Equity markets continue to surge higher, led by technology, even as the broader news flow remains dominated by geopolitical tension and uncertainty. While the immediate upside at the index level may be starting to look more limited after such a sharp rally, the cryptocurrency market still appears highly promising and full of potential.
This content has been produced by Kvarn Investment Services Oy, a licensed investment firm supervised by the Finnish Financial Supervisory Authority. The content is intended for informational purposes only and should not be interpreted as investment advice or recommendation. All investing involves risks, and past performance is not a guarantee of future returns.
A week ago, the Kvarn Pulse newsletter was written in a quite optimistic mood. The S&P 500 index had just climbed over 7,000 points and, at the same time, to new all-time highs.
In Kvarn Pulse newsletter, we drew attention to the contrast between the general news flow and the stock market's performance. We wrote at the time:
"If an investor were to read only the media news about ongoing military actions, oil prices near $100, and a potential aviation fuel shortage threatening Europe, the first impression of the stock market's state wouldn't necessarily be 'S&P 500 at all-time highs.'
….
We operate on the assumption that even though the markets are not always right, by default, they know more than we do. When the markets and our own views diverge, we fundamentally consider it a bad idea to assume that, between the two, our assessment is better. That is why we change our minds when the markets appear to change theirs, and right now, the markets are of the opinion that the direction is unequivocally upwards."
Over the past week, trusting the market consensus has been rewarded. The stock markets have continued their fierce rally. The S&P 500 index has made a massive, nearly 13 percent climb during April, and is already moving above 7,100 points.
Last week we wrote about how the stock market seems to have left the worries of the Middle East conflict behind, even though the conflict and its impacts continue to dominate news headlines. Indeed, the past few weeks have been a textbook example of a situation where an investor should primarily follow the actual reactions of the investment markets, not the sentiment conveyed by news headlines or the emotional reactions they provoke.
The market has moved upward primarily driven by the technology sector. This can be seen quite clearly if we plot the Nasdaq 100 index ETF (QQQ) against the S&P 500 index excluding the tech sector ETF SPXT.
In the short term, the market starts to look slightly overextended. The Nasdaq 100 index's Relative Strength Index has climbed well over 70, and the index's daily readings have touched outside the upper Bollinger Band.
These indicate that the upward movement of recent weeks has been very strong, and on the other hand, lead us to expect that the remaining immediate upside might be limited.
On the other hand, we draw attention to the fact that the VIX index, which reflects the market's expected volatility and thus often indicates market nervousness, has risen above 19 in recent days.
This alone is not yet a particularly high reading. However, it has broken the trend that continued throughout April, where the VIX index fell while the S&P 500 index skyrocketed.
The temporary overextension of stock indices and the VIX index turning upward together force us to prepare for the possibility that some kind of correction might be ahead after the fierce rally. At this stage, however, our assumption is that, if realized, this would only mean a buyable dip, and would be a very welcome buying opportunity, especially for those who partially or entirely missed the fierce rally at the beginning of April.
Last week in the Kvarn Pulse newsletter, we highlighted semiconductors (VanEck Semiconductor ETF, VVSM), data center infrastructure (Global X Data Center REITs & Digital Infrastructure ETF, V9N), and autonomous and electric vehicles (Global X Autonomous & Electric Vehicles ETF, DR7E) as particularly strong themes.
From the chart below, it can be seen that the prices of all three of these ETFs have continued to perform excellently even after last week's Kvarn Pulse newsletter (to the right of the vertical gray line).
They continue to belong to the strongest segments of the stock market, and our expectations regarding them remain optimistic. As a minor side note, we observe that on Wednesday, April 22, 2026, the data center theme seemed to move slightly weaker than the other two themes. This could be mere noise within the uptrend, but it is possibly something worth paying attention to over the next week.
It is also good for an investor to be aware that there is quite a bit of overlap across these three themes, as all contain elements directly or indirectly related to semiconductors or otherwise to computing power. Therefore, one cannot build a diversified portfolio out of these three ETFs alone, but they do contain a quite nice sample of the strongest themes of the moment.
In last week's Kvarn Pulse newsletter, we headlined our cryptocurrency analysis with the words "Cryptos next?"
At the time, we noted that the price of MARA Holdings (MARA), one of the largest Bitcoin miners, had already climbed above its local March peak, and the price of Bitcoin seemed to be just about to do the same.
A week later, we can state that this positive development has continued. Like MARA, Bitcoin's price has climbed above its March local top. MARA's price, in turn, has already climbed past itsJanuary local top, while Bitcoin still has about twenty percent to go to reach its own January top.
We are following this positive momentum in Bitcoin's price with great interest.
What makes the situation quite interesting is our previously highlighted observation that, in light of relative valuations, Bitcoin is in a quite interesting spot.
If we plot the price of Bitcoin (BTCUSD) against the Nasdaq 100 index (NDX), we can see that this ratio is still below its 200-week moving average.
We can also see that historically, this ratio has not dropped very far below its 200-week moving average.
We readily admit that one should not draw overly far-reaching conclusions from such ratios, and naturally, there are no guarantees that the BTCUSD/NDX uptrend would need to continue in a way reminiscent of past history at all.
However, if one generally believes that Bitcoin's price development will continue somewhat similarly to the past, it currently looks more affordably priced relative to other risk-on assets than it has in a long time.
Its dollar-denominated price also currently offers a very clear invalidation point for risk management: if the price were to fall below $65,000, it would be quite difficult to hold onto any bullish expectations.
Within the crypto market, things are currently proceeding in a very Bitcoin-driven manner, typical of a fresh uptrend. The price of Ether, the second-largest cryptocurrency by market capitalization, has more or less held its ground relative to Bitcoin, but the rest of the altcoin market as a whole has clearly lagged behind Bitcoin's price rally.
This can be seen from the chart below, which plots the total market cap of the altcoin market relative to the total market cap of Bitcoin. This ratio is currently below all its key moving averages, and has just hit its lowest readings since July 2025.
While Bitcoin looks quite modestly priced relative to the stock market, altcoins also look somewhat modestly priced relative to Bitcoin. If the crypto market's upward trend continues, we would expect altcoins to start strengthening against Bitcoin again at some point, which could make them quite an interesting target, at least for short-term trades. For now, however, the crypto market is moving in a very Bitcoin-driven way.
Stock indices at record highs and the crypto market in an uptrend. The market sentiment seems to have turned upside down in a matter of weeks, and we are currently in a full "risk-on" mood. At the same time, the Middle East conflict is still ongoing, and the situation could turn any given day.
Wherever the markets may head, we will continue to monitor the situation and keep you up to date, so stay tuned!
The information and sources presented are for illustrative purposes only. While obtained from sources deemed reliable, their accuracy cannot be guaranteed.
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