A lot of good comments and graphics you posted. To me it highlights even more all the possible scenarios that we are faced with over the next many months. We are not "masters of our fate" in any sense of the word. All we can do is follow along on a weekly basis keeping data and trying to decern in concert with the economic news of the day which way the market is going to go. Given reasonable probabilities going forward, some of the data will be good for the market and some will be bad. I will stick with my "guess" of the SOX and other indices continuing on a choppy path in their present channels.
This weekend(Saturday) marks the close of the 2nd calendar quarter for the year. Seventeen of the Group and SOXM stocks end their 2nd fiscal quarter as well. It used to be 18 stocks, but now that NVLS is no longer a separate entity, the list is now 17. I have revised the format and length of the table from previous postings since it was getting a little long in the tooth. For those who want the previous data as well, it is of course available from many previous posts. In a couple of weeks, data for the 17 stocks will become available to start filling in the results.
To summarize certain elements of the table, the following is offered.
1. Looking first at the bottom line of the table on the left side, it shows decreasing earnings with one exception for June 11 quarter as time progresses. The estimate for the June 12 quarter is less than last quarter by a small amount. I expect the actual results to be higher than last quarter, but the present estimate of 5.11 is way less than the actual of 9.30 for the year ago quarter. This is one of the main reasons for the SOX not being able to gain value compared to last year.
2. The yearly information on the right side of the table is even more devastating. The over 100 percent rise in the SOX from the bottom set from November 2008 to March 2009 to the present day is due in no small part to the huge recovery in earnings to 31.56 in 2010 compared to the 1.91 of 2009.
3. The earnings of 2011 exceeded that of 2010 by only 1.61, a percent gain of only 5.1 percent.
4. Now we come to the year, 2012. The present estimate is 23.20 compared to the actual 31.56 of 2010. Over these 2 years, that is a reduction in earnings of 8.36 or -26.5 percent. This is another reason for the under performance of the SOX index over the 2 years.
5. Optimism always springs eternal with earnings estimates. However, the earnings estimates for 2013 are only 32.06 compared to the 2010 actual of 31.56, a difference of 0.50 or +1.6 percent. This doesn't give me any confidence that the SOX will do any better in 2013 than it has been doing lately. Having said that, the SOX could pick up some enthusiasm from the fact that the estimated difference is +8.86 between the 2012 number and the 2013 number. This might propel the SOX to the high 400 levels if other outlooks of economic activity fall into place. Also, if other economic numbers show improvement, the estimates for 2013 would probably rise.
6. I think looking at these numbers in the table, and making frequent updates as we go forward will help us discern the direction of the SOX. Earnings are a very important indicator of how the sector is doing. Estimates can change quickly and radically as shown during the last selloff in the latter part of 2008, and as they did so, the SOX followed along to bottom in the 180 to 200 area at the end of 2008 and the beginning of 2009. The latest table of data since the end of August 2008 is shown at
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