Four Positive Weeks in a Row – A Trick or Treat?
I simply could not help myself–like the massive bowl of candy sitting in my home (specifically the little mini Butterfingers), it was too hard to resist using a Halloween title for today’s post.
And for the record, I don’t think it’s a trick.
The market has been rallying now for the past four weeks and while the news about the Eurozone’s plan to address Greece’s debt issues was well received, investors had been buying equities for the three weeks prior to that news.
Last week marked the fourth week in a row that the Standard & Poor’s 500 Index (S&P 500) was a winner. As of this writing, the S&P 500 is once again positive for the year and depending on how the market closes today, October could end up being the best month for the S&P 500 since 1974. Maybe this October will be referred to in the future as the “Great Bear Killer of 2011.” That would be a nice treat – and less fattening than those Butterfingers.
Mmmmm – Butterfingers.
For the week, the Dow Jones Industrial Average (DJIA) gained 3.58% to finish at 12,231, the S&P 500 gained 3.78% to finish at 1,285 and the Nasdaq Composite Index gained 3.78% as well to finish at 2,737. The Russell 2000 Index, which tracks the performance of small capitalization stocks, finished up a whopping 6.82% finishing at 761.
The earnings season is off to a pretty good start. Just about two-thirds of S&P 500 companies have reported Q3 results so far. This week we will see 116 post their earnings reports. So far, I’ll classify the results as “solid” relative to what the analysts expected. 71% of companies beat their EPS estimates (profit) and revenues are tracking toward a solid 10% increase year over year. Guidance for future earnings has been better than what I think the market had priced in, though 9 of 10 sectors have seen fourth quarter 2011 estimates reduced. The one sector where Q4 estimates have held steady is technology – which we have loved since 2008 and remain over-allocated in.
BOO!
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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Stock investing involves risk including loss of principal. The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries, and widely held by individuals and institutional investors. The Standard & Poor’s 500 Stock Index (S&P 500) is an unmanaged capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The NASDAQ Composite Index measures all domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. The Russell 2000 Small Stock Index is an unmanaged index generally representative of the 2000 smallest companies in the Russell 3000 Index. The Russell 2000 is an unmanaged index generally comprised of companies with lower price-to-book ratios and lower forecasted growth values.
David B. Armstrong, CFA
President & Co-Founder
Dave got into the industry when he discovered his passion for finance in his mid-20’s. He’s a combat veteran and served as an officer in the United States Marines Corps on both active duty and in the reserves, retiring at the rank of Lieutenant Colonel. While serving on active duty, Dave was unable to spend money on deployments, so he became a self-taught investor. Along with a few bucks cash as a bouncer, his investing performance grew to be good....
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