Chart of the Week: Earnings and Subsequent Market Gains

Dividing the S&P500 earnings gains into quintiles and the subsequent market performance:

S&P earnings “Sweet Spot”
Source: CBS MarketWatch

“When quarterly earnings were more than 10 percent lower than comparable results a year earlier, but not more than 25 percent lower, the S&P 500 grew at an annualized average of 28.6 percent,” observes Mark Hulbert. Note the fastest year over year earnings growth did not produce the best market returns.

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Quote of the Day
“Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they recover their senses slowly, and one by one.” –Charles MacKay

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