’re talking massive monthly savings for most Americans.

With Optimus, households…most powerfully, the elderly…will have a friend, companion, cook, housekeeper and incredibly, the best doctor on the planet, right in their home with them.

GDP growth and productivity will absolutely skyrocket, which will allow for government debt totals to begin moving in the other direction. Slowly at first, and then, really really fast.

These are just a few examples of how the lives of average Americans will radically change for the better, inside of a decade. When you extrapolate out the other unknown (but coming) advancements from this Innovation Revolution, I’ll just repeat what we’ve been saying for the last 4 years; we’re entering an era where there’s never been a better time to be an opportunistic optimist. The pessimists have this entirely wrong. Entirely.

It’s incredibly exciting. And btw, the Roaring 2020’s isn’t going to end in 2026. Know your history, understand market cycles/primary trends and crush Mr. Market. 

Dan Ives: Leading tech analyst Dan Ives via X: 



Until next time, thanks again for reading. 

Kip

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