October: If October ended today, this month would be one of the strongest Octobers since 1928 and the strongest since 1982 for the S&P 500. The other strongest Octobers were followed by a strong market in the following year.
Earnings: Most people would credit the recent rally in the market to subsiding fears related to Europe, but there may be another less publicized reason for the strength. While the media may not be highlighting this, earnings season has been good. So far, 106 companies in the S&P 500 have reported. Three times as many companies have surprised on the upside versus the downside, 75% are exhibiting positive earnings growth, and the growth rate so far in EPS is almost 14%. The table below breaks down earnings season by sector; so far, every sector is surprising on the upside:
AAPL: I noticed Apple was down again today in a strong market. This has not been a common occurrence, but has happened more recently. We looked back and found that in the past five years, up until this month, when the market is up more than 1.5%, Apple had been down only 8.6% of the time. Interestingly, in the past month, Apple has been down 50% of the eight days the S&P 500 has been up 1.5% or more. Is this a sign that Apple is beginning to weaken and may not show the same relative strength versus the market as it has over the past several years or is it just a short-term anomaly?
Market Today: The market was strong today on good earnings and optimism regarding a European debt crisis resolution. Sectors were up across the board with notable strength in homebuilders and healthcare stocks.
Have a great day! Brent
