While reported earnings this quarter have been in line with the prior four years average, revenues have been falling. As FACTSET noted:
“…only 44% of S&P 500 companies have reported revenues above the mean estimate to date. This percentage is below the average of 57% over the past four years. As a result, the revenue growth rate has declined to -0.6% today from 0.4% at the end of March and 0.9% at the start of the quarter. If the final revenue growth rate for the quarter is -0.6%, it will mark the second time in the past three quarters that the S&P 500 will have reported an aggregate year-over-year decline in revenues.
It is
interesting to note that the market does not seem to be reacting negatively to
the unusually high percentage of companies reporting revenue below analyst
expectations and the falling revenue growth rate for the quarter.” [My
emphasis]
Full report from FACTSET at…http://www.factset.com/websitefiles/PDFs/earningsinsight/earningsinsight_4.26.13
My cmt: No the markets aren’t reacting. I think the lack of market reaction in the
indices is unusual, as does FACTSET, but it can’t last forever.
EUROPE (FACTSET)
For the quarter, Europe's results were dampened by
ongoing economic uncertainty. First quarter comparable sales were down 1.1%...”
–McDonald’s Corp. (Apr. 19)
“We planned for Europe to be similar to 2012, down again,
but it was even weaker than we had expected.” –General Electric (Apr. 19)
Full report from FACTSET at…http://www.factset.com/websitefiles/PDFs/earningsinsight/earningsinsight_4.26.13
CHINA (FACTSET)
“In Asia/Pacific, Middle East and Africa (APMEA), first
quarter comparable sales declined 3.3% primarily due to ongoing weakness in
Japan and negative results in China.” –McDonald’s Corp. (Apr. 19)Full report from FACTSET at…
http://www.factset.com/websitefiles/PDFs/earningsinsight/earningsinsight_4.26.13
DR. COPPER (from a trader
board)
“Dr. Copper has a better
forecasting record than most prognosticators, and it thinks the outlook is
terrible. A head and shoulders pattern, shown on the weekly chart, projects
down to $1.70-2.00 from current level of $3.10 area. If it happens, everything
else will be in crisis mode similar to 2008.”
MARKET RECAP
Monday, the S&P 500 was up 0.7% to 1,594 (rounded). That's a new high for the S&P 500.
Monday, the S&P 500 was up 0.7% to 1,594 (rounded). That's a new high for the S&P 500.
VIX was up 0.7% to 13.71.
The S&P 500 is 9% above its 200-dMA at
today’s close. I don’t expect it to get
too much higher than 10% above that level.
Volume was down about 20% today compared to
the month’s data. You might say there
was little conviction at today’s top; or you might say, since Japan and China
exchanges were closed today, then Japan and China must account for 20% of the
daily NYSE volume. That might give a
clue why the market has been going up in the face of declining economic data. With currencies declining vs. the dollar, foreigners
can hedge their currency decline by investing in the S&P 500.
NTSM
Monday, the NTSM analysis was again at HOLD at the close. All indicators are now neutral.
A statistically significant day (about a 1% climb in the S&P 500)
will signal a top to me. I am guessing
the top will be when the S&P 500 climbs another couple of percent higher.
MY INVESTED POSITION
I remain about 20% invested in stocks as of 5 March (S&P 500
-1540). My reasoning may be found at…http://navigatethestockmarket.blogspot.com/2013/03/why-i-got-mostly-out-of-stock-market.html
The NTSM system sold at 1575 on 16 April. (This is just another reminder that I should
follow the NTSM analysis and not act emotionally – I am under-performing my own
system by about 2%!)
I have no problems leaving 20% or 30% invested. If the market is cut in half (worst case) I’d
only lose 10%-15% of my investments. It
also hedges the bet if I am wrong since I will have some invested if the market
goes up. No system is perfect.
