S&P 500 corporate earnings update / S&P 500 tests key support

Click to enlarge.

The S&P 500 is sitting at critical technical support near its 200-day moving average, as well as the longer-term 50-week moving average on the attached chart.

The upward-sloping trend line off the 2008 – 2009 lows comes into play right around 1,250 so we should be seeing solid technical support in this area over the next few weeks.

Fundamentally, according to ThomsonReuters data, the “forward 4-quarter” earnings estimate for the S&P 500 was $108.62, down from $108.75 last week and unchanged since early April, as we entered the new quarter, leaving the market trading at 12(x) earnings as of Friday’s close.

While y/y earnings growth for q1 ’12 was expected to be 3.1% on April 1, since earnings started the actual earnings growth is closer 8%, and 5.8% ex Apple.

For q2 ’12, or the current quarter, analysts are looking for 7% y/y growth, down from 9% on April 1.

The ThomsonReuters data calls for “mid-single-digit” earnings growth until q4 ’12:

q1 ’12 = 8%

q2 ’12 = 7.4%

q3 ’12 = 4.6%

q4 ’12 = 15%

Two interesting fundamental observations we read on Bespoke over the weekend:

1.) Economic data – of the 21 economic indicators Bespoke tracked last week, 18 were weaker-than-expected, in what Bespoke called “the worst week ever” for economic data;

2.) Only 13% of S&P 500 stocks are trading above their 50-day moving average.

The stock market is very oversold, and yet earnings should be one seen as one fundamental positive.

Oracle is the only one of our companied scheduled to report earnings this week – June 8th.

Watch 1,250 on the S&P 500.

(Long AAPL, smaller position in ORCL)

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.