The Simple Question That Answers All
- Joshua M Brown
- October 15th, 2012
Will the market keep rallying?
Yes, if earnings - real and estimated - begin turning higher again.
Otherwise, the rally is dead or on ice until profit growth resumes.
My guess is we've come as far as we could have on improving sentiment and Fed-driven multiple expansion for the major averages. Now we'll see if all of this goodwill and easing can kick in to justify a continued run, another leg.
If not, we pause.
So, ask yourself:
Is the weak earnings picture for Q3 the start of a new trend toward lower profitability or a bump on the road to full recovery?
Simple question. It will answer all.
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The Reformed Broker is a blog about financial markets and the economy. Joshua Brown is a New York City-based investment advisor for high net worth individuals, charitable foundations, retirement plans and corporations... More.