Home 2021 Stocks: Path of Least Resistance is North

Stocks: Path of Least Resistance is North


#stocks #trend #sentiment


NAS Comp closed at record high and the DJIA marked a record high intraday in mixed session

On 31 December 2020 S&P 500 earnings for Q-4 were projected to decline 9.2% Y-Y. That estimate did not come true“– Paul Ebeling 

The blended earnings growth rate, which takes into account the actuals for the companies that have reported and the estimates for the companies that have not is 1.7%. No minus sign there.

That marks the 1st time since Q-4 of Y 2019 that S&P 500 earnings will be up on a Y-Y basis, monumental in light of the challenges posed in the Q, namely targeted shutdown measures to contain the spread of the virus, a deterioration in the labor market, and the uncertainty created by the delay in getting the vaccine and passing additional aid/relief/stimulus.

The 1.7% growth rate is not a rapid growth rate, yet there is some very meaningful momentum there.

This transition to positive earnings growth in Q-4, when growth was not expected, is important for the market. As it represents the green shoots in the earnings recovery story that market participants expect to fully blossom later this year.

That expectation is seen in consensus estimates that call for 21% earnings growth in Q-1, 49.4% growth in Q-2, and 23.4% growth for FY 2021.

The absolute change in those estimated growth rates is significant, as is the trend.

Market participants like a rising trend line and that is what they are seeing with earnings estimates.

Thursday, the benchmark US stock market indexes finished at: DJIA -7.10 to 31430.70, NAS Comp +53.24 at 14025.79, S&P 500 +6.50 at 3916.38

Volume: Trade on the NYSE came in at 1-B/shares exchanged

HeffX-LTN’s overall technical outlook for the major US stock market indexes is Bullish with a Very Bullish bias in here.

  • Russell 2000 +15.6% YTD
  • NAS Comp +8.8% YTD
  • S&P 500 +4.3% YTD
  • DJIA +2.7% YTD

Looking Ahead: Investors will receive the preliminary University of Michigan Index of Consumer Sentiment (MSI) for February Friday

Have a healthy weekend, Keep the Faith!

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Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he is the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.