2Q17 earnings season kicks off next Friday with four banks - Citi, JPM, Wells And PNC - reporting results, accounting for roughly 5% of the S&P 500 by market cap. 89% of the S&P500 is expected to report earnings by August 4th. And while most analysts expects a beat vs. consensus (+7% EPS) in 2Q, BofA warns that analysts’ forecasts continue to look overly optimistic for the 2H, particularly in 4Q.
Authored by Lance Roberts via RealInvestmentAdvice.com,
There are two important areas of the market that have historically been good leading indicators of the strength, or weakness, of the markets and the economy. Oil and retail.
For dip-buyers in the S&P 500, 2017 has actually been a tough year... because there hasn't been any.
As JPMorgan notes, 2017's 3% intra-year decline is the smallest since 1980 (tieing with 1995 which saw a 34% return)
This 3% drawdown (for now), continues a 6 year streak of drawdowns that are dramatically below the longer-term average of 14.1% drops intra-year.
But what happens now that Central Bank balance sheets are set to stop their expansion?
Stocks are now in very serious trouble.
The S&P 500 has fallen to test its “election rally” trendline. If the market breaks down here, there’s essentially one giant “air pocket” down to 2,200 or so.
The bad news is that high yield credit (HYG), which leads the S&P 500, has already broken its respective trendline. This is a serious “risk off” signal.
Indeed, it gets worse. HYG is in fact breaking out of a massive rising wedge pattern that could very well mark the end for the 9 year bull market in risk.
What would this mean for stocks?
S&P futures are little changed following yesterday's rout even as Asian and European markets continued selling; the pound slid on poor factory data, the yen tumbled after the BOJ intervened to stabilize the JGB bond market, precious metals flash crashed early in the session, while the selloff in oil accelerated despite yesterday's massive inventory draw, although at least yesterday's sharp bond tantrum has stabilized.