Pretty Much a Stand Still Week
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FactSet is a critical weekly read for Radar.
To break it down a little:
Key Metrics
• Earnings Scorecard: For Q1 2018 (with 53% of the companies in the S&P 500 reporting actual results for the quarter), 79% of S&P 500 companies have reported a positive EPS surprise and 74% have reported a positive sales surprise. If 79% is the final number for the quarter, it will mark the highest percentage since FactSet began tracking this metric in Q3 2008 • Earnings Growth: For Q1 2018, the blended earnings growth rate for the S&P 500 is 23.2%. If 23.2% is the actual growth rate for the quarter, it will mark the highest earnings growth since Q3 2010 (34.0%). • Earnings Revisions: On March 31, the estimated earnings growth rate for Q1 2018 was 17.1%. All eleven sectors have higher growth rates today (compared to March 31) due to positive earnings surprises. • Earnings Guidance: For Q2 2018, 26 S&P 500 companies have issued negative EPS guidance and 21 S&P 500 companies have issued positive EPS guidance. • Valuation: The forward 12-month P/E ratio for the S&P 500 is 16.3. This P/E ratio is above the 5-year average (16.1) and above the 10-year average (14.3).
Double-Digit Earnings Growth Expected For All of 2018 For the first quarter, companies are reporting earnings growth of 23.2% and revenue growth of 8.4%. Analysts currently expect earnings to grow at double-digit levels for the remainder 2018. For Q2 2018, analysts are projecting earnings growth of 19.1% and revenue growth of 8.2%. For Q3 2018, analysts are projecting earnings growth of 21.2% and revenue growth of 7.0%. For Q4 2018, analysts are projecting earnings growth of 17.1% and revenue growth of 6.0%. For all of 2018, analysts are projecting earnings growth of 19.4% and revenue growth of 7.2%. FACTSET
In just a few days 80% of Q1 will be history; and it will take nearly three months before Q2 will begin reporting. Q3 will be new guidance. This is critical! 21.3% is current guidance for Q3. This will be a very important measure to keep an eye on! Inflections lower will be harsh! Interest Rates have been on the rise. Each rate increase will cause uncertainty and pain going forward. QE in reverse.
Valuations are at 24 times trailing. As of Friday’s close 2671.50 the market has begun discounting more reasonable valuations under the above circumstances. The market has already priced in a 7% effect lower of the above ingredients. Radar will continue to short rips as a main theme. Confluence of Quarterly, Monthly, Weekly and Daily pivots should present above average trades, IRHO. Key areas above 2698/2725/2803. Possible shorts at these levels, especially 2725’s and 2803. This weekly exercise is fundamental in nature.
I would like to emphasize the entire methodology is being spelled out here! You can’t read and observe enough!
Notes:
IMPORTANT WEEKLY VIEWS:
https://insight.factset.com/hubfs/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_042718.pdf This is a weekly MUST READ!
https://www.screencast.com/t/KW65TWxgIpF April 20 close 2671.50.
Last Trade ES Friday 4-27-18 2671.50. Hmmm…2671.50, coincidence? I think not.
https://www.screencast.com/t/EyxqRmrjcIUh
https://www.screencast.com/t/ycy4LKg5mk Very Important to View This!
https://www.screencast.com/t/OUcI6AqZ Earnings Guidance…Very Important.
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