Originally appeared on Forbes on October 1, 2015. The Dow Jones Industrial Average ended the first three quarters of 2015 in correction territory down 8.6% year-to-date and 11.3% below its all-time intraday high of 18,351.36 set on May 19. Six of the 30 Dow stocks ended September in bear market territory, down by more than…
Many years ago, if you asked someone what drove stock prices, they would give you a simple, honest answer: earnings. If a company had strong earnings, and those earnings were projected to grow, then the stock price was strong. If not, then not. Take a time machine back to that same person and tell them about…
Now that even permabulls are openly discussing a recession as a possibility for the US economy, a comparable and far more dire scenario is making the mainstream rounds: a China hard-landing. Earlier today, SocGen decided to model out what what would happen to equities in just such a scenario. In fact, it took it one step…
Global markets had a good day today. The Nikkei rose 1.0% and the Euro STOXX 50 was up a comparable 0.93%. In contrast, our benchmark S&P 500 vacillated at the open, traded in the shallow red and then sold off to its -0.76% mid-day low. It spent the rest of the day grinding in a…
The economic news continues to come in weakly. Alcoa will kick off the 3Q earnings reports on Thursday, October 8 after the bell. We have been getting some advance notice of changes in earnings forecasts. The overall picture of the economy is not particularly good. So far we have seen a noticeable divergence between corporate…
“Profit margins are probably the most mean-reverting series in finance.” -Jeremy Grantham Just over a year ago I wrote a brief post simply pointing out how peaks in profit margins over the past couple of decades have preceded major peaks in the stock market. At the time, it looked as if record profit margins might be in…
Most of the gains were posted pre-market, but bulls were able to hold gains after a couple of days of bullish strength. The S&P is on course to finish with a spinning top doji. The 50-day MA is just overhead and close to 2,000 psychological resistance. Technicals are close to turning net bullish. The…
Two persistent myths convince gold bears that the price of gold will remain low – a looming series of interest rate hikes from the Federal Reserve and the fact that gold did not rally during the last round of quantitative easing. Peter Schiff explains why both of these myths are ready to die following Friday’s…
We have been talking a lot about China, emerging markets, and commodities price declines over the past few months. In short, we see a slowdown for some economies and an attendant decline in share prices for firms like Caterpillar–makers of mining and construction equipment, other materials firms, and perhaps biggest of all, energy firms involved…
The chart above depicts the individual sector performance since the May highs in the markets. This gives a good idea about relative strength and weakness. The weakness is obviously coming in the Energy, Healthcare, and Materials sectors. Let’s take a look at their performance during the rally off last week’s lows. The energy sector (XLE)…
