E**O
发帖数: 1980 | 1 CHART OF THE DAY: The Best Market-Timing Indicator Says Stocks Are Headed
Down
Joe Weisenthal | Sep. 13, 2010, 11:42 AM | 4,870 | comment 7
In his latest note, Gluskin-Sheff's David Rosenberg explains what indicator
he would like to see that would make him bullish.
His favorite indicator: Revisions to analyst earnings projections.
He explains:
The 12-month forward S&P 500 earnings estimates, for example, peaked at $103
.61 per share right when the market peaked in October 2007. It bottomed,
believe it or not, in March 2009 (right at the market lows), at $60.08.
The consensus analyst earnings estimates on a 12-month forward basis peaked
this year in April — again, right when the S&P 500 did — at $94.79. It has
since declined for five months in a row and so far in September is down 1.3
%, to $86.74.
Based on this indicator, we've still got a way to fall:
This means that the time to start turning optimistic is when these earnings
estimates bottom out (ie, the downgrading process comes to an end). Now at
the profit cycle peaks, the analysts are typically about 20% too bullish on
their earnings estimates for the coming 12 months, which would then mean a
trough somewhere around $75 EPS this time around — if past is prescient. So
this is a level I would be looking for before sounding the all clear that a
lot of the “double dip” news is priced in ($75 would be a 4% earnings
haircut from where we are now on a 12-month trailing basis for operating
earnings). The consensus, meanwhile, is still at +11% in terms of profit
growth expectations for the coming year, which is unlikely to occur if
nominal GDP growth is flat-ish, as I expect. But at the peak, the consensus
was looking at +43% EPS growth for the next 12 months, so at least we are
well on our way in this process of eradicating the excess optimism in
consensus profit projections.
In any event, I always say that there is no alarm bell that rings at the
lows or the highs but this seems like a metric we can fall back on at some
point to turn more bullish. It worked like a charm in March 2009 (though
admittedly, it would have got us into the market too early in 2002 ... but
by mid-2003 the patience would certainly have paid off). |
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