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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (60047)	10/7/2000 11:23:30 AM
From: Les H	Read Replies (2) \| Respond to of 99985

Options Fear Signals Quiet thestreet.com

To: Les H who wrote (60047)	10/7/2000 11:54:40 AM
From: HairBall	Respond to of 99985

Les: As always thanks for the links...reading worth the time. Regards, LG

To: Les H who wrote (60047)	10/7/2000 2:05:18 PM
From: Les H	Read Replies (1) \| Respond to of 99985

Motorola Profits to Test Mobile/Telecom/Chip Sectors hoovers.com First Call MARKET EARNINGS Although the downward revisions in 3Q00 earnings estimates continue to be no more than the normal trimming, despite more negative pre-announcements than normal, there has been far more than normal trimming in some sectors. However, the estimate slashing in those sectors has continued to be offset by continuing upward revisions for the energy sector and a relatively constant estimate for the technology sector despite the major hits from the Lucent and Intel warnings. Earnings warnings applicable to 3Q00 now stand at 257, up 25% from the 204 at the same point in 3Q99. It is only in the last week or so that the number of warnings broke out from running about the same as in 3Q99, a normal quarter for pre-announcements. On 1 July, the expectations for S&P500 3Q00 earnings growth was 18.8%. Since then it has only been trimmed 2.5 percentage points to 16.3%. Since the beginning of the quarter, we have been saying we expected the trimming would be no worse than normal, and that the analysts would take the estimates down to about 16%, that the final reports would beat the estimates by the typical amount of about 3%, implying a final result of 19%. That still seems the likely outcome. Even though the warnings are now starting to be more numerous than usual the magnitude of many of the warnings have been fairly modest, hence the limited revision of the aggregate estimate. However, they may be an indication of where greater magnitude warnings may occur in 4Q00. The sectors most vulnerable in 4Q00 are the ones where the greatest downward revisions are occurring for 3Q00. The current 4Q00 estimate for consumer cyclicals appears particular suspect. Given the Fed induced slowing of US consumer spending, now accentuated by worries of higher heating and gasoline prices, it seems unlikely that consumer cyclical sector earnings are going to be down 1% in 3Q00 and rebound to 10% growth in 4Q00. Stand by for the slashing of 4Q00 estimates as 3Q00 results come out in October and November. While it seems likely that it will be more than the normal trimming, it remains to be seen how much so. But the market will likely continue to dislike the increased risk that the cuts could be well below the normal trimming. The market needs some confirmation that the landing is likely to be a soft one. Strong earnings growth of 19%, or even 18%, in 3Q00 would not be a confirmation. It has to come from estimates holding their own with no more than the normal trimming or so in October, and then continuing to do so in November.