"With 73% of the companies in the S&P 500 reporting actual results, the percentage of companies reporting earnings above estimates is above the four-year average, while the percentage of companies reporting revenue above estimates is below the four-year average...
-Earnings Scorecard: Of the 366 companies that have
reported earnings to date for Q3 2013, 74% have reported earnings above the
mean estimate and 53% have reported sales above the mean estimate...
-Earnings Guidance: For Q4 2013, 66 companies have issued
negative EPS guidance and 13 companies have issued positive EPS guidance...
In aggregate, companies are reporting earnings that are
1.4% above expectations. Over the last four quarters on average, actual
earnings have surpassed estimates by 3.7%. Over the past four years on average,
actual earnings have surpassed estimates by 6.5%. If 1.4% is the final surprise
percentage for the quarter, it will mark the lowest surprise percentage since
Q4 2008 (-62%).” Earnings Insight is
available from Factset at…
http://www.factset.com/websitefiles/PDFs/earningsinsight/earningsinsight_11.1.13/view
Analysts lower their earnings expectations; companies
beat the lowered earnings expectations; but that has not been true for revenues
this year, so expect further lowered earnings expectations. One would think that this cycle can’t go on forever,
but I don’t know if it will break or when.
ATA TRUCK TONNAGE INDEX UP 1.4% IN SEPTEMBER (ATA)
"The American Trucking Associations’ advanced seasonally
adjusted (SA) For-Hire Truck Tonnage Index increased 1.4% in September, which
matched the August gain...
'While tonnage is likely running ahead of overall
economic growth, perhaps the economy is stronger than many believe. The index
has now increased in four of the last five months and the year-over-year growth
rate has accelerated. Plus, other measures of truck freight volumes, while
increasing at a slower pace than tonnage, have also accelerated in recent
months,' he [ATA Chief Economist Bob Costello] said.” Press release at…http://www.truckline.com/article.aspx?uid=fc82c4c0-8f3e-4086-b99c-479f20a83968
Trucking is not indicating an economic slowdown. Freight volumes aren’t either (see below).
CASS FREIGHT INDEX (Cass Information Systems)
MARKET REPORT
Monday, the S&P was up 0.4% to 1768 (rounded).
VIX fell about 3% to 12.93. Monday, the S&P was up 0.4% to 1768 (rounded).
MARKET INTERNALS (NYSE DATA)
Volume was about 10% below normal Monday with normal
measured as the monthly average. I had
to go back 3-weeks to find volume as low as today. Perhaps there wasn’t as much conviction in
today’s move up.
On the other hand, the index was up in the last hour so
maybe the pros know something Joe 6-pack doesn’t. (I report on the late-day
action and it seems like it should be predictive, but I haven’t seen a great correlation
yet.)
The 10-day moving average of stocks advancing was up
today to 52%. (A number above 50% for
the 10-day average is generally good news for the market.)
New-highs outpaced new-lows, Monday, leaving the spread
(new-hi minus new-low) at + 132 (it was +70 Friday). The 10-day moving average of change in the
spread was up to minus-19. In other
words over the last 10-days, on average, the spread has declined by 19 each
day.
Market Internals are a decent trend-following analysis of
current market action, but should not be used for short-term trading except
perhaps to augment another system.
NTSM ANALYSIS
SENTIMENT: Sentiment was 72%-bulls Friday with the 5-dMA at 71%. (That means that in the Rydex/Guggenheim
funds I track 72% were betting long Friday at the close. Perhaps even more telling, the amount of
funds bet on the short side was the lowest since 1-day during Christmas week of
2012…and 2-days ago. That’s based on a quick review of data back to July 2009. 72%-bulls is extraordinarily high and usually
portends trouble, but perhaps not with QE infinity in place. All other NTSM indicators are hold.
MY INVESTED POSITION (NO CHANGE)
I remain about 20% invested in stocks as of 5 March
(S&P 500 -1540). 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.
I still lean toward getting back in, after a pullback, to
speculate on a final ride to the top.
NTSM did give several buy signals over the weeks of 14 and 21 Oct, but the market just looks
too frothy to rush back in…we’ll see if the market will pullback so I can join
the insanity. If not, cash is fine.
