Monday, October 8, 2007

Earnings Start With Lowered Expectations

It is the start of earnings season. With the market in rally mode after a half point rate cut and the correction in the jobs number, the market looks to get stronger and stronger. Below is an updated chart of the S&P 500 Index with the opening range levels marked in the red dashed lines. The top pane compares two sets of indicators which measure different time frames of money-flows. The market is in bullish mode when the indicators are above zero and the blue histogram bars are greater than the red line. The next new target is 1571.44.

S&P 500 Index

NDX Nasdaq 100 Index

The potential target for the NDX-Nasdaq 100 Index is the 2218 area. The money-flow comparing pivots and volume show pretty good strength. With earnings estimates being lowered, it should be interesting to see the reaction when companies miss or beat their earnings estimates. Will their growth rates maintain or will people just be happy that they beat or match want analysts project?

Below is the VIX index which shows some of the fear has left the market. This could be a bad thing!

VIX CBOE Volatility Index

Below is something to think about when comparing stocks with the lowered earnings expectations over the next few weeks. Avoid pigs with lipstick.

Lowered Expectations

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