Saturday, August 21, 2010

Corporate earnings at dot-com peak level: Chart of the Day

The folks at Chart of the Day have updated and reissued their look at corporate earnings, see below. Their reference to the dot-com times suggests peak levels which would be bearish for the next direction. One could argue that the drop was overdone and artificially caused by the real estate and banking debacle. Then again, the economic recession does appear all too real. So can these earnings levels be sustained? That's the risk. And note when they refer to 13 months, that's one version of a Fibonacci number, hmm ... So take a look at what they're showing, from Chart of the Day:


Chart of the Day - Corporate earnings at dot-com peak level

With second-quarter earnings largely in the books (95% of S&P 500 companies have reported for Q2 2010), today's chart provides some long-term perspective to the current earnings environment by focusing on 12-month, as reported S&P 500 earnings. Today's chart illustrates how earnings declined over 92% from its Q3 2007 peak to Q1 2009 low which brought inflation-adjusted earnings to near Great Depression lows. Since its Q1 2009 low, S&P 500 earnings have surged (up over 800%) and currently come in at a level that occurred at the peak of the dot-com bubble. It is interesting to note that the original run-up in real earnings from Great Depression lows to dot-com highs took over 67 years. The current spike has taken 13 months.

- Where's the Dow headed? The answer may surprise you. Find out right now with the exclusive & Barron's recommended charts of Chart of the Day Plus.

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Quote of the Day
"There will always be bull markets followed by bear markets followed by bull markets." - John Templeton

Events of the Day
August 30, 2010 - US Open tennis tournament begins (ends September 12th)

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