The stock market is all about earnings, or more specifically, earnings growth. If earnings are growing, stock prices are usually rising. Rising earnings go hand in hand with rising revenues. Companies need to bring in more dollars each quarter to improve the earnings. If revenues are falling, companies can make up for that by reducing costs or increasing productivity, but cost reduction can only go so far. Here’s what Contrary Investor had to say about Revenues (Contrary Investor.com):
“3Q saw the smallest year
over year gain in US corporate revenues since 2009. Moreover, the ongoing trend
in slowing year over year revenue growth is unmistakable over the last five
quarters.”
“Looking beyond the US
Fiscal Cliff issues specifically, it’s clear that global economic slowing is
negatively impacting US goods exports, one of the two key legs of the economic
stool in the current recovery. Additionally, the ability of the US Federal
government to continue to take on debt is more of a question mark than has been
the case in recent years. Both of these issues have direct bearing on the
forward character of US corporate earnings. Is this what is really causing
angst among the equity investment community as of late as opposed to the
already more than well-known Fiscal Cliff issues?…Now is the time to look over
the Cliff and assess the forward rhythm and tenor of the global economy, as
well as how that rhythm will either positively or negatively impact the US
corporate revenue and earnings growth outlook for the next two to three quarters.” From Contrary Investor.com at…
http://www.contraryinvestor.com/mo.htm
ATA TRUCK TONNAGE
The ATA Truck tonnage
Index, as reported by the American Trucking Association, rebounded from a 3.8% drop
in October to post a seasonally adjusted 3.7% gain in November. That’s the first positive month since July. ATA said, “Year-to-date,
compared with the same period last year, tonnage was up 2.8%.” From their
website: “Trucking serves as a barometer of the U.S.
economy, representing 67% of tonnage carried by all modes of domestic freight
transportation…” My cmt: I think
this data supports a slightly growing economy, though one-month’s increase (remember
August thru October were down) may not indicate we are out of the woods yet. From ATA at…
RETAIL SALES DOWN
(coloradoan.com)
“Holiday retail sales this year were the
weakest since 2008, when the nation was in a deep recession. In 2012, the
shopping season was disrupted by bad weather and consumers’ rising uncertainty
about the economy… In the end, even steep last-minute discounts weren’t enough
to get people into stores, said Marshal Cohen, chief research analyst at the
market research firm NPD Inc.” Full
story at…http://www.coloradoan.com/viewart/20121225/BUSINESS/312260006/Holiday-Retail-sales-weakest-since-2008
SENTIMENT
As of Monday’s close, sentiment is 66%-bulls
so now it’s official: 2 out of every 3 investors are betting the markets will
rise. (My sentiment indicator tracks the assets invested in selected bull and
bear mutual funds in the Guggenheim Investment Family, formerly Rydex
Funds.) This is negative for the
markets. Too much bullish sentiment is
not a good thing. Furthermore, sentiment
usually peaks after the stock market has topped as investors move in to
buy-the-dip. Could sentiment be
right? Is now the time to be more
optimistic than at any other time since last May? - Maybe, but not likely.
MARKET RECAP
Wednesday
the S&P 500 was down 0.5% to 1420 (rounded). VIX rose 9% to 19.48.
NTSM
The NTSM analysis remained HOLD Wednesday. Sentiment is the only negative indicator.
MY INVESTED POSITION
Based on the SELL signal, 7 November 2012, I
moved out of the stock market at 1377 on the S&P 500. Because of the negativity I have noted from
Hussman and others, I am currently invested in a range of near 15% invested in
stocks. 
