Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Strong Earnings Growth is Bullish for Stocks

Stock-Markets / Stock Markets 2018 Mar 17, 2018 - 01:26 PM GMT

By: Troy_Bombardia

Stock-Markets

The S&P 500’s earnings growth is projected to be very strong in 2018: mid-high teens (i.e. 15-18%). Growth tends to come down as the year goes on, but even then the earnings growth rate will still exceed 10% for this year.

This is the second year in a row in which the S&P 500’s earnings growth exceeded 10%. The S&P’s earnings growth in 2017 was 13.1%.


Here are the historical cases in which the S&P’s earnings growth exceeded 10% for 2 years in a row. Historically, the U.S. stock market tended to go up.

  1. 2010
  2. 2004
  3. 2005
  4. 2006
  5. 1993
  6. 1994
  7. 1988
  8. 1965
  9. 1955

Here are those historical cases in detail and the U.S. stock market’s reaction.

2010

The S&P closed the year 12.7% higher than the previous year’s (2009) close. The S&P made a “significant correction” during this year.

2006

The S&P closed the year 13.7% higher than the previous year’s (2005) close. The S&P did not make a “significant correction” during this year.

2005

The S&P closed the year 3% higher than the previous year’s (2004) close. The S&P did not make a “significant correction” during this year.

2004

The S&P closed the year 8.9% higher than the previous year’s (2003) close. The S&P did not make a “significant correction” during this year.

1995

The S&P closed the year 34.1% higher than the previous year’s (1994) close. The S&P did not make a “significant correction” during this year.

1994

The S&P closed the year -1.5% lower than the previous year’s (1993) close. The S&P made a “significant correction” during this year.

1988

The S&P closed the year 13.9% higher than the previous year’s (1987) close. The S&P did not make a “significant correction” during this year.

1965

The S&P closed the year 8.3% higher than the previous year’s (1964) close. The S&P did not make a “significant correction” during this year.

1955

The S&P closed the year 24% higher than the previous year’s (1954) close. The S&P did not make a “significant correction” during this year.

Conclusion

As you can see, the S&P 500 tended to go up in the second year when the stock market’s earnings growth exceeded 10% for 2 years in a row.

The S&P 500 closed higher in 8 out of 9 of these historical years.

This suggests that strong earnings growth will propel the S&P 500 higher throughout 2018. Expect increased volatility, but the stock market will probably go higher.

By Troy Bombardia

BullMarkets.co

I’m Troy Bombardia, the author behind BullMarkets.co. I used to run a hedge fund, but closed it due to a major health scare. I am now enjoying life and simply investing/trading my own account. I focus on long term performance and ignore short term performance.

Copyright 2018 © Troy Bombardia - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in