Morning Market Thoughts

It has been a crazy month for both me and the market. Im taking my last mid term today and had my economics mid term last week while I have been working on average fifteen hours a week in one of Lehigh’s theaters in preparation for our musical Violet. The markets have gone from possibly breaking down into another ten percent drop in start of October to getting close new all time highs fro the S&P.

Its interesting to note that this turn around came in October. October and November are some of the best performing months for the equity markets and the retail sector specifically. While this market reversal happened we have had earnings being reported by America’s company. Earnings growth is tracking about -2% YoY and about +5% ex Energy. about 63% of companies have beaten on EPS, 40% have beaten on ales and only 30% have beaten on both. This concerns me especially after this big rally. We now have companies trading at higher P/Es with very little earnings growth to justify it. That being said there are individual stocks and sectors that have been killing it. Consumer Discretionary earnings are up 10.2% YoY, 4.2% QoQ, 4.3% YoY and 1.7% QoQ on sales. Healthcare earnings are up 11.7% YoY, -0.3% QoQ, 9.4% YoY and 1.5% QoQ on sales. Consumer Discretionary has had 53% beat on EPS, 45% beat on sales, and 30% beat on both compared to the S&P at 63%, 40%, and 30%. Healthcare has had 73% beat on EPS, 62% on sales, and 49% beat on both which is the highest percentage beat on both of any sector in the S&P. All and all I say to be cautious out there. If you put money to work in early October, congrats, if you missed the opportunity then stay patient add look for individual names to add to. The market does have a chance to make another big leg higher if it breaks it’s all time high that was set in May. This break above the all time high would mean a break out above nearly four months of consolidation. It could be a big move.

Song: