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The headlines keep screaming fear. Geopolitical tensions flare up in the Middle East. Oil prices spike and then hold elevated levels. Whispers of sticky inflation refuse to fade away. Yet here we sit in late April 2026 with the S&P 500 pushing above 7100 and carving out fresh record highs. The NASDAQ has joined in with its own string of all-time highs after a sharp rebound from earlier weakness. What is really moving the needle? It is not the daily noise from the headlines. It is the steady stream of strong numbers coming out of earnings season. Surprise, Surprise At Zacks, we have been digging through the tape every single day. The story could not be clearer. Q1 2026 earnings are delivering positive surprises at a rate in line with the long-term average. Through the middle and late part of April roughly 79% of the S&P 500 companies that have reported so far have beaten EPS estimates. The magnitude of those beats is running around 29% above consensus. That is way stronger than the beats have been over the last several quarters. Revenue surprises are also holding up nicely with about 79% of reporting companies topping estimates. We are on track for solid double-digit earnings growth in the first quarter with blended estimates now pointing to roughly 16% year-over-year expansion. That marks the sixth straight quarter of that kind of growth. Technology continues to lead the charge with projected growth north of 45% in some cases but the breadth is clearly improving. Upward revisions are spreading beyond the usual mega cap names and into other sectors. Here is what matters most for traders like you and me. When companies do not just meet expectations but smash them and then raise guidance the stock price action tends to follow with real conviction. That is the heart of the Surprise Trader approach I have followed for years. Positive earnings surprises combined with upward estimate revisions create the kind of momentum that can push stocks significantly higher in the weeks and months after the report. |
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Financials to the Rescue We are already seeing this play out in real time. Banks kicked off the season with solid beats and raised outlooks. Industrial names and select technology companies have followed suit. As more heavyweights report in the coming days the market will keep its focus squarely on whether the beat and raise cycle continues. Early indications from the data look encouraging. Revenue growth is tracking above average in many cases and forward estimates for the full year have edged higher. At Zacks we track this rigorously through our proprietary Zacks Rank system. It puts the highest priority on exactly these earnings revision trends. Zacks Rank #1 (Strong Buy) stocks have a proven long-term track record of outperforming the broader market. They capture companies where analysts are actively raising estimates often right after or in anticipation of strong surprise potential. I also like to combine the Zacks Rank with our Earnings ESP tool. That screen looks for stocks with positive expected surprise potential based on the most recent estimate revisions. When you put a Zacks Rank #3 (Hold) or better together with a positive Earnings ESP, the historical hit rate for actual positive surprises jumps to over 80 percent. That is the kind of edge that separates good trading from great trading. The storyline here is straightforward. Short-term fear from the headlines is creating opportunities for those who stay laser focused on the fundamentals that actually drive stock prices over time. Earnings momentum and positive surprises remain the dominant force right now. Markets have a habit of climbing a wall of worry when the underlying numbers support it and right now the earnings setup looks constructive. If you are trading or investing with an eye toward the next leg higher, keep your radar locked on names showing strong earnings beats upward revisions and the technical momentum that usually follows those developments. Pay close attention to how management guidance lands during conference calls. A confident tone and raised full year outlook can add even more fuel to the post earnings move. Eyes on the Zacks Prize This is also a good time to review your watch list through the Zacks lens. Screen for stocks with improving Earnings ESP scores and a solid Zacks Rank. Layer in basic technical confirmation such as price holding above key moving averages and you have the ingredients for high probability setups. Earnings season still has plenty of weeks left to run. The data so far suggest the market has good reason to stay optimistic even with the macro noise refusing to quiet down. Stick with the numbers, not the drama. That has been the winning formula through every cycle I have traded. Better trading starts with better information on earnings surprises. New Surprise Stock to Post Monday Morning Check our live recommendations right now, and be first to the one I'm adding Monday. You can take advantage of ripples of buying even before a company reports earnings. Don't miss your chance to beat Wall Street to the punch and make the most of the potential double-digit price pops. Our signals predict big positive surprises and they've been right a remarkably consistent 80% of the time! They've led us to recent gains like +26.9%, +34.3%, and +68.6% in as little as 6 days.¹ Bonus Report: Another reason to look into this now is that you are also invited to download our just-released "Early Warning Alert" report. It reveals Stocks to Sell BEFORE They Report Earnings in the Coming Weeks. Our strategy works both ways, and you can use this report to avoid companies that are more likely to report negative surprises. See our Surprise Trader stocks and "Early Warning Alert" before the deadline - Sunday, April 26. » All the Best,
David Bartosiak is Zacks' resident earnings surprise expert. He selects stocks and delivers daily commentary for our Surprise Trader portfolio. |
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¹ The results listed above are not (or may not be) representative of the performance of all selections made by Zacks Investment Research's newsletter editors and may represent the partial close of a position. Access grants you a comprehensive list of all open and closed trades. This free resource is being sent by Zacks.com. We look for investment resources and inform you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms of Service". https://www.zacks.com/terms_of_service Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research is not a licensed securities dealer, broker or U.S. investment adviser or investment bank. The Zacks #1 Rank Performance covers the period beginning on January 1, 1988 through March 2, 2026. The performance is the equal weighted performance of a hypothetical portfolio consisting of stocks with a Zacks Rank of #1 that was rebalanced monthly from January 1988 through December 2013 and weekly from 12/31/13 through Monday's open on March 2, 2026. For each stock with a Zacks Rank #1 at the beginning of the month, the total return during the month was calculated as the % change in the price of the stock from the closing price of the prior month to the closing price of the current month plus any dividends received during the month. The monthly individual stock returns were then averaged to determine the portfolio return for the month. For each stock with a Zacks Rank #1 at the beginning of the week, the total return during the week was calculated as the % change in the price of the stock from the opening price for the week to the opening price of the next week plus any dividends received during the week. The weekly individual stock returns were then averaged to determine the portfolio return for the week. If no month-end price or week end open price was available for a stock, it was not included in the portfolio return for the month or the week. The monthly and weekly returns were compounded to arrive at the annual returns. The annualized return is the annual return that, had it been achieved in each year or portion of a year, would have compounded to create the total return over the full time period. These returns are based on the list of Zacks Rank #1 Stocks that was available to clients of Zacks as of the beginning of the month, when returns were calculated monthly, or as of the beginning of the week when returns were calculated weekly. These returns are higher than the returns an investor could achieve investing real money in a portfolio of Zacks Rank #1 stocks because the returns of the hypothetical Zacks Rank #1 portfolio exclude a number of costs, including commissions incurred for trading, the average bid ask spread, the price impact of the trading and, prior to 2013, in those months when the end of the month fell on Friday, Saturday or Sunday, the overnight return from the month end close to the open on the next trading day. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance_disclosure for information about the performance numbers displayed above. Zacks Emails Zacks Investment Research |
The last few weeks of price action is a clear indication of how market can flip quickly.
Calm one moment… then sharp headline driven moves in the next.
By the time most indicators (and as a result, most traders) react, the deep pockets are already in position.
That’s why I’ve been focused on a pattern that tends to show up before those moves begin.
