Meanwhile, Apple, Inc. (NASDAQ:AAPL) and Amazon.com, Inc. (NASDAQ:AMZN) both cruised to new highs Wednesday. The Nasdaq (COMP), which is loaded with tech names, actually rose a bit despite Oracle Corporation (NASDAQ:ORCL) getting taken out to the woodshed as investors reacted negatively to its earnings. Small caps, which led earlier this week, hit the dirt yesterday. 

Getting back to the bigger picture, Wednesday’s setback for the SPX and the Dow Jones Industrial Average ($DJI) could have reflected a little investor exhaustion. Things can’t just keep going up without a break. Technically, there may be disappointment that for the second-straight day, the SPX wasn’t able to hold onto early gains that took it above resistance at 3130. Wondering where support might be? It’s possibly shaping up at around 3090, and the bias remains positive above that level, according to research firm CFRA.

Speaking of CFRA, they say it might take sharp upward revisions to Q2 earnings estimates for the market to gain more steam. The firm’s note to investors late yesterday projected a 44.2% decline in Q2 earnings year-over-year after an 11.9% drop in Q1. Things do look better moving forward, CFRA said, projecting 30.2% earnings growth next year following this year’s expected decline of 24.2%. A lot of analysts have pretty much thrown in the towel on 2020 earnings and are now modeling based on their expectations for 2021. 

That’s not a bad thing, either, especially when we’re dealing with COVID-19 and stock indices that are this highly valued. Still, you could arguably take it too far. Deutsche Bank put out a note this week warning of possible global emergencies, MarketWatch reported. There’s at least a one-in-three chance, Deutsche Bank said, that at least one of four major risks will occur within the next decade: a major influenza pandemic; a globally catastrophic volcanic eruption; a major solar flare; or a global war 

That’s all possible, but you can’t live your life in fear of what might happen. While past isn’t precedent, it’s pretty amazing how well the markets have done over the last 100 years considering all the disasters that happened. That doesn’t mean long-term investors should be too sanguine, either, obviously. That’s why tucking some cash away in an emergency fund is an idea that probably makes sense for most of us. 

Also, it’s arguably worth educating yourself about precious metals and their potential role in a portfolio. Proponents of gold say the metal’s low correlation to traditional assets can act as a hedge against systemic risk, especially during periods of stress in the stock and bond markets. However, there’s a lot of risk with gold, too, and unlike stocks or bonds, it won’t pay you a quarterly dividend. As with any investment, tread carefully.

CHART OF THE DAY: NASDAQ STILL HANGING ON. The Nasdaq Composite (COMP—candlestick) reached an all-time high last week. But since then, COMP pulled back and broke below its upward sloping trendline (yellow line) for three consecutive trading days. But then the index made its way back to the trendline and looks like it’s trying hard to stay there. If COMP does move above the trendline, it could be an indication that the uptrend is still intact. Of course, it could go the other way. It’s something to keep an eye on going forward. Data source: Nasdaq. Chart source: The thinkorswim® platform from TD Ameritrade. For illustrative purposes only. Past performance does not guarantee future results.  

OPEC Awaited: Crude—which some view as a proxy for economic demand—rose a bit today as investors anticipated an OPEC meeting. The group, accompanied by Russia and Mexico, is keeping nearly 10 million barrels a day off the market, and it could be interesting to see if they decide to pull more barrels out of production. Crude prices in the U.S. have been below $40 a barrel since early March despite lower supplies from overseas and falling U.S. production. 

Cash Considerations: One thing that might be worth monitoring is what companies say they’ll do with their money if Q2 earnings come in better than expected. In the past, better earnings often meant rewards to investors through buybacks and dividends. If there’s extra money around, as unlikely as that seems now, the question is where it might go. A handful of companies have raised dividends despite the COVID-19 challenges, though that’s likely to remain scattered. Buybacks probably aren’t in the picture because of the potential bad optics. 

One possibility is that we could see more industry consolidation through mergers and acquisitions (M&A)—some of which are percolating already. That includes GrubHub Inc. (NYSE:GRUB) merger with Just Eat Takeaway, a European food delivery service. More mergers in the leisure and travel sectors wouldn’t be all that surprising, either, considering the challenges those companies face. Health Care could be another segment to watch, especially in the biotech arena. Global M&A volume between March and May was down 42% compared to the same period last year, according to data from data firm PitchBook, however. That may be starting to change. 

Some note that the market rallied for 10 years during the Fed’s previous balance sheet bonanza after the 2008 financial crisis, so why not again? Keep in mind, however, that stocks are valued a lot higher now than they were in the depths of that period, so it’s hard to make an exact comparison. What does seem evident is the effect the Fed is having on gold—which remains near its recent highs—and on the dollar, which isn’t exactly weak but is well below its peak from earlier this year.