By Jared Levy
A couple of weeks into this quarter’s round of reports and the overall results seem positive so far. At least that seems to be how the market has interpreted them. At the end of the day, when it comes to investing, it’s all about a stock’s relative value (for most of us, anyway). Earnings results can make or break a stock’s price trajectory, accelerating a current trend or reversing it.
Since June 12, which was the start of this earnings season, the S&P 500 has risen from 1070 to its current level of about 1105. While the broad index has managed to get above its 20- and 50- day simple moving averages (SMA), it still has yet to clear and hold above the 200-day SMA, which is currently 1,114.3.
This is in addition to resistance the index may encounter up around the 1,130 level, which was the high back on the 21 of June. The reality of all of this is that we are currently trading just above most of June’s levels, but far below the highs of around 1220 visited in April. While the majority of stocks seem to be meeting or beating estimates, there are a few areas where growth is just not there or a company is guiding lower.
Top line or actual gross sales/revenue seems to be the focus of many market participants. After all, a company can only cut costs so much. Without a real increase in revenue, there may not be much of a reason for companies to hire new employees, which is another looming specter for the markets. By the way, non-farm payrolls will be released next Friday ahead of the opening bell.