Earnings season is upon us. Expect a lot of jumping around this quarter as companies miss or exceed estimates. Although earnings are important, they are also fickle and easily manipulated, which is why it’s always good to remind ourselves, as shareholders, of some of the long-term time-tested ways in which companies deliver value not merely over one quarter to the next, but over years and years to come.
The markets were down big this week, with much of the profit-taking in high growth stocks and popular momentum names. Although economic data here in the U.S. continues to improve, the market was showing signs of exhaustion over the past couple months as less stocks were participating in the rally to new highs.
Energy is an emerging interest for the market as portfolio managers search for value in energy stocks. One of the biggest topics discussed at the beginning of the year was valuations. You need to look no further than energy, old tech, materials, and utilities to find value this quarter.
On April 8, we outlined reasons to be concerned about stocks. The Fed pays close attention to the market’s risk profile; maybe they didn’t like what they saw. In addition to the Fed minutes that were released Wednesday, Charles Evans seemed to be carrying the “talk stocks back up” torch for the U.S. central bank.
Richard Dickson, Chief Market Analyst at Lowry Research, explains why they don't see any signs of a market top, whether it's possible to "time the market," and the likelihood of another 10% correction before heading higher.
After hitting all-time highs last week, the markets quickly sold off ahead of first-quarter earnings, with Alcoa kicking things off Tuesday. Both the S&P 500 (SPY) and Dow (DIA) were down a little over 1% on Monday’s close.
This week the market has seen a greater loss in momentum and breadth, which suggests we are on a much weaker foundation than was seen in 2013. Interestingly, while US markets are beginning to show signs of exhaustion, there are signs of life in emerging markets.
As we are nearing a high in the S&P 500 there was a sharp retreat in the NASDAQ and Russell 2000 averages last week. The Dow has remained under its old high and failed to confirm the move to new highs in the transports. The number of names in attractive technical condition declined last week.