Have S&P index companies' earnings bottomed? If so, still at low levels: Chart of Day

Is the earnings glass half empty, or half full? How you answer that depends partly on your perception of whether they will continue to improve. But what about the fact they fell even farther down than the companies' stock prices? "Chart of the Day" has produced an update of their S&P 500 companies' earnings chart. It shows that earnings fell not just under the levels of the 1990's - but even well under the levels of the 1960's! Here, we do trade based on technical indicators and not primarily based on valuation measures like price-earnings ratios. But this remains eye-opening stuff.

You must note that it's inflation-adjusted information they charted (below). But so is their long-term chart of the stock market companies' stock price index. That means you can compare and see that the earnings are still relatively lower. Their inflation-adjusted stock market chart is of the Dow, but that's close enough to perceive the disparity.

Let's suppose earnings did bottom already. Does it mean they will skyrocket back up? I don't think we can assume that. If nothing else, there's likely to be a test back or fall back before they really get going again. I also don't know that we can assume that the low has been seen. Here's what the folks at Chart of the Day show:

Chart of the Day - After a 92% decline, S&P 500 earnings have bottomed
November 20, 2009
With a large majority of third-quarter earnings in the books (87% of S&P 500 companies have reported for Q3 2009), 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 its Q3 2009 trough, which makes it easily the largest decline on record (the data goes back to 1936). On the positive side, S&P 500 earnings bottomed and are moving up sharply.

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

Quote of the Day
"If a man is offered a fact which goes against his instincts, he will scrutinize it closely, and unless the evidence is overwhelming, he will refuse to believe it. If, on the other hand, he is offered something which affords a reason for acting in accordance to his instincts, he will accept it even on the slightest evidence." - Bertrand Russell

Events of the Day
November 26, 2009 - Thanksgiving Day

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