— aleatory

Earnings: A Catalyst?

The smart money is on a resumption of the bear market.

The upcoming earnings season is thought to be the spark that reignites the bears’ tinder.  But as this report points out, firms have already downgraded themselves to expect nothing but bad news anyway.  There hasn’t been any warnings because the bar has been lowered to a point where no one will come in under it.  So I think this might not be the smoking gun the analysts are looking for.  Let’s face it, when something like that is telegraphed so far in advance the trades have already been made.  

Likely then it will be the visibility vacuum created after the deluge of numbers dries up that provides this rumour based market with sufficient uncertainty to go to the wall once more.  Looking forward the consensus is still predicting a 2nd half recovery, or at least a slowdown in the rate of economic decline.  This imbalance between a somewhat doveish expectation and the fact there is far more uncertainty built into the economy as things stand is the disconnect to sell into.

If we are to look at the market as a series of quarterly themes, it is the mid-quarter that can often tell the tale for the time frame as a whole.  

The phrase “sell in May and go away” is shaping up to be my key investment theme this summer…

1 comment
  1. Well Then… at aleatory says: 1 May 20092:11 pm

    […] the beginning of last month I surmised the likelihood was that this bounce would not last. However I thought there was enough optimism in […]

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