It seems that the latest rational behind the rally is a mix of technical indicators & the belief that "the worst news is behind us" as we near the end of the warnings seasons.
Yet, we are now entering the earnings period. The most important question to ask near term is whether MOT, ET, SONS, etc. is representative of the earnings that we will see in the next few weeks. I believe they will be. As such, "the worst" is not in yet & we will instead be facing a period where many of these stocks get re-adjusted to their "new" outlooks & earnings prospects. Surely, we'll get alot of "little visibility." This, after all, has become the easiest way to dodge a negative outlook. But, the numbers in combination with valuations, will speak for themselves. We saw this in SONS tonight. Even if SONS numbers we're good (which only Maria B on cnbs could cheerlead to), the bottom line is that SONS fundamental valuation is sky high. This $18 stock will be $5 by next year. Guidance was equally abysmal. Ditto on MOT.
So, here we sit. Most of the "warnings" are finished and the earnings are just beginning....in a bear market, in an obviously slowing economy. Is "the bad news" already in? I answer that with a resounding no. Instead, what we saw the past few days is no more than a perfectly timed bear market rally. We had the "oversold" comments, the cheerleading comments of "the warnings are in so the bad news is in" & we have a slight break from night after night of uncertainty (which the warnings present). It was a breathing period. A sigh of relief after a huge battering. Now, we have earnings. They will tell the tale. And, as we all know, that tale is not good especially in a market where many of the current alleged "values" are still historically expensive.
While warnings are prospective & often in a range, earnings are definite (even if definite bs accounting gimmicks). If I were holding longs, I sure wouldn't feel good going into earnings.
Bulls can cheer "warnings are over, warnings are over." Bears can sit back, relax, and whisper "psss, nice guidance <g>."
Of course, after earnings, the puppet-masters will again proclaim "the bad news is out & valued in, expectations lowered, yadda yadda." A quick turn in the economy (lol, that's hilarious...."a quick turn in the economy"....) will be their only savior from watching their bloated high flyer become the single digit piggy it has always deserved to be.
Chris
P.S. Dennis, good luck & take care. |
