The earnings apocalypse has not yet materialized

The archetypal harvest of net reports was a disappointment, but astir of the aboriginal slope reports connected Friday were decent, and Bank of America besides reported net supra expectations Monday morning.

Thirty- 5 companies person reported third-quarter net truthful far. Of that group, 68.5% person beaten estimates, little than the anterior four-quarter mean of 78.1% but higher than the historical mean of 66.2%, according to Refinitiv.

Like the 2nd quarter, galore person been anticipating an net apocalypse — a melodramatic illness successful earnings.

The grounds truthful acold suggests a contraction but not a collapse.

The third-quarter estimated net maturation complaint for the S&P 500 is present 3.6%, down from 11.1% connected July 1. Excluding energy, however, the maturation complaint drops to minus-3.1%.

Those immense lipid profits person concealed that 9 of 11 S&P sectors person already seen downward net revisions. Technology has seen a important downward revision — from up 5.8% connected July 1 to minus-4.0% today.

There person been akin downward revisions successful the 4th fourth arsenic well. Technology has gone from an expected summation of 8.6% connected July 1 to minus-0.4% now, for example.

Bottom enactment connected earnings: the marketplace has already priced successful a overmuch little aggregate ( P/E ratio), anticipating a slowdown successful the economy. Everyone is present anticipating that net volition beryllium slashed for the 4th quarter, and that volition beryllium the impetus for different limb down successful the market.

The symptom commercialized (the commercialized that would origin the top astonishment successful the market) would beryllium that net travel successful adjacent to expectations, which could origin the aforesaid rally that we saw aft the June lows, erstwhile different expected net apocalypse did not happen.

If you're looking for signs of a bottom, you're not going to find it successful the method indicators. Technicians were afloat of gloomy comments implicit the weekend.

"Since the expiration of this summer's carnivore marketplace rally successful mid-August, the equilibrium of Demand and Supply materially weakened," Lowry, the nation's oldest method investigation service, wrote to clients implicit the weekend.

No kidding: rallies truthful acold (there person been several, successful May, June, July, September and October) person met with small buying enthusiasm (heavy volume).

"Historically, specified patterns are signs of a banal marketplace that is susceptible to further intermediate-term downside," Lowry wrote.

A elemental indicator of momentum, the advance-decline line, fell to a caller carnivore marketplace debased past week.

"This reinforces the market's fragile authorities and suggests further downside for stocks arsenic breadth often leads price," Lowry wrote.