Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Wall Street Earnings Recession is no cause for Worry; Stock Market Bull has been ignoring it.

Stock-Markets / Stock Markets 2016 Oct 06, 2016 - 06:13 PM GMT

By: Sol_Palha

Stock-Markets Irony is the form of paradox. Paradox is what is good and great at the same time.Friedrich Schlegel

We could sum it up in two words as to why earnings recession was, is and will be a non-event; Hot Money.  However, for some strange reason when it comes to the markets individuals happen to love long explanations even though in most cases the long answers reveal a lot less than the short ones do.  So let’s take a look at some of these meaningless statistics.


S&P 500 companies are going to report what will turn out to be the 6th consecutive quarter of lower earnings.  This is one of the longest earning slumps in over a decade and logic dictates that the markets should have been trending lower, but the opposite is taking place.

An investor following the old paradigm could not be faulted for making this statement “well then there is no way stocks can keep rising” or how long can they grow in such an environment

To get the right answer, you need to ask the right question.Such questions are irrelevant in today’s environment, and answering such questions is not going to provide you with any insights on how to play this market.   One person will state it cannot rise because of the negative factors listed above. The other penguin will say it can rise because inflation is low, unemployment is low, gas prices are low and a host of other rubbish.

It would be far better to focus on trying come up with the right questions. For example:

When will central banks stop flooding the markets with money?

When hell freezes over is the answer; this means that this market will rise for much longer than most naysayers can stay solvent. 

An even better question would be “what side of the market are the masses on.”

Now we are getting somewhere; the masses are decidedly negative, and that means until they embrace this market, it will not crash.

So there you have it. However, even this is not enough for many individuals. So let’s look at a few more meaningless reasons as to why earnings might be dropping.

Energy and other commodity based companies have seen their profits dive, and that is why these sectors have been the worst performing sectors for over 18 months. U.S. firms in the aggregate have reported lower earnings because energy, commodity and basic materials companies have seen their profits decimated by lower prices.  The energy sector will once again lead the way with massive losses.

A strong dollar; the dollar has been in an uptrend, and this affects multinationals profits.  This is simple to understand as we in the midst of a massive currency war; a strong dollar is not okay for multinationals and vice versa.

It also affects our exports as it makes our products more expensive overseas.

Conclusion

The only two things you need to pay attention to are; We have an extremely accommodative Fed and secondly the masses refuse to embrace this market. Both developments are extremely bullish for this market.

Data that is readily available to everyone is like news; the moment you hear it is no longer news but Gossip. 

A taste for irony has kept more hearts from breaking than a sense of humor for it takes irony to appreciate the joke which is on oneself. Jessamyn West

by Sol Palha

www.tacticalinvestor.com

Sol Palha is a market analyst and educator who uses Mass Psychology, Technical Analysis and Esoteric Cycles to keep you on the right side of the market. He and his partners are on the web at www.tacticalinvestor.com.

© 2016 Copyright Sol Palha- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in