Warnings Season

I mentioned in my Sept. 6th article (see below) that I wouldn’t be surprised to see stock prices lift more before dropping. That’s exactly what happened in the past week. We appear to be at or near the end of a six-week uptrend. Following it, I expect to see a brief downdraft followed by a seasonal and powerful rally into the new year. That’s roughly the pattern we saw last year.

From Dick Green’s Big Picture column at Briefing.com:

The pickup in warnings is not surprising. Higher energy prices have sapped consumer spending power. Retailers have felt the impact and had to lower guidance. Energy-dependent firms such as airlines and transports have faced higher than expected costs. Technology companies are a whole issue in themselves. The slowdown in economic growth has made put expectations of a return to blowout growth trends of previous years back into perspective.

The next three weeks are likely to continue to bring earnings warnings at a more rapid pace than seen in quite some time. This has the potential to produce a very choppy market, and even to cause a significant, if brief, sell-off.

This doesn’t change our long-term moderately bullish view. The earnings growth is still good enough to ultimately provide a lift to the market. Still, the recent mini-rally should be seen as a bounce from oversold conditions rather than as the start of a steady rise in the market.

Warnings season presents risks to individual stocks and makes it a difficult time to look for stocks that might make strong upward moves. It has historically been a time for investors to take a cautious short-term approach regardless of the long-term view. This quarter looks like there could be a return to those historical trends.

This entry was posted in Uncategorized. Bookmark the permalink. Both comments and trackbacks are currently closed.
  • Here are your three options:

    Option 1: Annual Subscription (no refunds)

    For just $200 per year, you’ll receive everything listed above to completely upgrade the way you manage your investments. This is 17% cheaper than the monthly option. This is what I recommend:

    Option 2:Monthly Subscription (no refunds)

    If you'd like to try The Kelly Letter  without paying the full year, you can pay $20 per month.

    Option 3:Free Email List

    If you'd like to hear more from me but aren't ready to part with any money yet, you're welcome to join my free email list:

    Join the free list

    Thank you for the work you do. You're a household name here and my wife and I often discuss your letters on Sundays. My ten- and seven-year-old children recognize your name and will eventually be taught to invest using 3Sig and 6Sig. You've had an enormously positive impact on our investing and inspired me to look at the world in more rational and clear terms than I did years ago. I'm sure that thousands of others would say the same. Kelly Letter subscriber Matt Barnes
    Matt Barnes
    Product Line Director

    Join Matt and thousands of other rational investors to invest without stress.

    Subscribe to The Kelly Letter  now!

Bestselling Financial Author