It’s that time of the year we all look forward to.  No, not Thanksgiving, although we certainly look forward to that, but Q3 Earnings Season! It has begun and so far, the key data has been mixed on both economic and earnings fronts. On the ‘Up’ side Consumer Confidence was Up but the initial reading of Q3 GDP was a bit weaker than anticipated.  Some of the big names were a bit weak (such as Amazon- AMZN, Starbucks-SBUX, and Apple – APPL) but on the whole earnings have been, once again, better than anticipated.

According to Refinitiv, with over 56% of the S&P 500 Index* companies reporting, EPS growth for Q3 looks to have increased by almost 40% which is up from the prior week’s reading of 34.8%.  AND 82% of the companies that have updated their results have beaten expectations.  Finally, for the quarter, revenue growth is now forecast to be up 15.1% over the same period in 2020.

SO, it appears that investors are looking on the bright side and staying with the historical seasonal cycle script. We’ve included Ned Davis’ Chart showing the 1-year historical pattern for the S&P 500 Index, which suggests that there is more upside coming before the champagne starts to flow on New Year’s Eve.  Here’s the chart:

This of course is not a prediction, merely a chart of what things typically look like as we end a year. Here’s hoping the cycle continues!

Ron’s Market Minute

You may recall that we ended last week’s Market Minute with a comment that large cap stock indexes had broken out, and if we could see similar breakouts in small cap indexes and Junk bond indexes, we would be looking forward to blue skies in market land. 

Here’s the updated chart for the small caps- it now has also broken to the upside.

So that’ looks pretty positive. That leaves only the junk bond index (high yield index) which is wavering a bit but leaning toward a positive resolution. Cross those fingers!

Ronald P. Denk, CFP®
Investment Advisor
Denk Strategic Wealth Partners
10000 N. 31st Avenue, Suite C-262
Phoenix, AZ 85051
Phone (602) 252-8700
Fax (602) 252-8701
Toll-Free (877) The-Denk


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