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
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
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

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Strong Earnings Growth is Bullish for Stocks

Stock-Markets / Stock Markets 2018 Mar 17, 2018 - 01:26 PM GMT

By: Troy_Bombardia

Stock-Markets

The S&P 500’s earnings growth is projected to be very strong in 2018: mid-high teens (i.e. 15-18%). Growth tends to come down as the year goes on, but even then the earnings growth rate will still exceed 10% for this year.

This is the second year in a row in which the S&P 500’s earnings growth exceeded 10%. The S&P’s earnings growth in 2017 was 13.1%.


Here are the historical cases in which the S&P’s earnings growth exceeded 10% for 2 years in a row. Historically, the U.S. stock market tended to go up.

  1. 2010
  2. 2004
  3. 2005
  4. 2006
  5. 1993
  6. 1994
  7. 1988
  8. 1965
  9. 1955

Here are those historical cases in detail and the U.S. stock market’s reaction.

2010

The S&P closed the year 12.7% higher than the previous year’s (2009) close. The S&P made a “significant correction” during this year.

2006

The S&P closed the year 13.7% higher than the previous year’s (2005) close. The S&P did not make a “significant correction” during this year.

2005

The S&P closed the year 3% higher than the previous year’s (2004) close. The S&P did not make a “significant correction” during this year.

2004

The S&P closed the year 8.9% higher than the previous year’s (2003) close. The S&P did not make a “significant correction” during this year.

1995

The S&P closed the year 34.1% higher than the previous year’s (1994) close. The S&P did not make a “significant correction” during this year.

1994

The S&P closed the year -1.5% lower than the previous year’s (1993) close. The S&P made a “significant correction” during this year.

1988

The S&P closed the year 13.9% higher than the previous year’s (1987) close. The S&P did not make a “significant correction” during this year.

1965

The S&P closed the year 8.3% higher than the previous year’s (1964) close. The S&P did not make a “significant correction” during this year.

1955

The S&P closed the year 24% higher than the previous year’s (1954) close. The S&P did not make a “significant correction” during this year.

Conclusion

As you can see, the S&P 500 tended to go up in the second year when the stock market’s earnings growth exceeded 10% for 2 years in a row.

The S&P 500 closed higher in 8 out of 9 of these historical years.

This suggests that strong earnings growth will propel the S&P 500 higher throughout 2018. Expect increased volatility, but the stock market will probably go higher.

By Troy Bombardia

BullMarkets.co

I’m Troy Bombardia, the author behind BullMarkets.co. I used to run a hedge fund, but closed it due to a major health scare. I am now enjoying life and simply investing/trading my own account. I focus on long term performance and ignore short term performance.

Copyright 2018 © Troy Bombardia - 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