The Stock Market MELT UP is Happening

Just a few months ago, investors were in full panic mode. 2026 didn't get off to a great start. Then we saw the start of the war happening and the sell-off in the markets ensued. Now the stock market is ripping higher once again to new record highs. And what we may be witnessing right now is the beginning of a stock market meltup. We've seen an incredibly sharp V-shaped recovery in stocks. Sentiment flipped fast. Fear turned to optimism. Cash moved back into equities. and technology stocks were once again leading the way. The question is, is this irrational euphoria or is the market actually responding to stronger fundamentals? And that's exactly what I'm looking to cover in today's video. With that being said, let's first talk about what a meltup actually is. A meltup is a rapid move higher in asset prices driven by momentum, investor psychology, and FOMO or fear of missing out. It's different from a normal bull market. In a meltup, investors feel forced to chase. Sideline cash rushes back in and valuations can expand very quickly. You start hearing things like, "I missed the bottom. I need exposure to the market." The thing that just keeps going higher and I can't miss the boat. That psychology fuels the move higher. Some of the most recent meltups we have seen was the pre-inancial crisis meltup from 2006 to 2007 occurring right before the housing crisis took place and the economy later fell into a recession. But looking at this chart here, we can see the move in the S&P 500 from the ' 06 lows in July through the end of December in ' 07 in which the market grew nearly 20%. That's a pretty solid gain in the market, especially considering 12 months prior to that, the S&P 500 grew another 20%. The problem comes down to reasoning. In 2006, earnings grew by 17%. Markets grew by 15%. Makes a lot of sense. Now, as we just saw, markets grew nearly 20% from July '06 to the end of '07. But why was that so weird? It was not substantiated by earnings growth. It was inflating asset prices, not backed by substance. In fact, in 2007, did you know that the S&P 500 saw earnings decline by nearly 20%. Regardless of the earnings declines? Look at the gains from these top performing companies. First Solar was up 800% nearly Mosaic up 336%. CF Industries 325%. Intuitive Surgical up 232% and Booking up60%. In fact, there were 12 stocks with gains above 100%. Now, we move back to 2020 when markets tanked on the news of the pandemic through mid-March. But then from there, that period forward, shares grew 40% through the end of the year. Investors and consumers saw huge unemployment, which resulted in government stimulus. But S&P 500 earnings that year fell 30%. Another disconnect. markets increasing, earnings decreasing. Strong recoveries or even V-shaped recoveries are fine when they're backed by substance like earnings growth. But when there's a disconnect, that's when markets can be vulnerable to massive downturns. And as investors and money managers of your own portfolio, that is what you want to limit. So, what is it that we have seen of late? It's been that very v-shaped recovery we're talking about. The market nearly fell into a correction to start the year in 2026, falling nearly 10% through the first quarter. There was fear around rates, sticky inflation, job concerns, geopolitical concerns, and worries about an economic slowdown. That was at the start of the year. Then came March and the US Iran war begins sending stocks into a tail spin and oil prices through the roof. But then the market snapped back aggressively in the month of April when the S&P 500 jumped more than 10% in that month alone. And the important part is leadership returned quickly, especially for technology. Now, here's where I think most people are oversimplifying the move. A lot of investors are starting to call this irrational, a bubble, pure speculation. But the reality is many technology companies are actually reporting extremely strong earnings. We're seeing massive free cash flow, strong margins, accelerating AI demand, and continued infrastructure spending. Companies tied to AI, cloud, semiconductors, even cyber security at times, are seeing real demand, not just hype. The capex spending is massive, especially for the hyperscalers. In 2026 alone, here are the capex budgets for some of the largest companies in the market. Microsoft over a hundred billion, Meta 125 billion, Alphabet nearing 200 billion and Amazon close to 200 billion in capex spending. These are real dollars that are supporting a lot of these earnings. This is the key difference from many of the past rallies and meltups. There's actual capital expenditure that's happening. We're not just seeing inflating asset prices not being substantiated. Billions are being spent on data centers, chips, cloud infrastructure, power generation. This isn't just investors imagining growth or asset prices rising while earnings decline. No, we have real growth with real earnings. Companies are spending aggressively because demand is there. But are some of these individual moves justified? And that's where talks of an AI bubble fears are starting to pick up steam. Huge moves. Investors not looking to miss the boat on big moves higher. Look at these moves from just a few of the chip names. Micron shares have doubled just since the start of April. SanDisk up 110% since the start of April. Intel up 150%. AMD up 100%. And even Qualcomm up 60% since the start of April. Those would be insane moves over a 2 to threeyear period, but we're talking about one month. So for starters, let's first look at Micron, which had a phenomenal quarter in which revenues climbed nearly 200% and growth is continuing moving ahead with very strong pricing power leading to strong margins above 80%. An extremely strong quarter, but at the same time, does that warrant a 100% move up in the stock? At the start of April, Micron had a market cap of 380 billion. Today, it sits at over $820 billion. But from a valuation perspective, the stock was just way too cheap, trading at a singledigit earnings multiple. But moving this far that fast does have memelike tendencies. But this is something that I continue to talk about inside of my Discord community. There are some of these companies, many of them technology companies that aren't that much impacted by what's going on in the Middle East. So while stocks were selling off, their earnings continued to grow, which made these stocks that much cheaper. So that was Micron. And next, I want to look at AMD. But before I do, let me thank today's video sponsor, which is the Mly Fool. And right now, you can go to fool.com/mark to check out their 10 best stocks to buy right now. All right, so with that being said, now let's move on to AMD. And AMD since the beginning of April saw their market cap grow from 330 billion to over $720 billion. That's wild. Is it justified, though? Well, looking at their latest earnings, AMD saw topline revenue growth of about 40% and earnings are set to grow 75% this year and another 75% next year. Using the 2026 estimates, shares of AMD trade at a 55x multiple, which seems high, but again, we're expecting 75% earnings growth, and it may warrant that valuation. So, what I'm saying right here is even after these moves, the fact that valuations aren't 100x plus from an earnings perspective can be a case of these stocks that were staying muted for just too long and now playing catch-up from the last 6 months. And it's something I continue to say as stocks trade sideways or even down like we saw at the start of the year. These tech companies were continuing to grow earnings behind the scenes, meaning really valuations were getting cheaper and right now they're taking off. So, what are the decisions I'm making for my portfolio? And again, for me, I'm not looking to chase any of these names because we have seen how these tend to end, these huge moves in a short period of time. And it's not necessarily an end to the long-term run, but rather a sharp pullback when the big money wants to start taking profits from these insane runs. And that will happen. Now, does that mean valuations don't matter? Of course not. Some stocks have clearly run ahead and they've ran too far. They've gotten ahead of themselves. But I also think many investors are underestimating how powerful this cycle could become. Because if AI productivity improves, enterprise spending remains strong and earnings continue to grow, then higher stock prices may actually be warranted and justified. That's the important nuance. Not every sharp rally is irrational. But here's the danger with meltups. They can become self-reinforcing. Momentum attracts momentum and eventually positioning gets crowded. expectations become just too extreme and even great earnings stop being enough. That's when volatility returns. So, what is the best way to approach this, you might ask? For me, it's going to be options. Options allow me to stay involved with stocks I like rather than chasing them. I can wait to buy them lower if there is a pullback. Buy stocks I like at prices I want to own them at. Let's look at a few examples. Let's start with Nvidia. That's a name I like a lot and believe is actually being left behind if you can even imagine that with all of the madness, but it also may be the highest quality of all the semi-names on the market today. Shares of Nvidia are up 23% since the start of April, which is weird to say, but seems muted compared to the rest of the chip industry. But this is a name I said just a few months ago that it was going to be trading over $200 and boom, it did. Probably quicker than even I anticipated. Now it's at $215. But for me, I would love to load back up on the stock around that 180 185 range. I like valuations there. So for me, from an option standpoint, I could sell the June 18th 185 put, which is going to pay me $265 per contract in premium just to wait. This would warrant me to buy shares of Nvidia at the 185 agreement I made if they fell below that by the expiration. And in return, I'm earning $265 to wait to buy a stock that I want to buy at a price that I want to buy it at. So that's Nvidia. Let's look at another one. Let's look outside of the chip industry. And how about a stock like I stock ticker I en. That's one I've been talking about for say the past six plus months. I would love to buy more of this name around $45. So, I could sell the June 18th $45 put and earn $245 in premium on a just a $45 stock. That is cash that goes into my account immediately and it allows me to stick to my strategy. I'm not chasing stocks. I don't have the FOMO trade. I'm getting paid to wait. And if you're interested in learning options, I just opened enrollment to my full stack options investor course, which is a four-week group program in which you will be trading options right alongside me. I will be teaching you over 10 different strategies that I utilize, show you step by step my checklist that I use to determine the trade, but also the strike. Options is a thing that can take your investing to the next level. And it can be done from an income perspective, which is a major part of my goal of generating over $10,000 per month in options income. This 4-week program is going to be unlike anything I have ever taught. So, if you want to join this program, seats are limited to the first 15 people that sign up. Check out the link in the description below to join my full stack options investor program today. So, how should investors think about all of this? I think there's really two really main mistakes. Blindly chasing or staying completely bearish while fundamentals improve. The better approach is to focus on companies with real earnings power, pricing power, not just hype. Because in this environment, quality leadership matters, fundamentals matter, and execution matters. So, yes, the stock market meltup may already be happening, but unlike some past rallies, this one may actually have stronger earnings support underneath it than many people realize, but still not something I want to chase. And instead, I'm taking the option strategy approach. And again, if you're looking to fully understand options and learn the strategies that fit your investor profile and your risk profile, this group program is going to be huge for you. And if you found any value in today's video, do me a huge favor and click that like button down below. below. It helps more than you think and I truly appreciate it. Subscribe to the channel and we'll see you in the next one. Take care.