Monday, October 29, 2007

More On Third Quarter Earnings

From IBD:

What does this tell us?

1.) The gains in consumer staples, health care and possibly telecom indicate more recession resistant economic areas are doing well.

2.) The cheap dollar is leading to rising exports which is helping industrials.

3.) Consumer discretionary is hurting. That indicates the US consumer may not be that healthy.

4.) Financials are taking a terrific hit from the subprime mess.

5.) I am completely mystified by tech's earnings gains. My main thought there is this is largely driven by growth in foreign markets, although any other observations would be great.

6.) the XLBs (Basic Materials ETF) is up 30.53% over the last year and 24.9% YTD. This ETF has been a market leader this year. But with earnings growth coming in at 0% so far this quarter, I have to wonder if traders will start to consider booking some profits for year end window dressing. The same can be said of energy (XLE), which is also a market leader of this rally, up 36.25% over the last year and 31.50% YTD.