Lombardi: Stock Market Commentary & Forecasts, Financial & Economic Analysis Since 1986

Earnings, the Debt Crisis and Domestic
Economic Data Are Shaping Up

Monday, October 24th, 2011
By for Profit Confidential

How earnings, the debt crisis and domestic economic data are shaping up right now.

The S&P 500 Index is looking pretty good right now. It is seemingly trying to break out of its three-month trading range, which is a very positive development for the stock market. Not only are investors coming back to the market because of more certainty towards the European debt crisis, but also corporate earnings are coming in solid and there’s been an uptick in domestic economic data. Clearly, this is a stock market that wants to go higher over the near term, providing there are no shocks to the system and the debt crisis doesn’t get much worse.

Third-quarter numbers are now pouring in and, for the most part, large corporations are reporting very good financial results with solid expectations for the future. Smaller companies are only now beginning to report their numbers and there is a lot of anticipation in the marketplace.

Investment risk for equities still remains high at this time, but the stock market has been looking for a catalyst to move higher for quite a while now. There hasn’t been any one big catalyst getting institutional investors to buy shares; it’s been a multitude of factors that are now beginning to come together (no one knows for how long) to create just a little more certainty in the marketplace.

As I’ve been writing (see The Correction Within the Current Bear Market Rally: Will it End Soon?), all the stock market needs is for the European debt crisis to be handled decisively and with a timetable, and capital markets will applaud the move and buyers will return. Institutional investors in particular have been sitting on the sidelines, building up cash waiting for an opportune time to add to positions. Now we’ve got some more positive fundamentals for the stock market so the players are beginning to make hay while they can.

Union Pacific Corporation (NYSE/UNP), which is an important railroad benchmark, reported third-quarter revenues that grew solidly and, in spite of higher prices for fuel and slightly slower growth in total shipments, the company grew its earnings based on higher prices. This is a very good sign for the domestic economy and for the Dow Jones Transports Average, which is itself looking like it’s about to break out of its recent trading range.

  • The Two Most Important Pictures Investors Will See This Year

    Within the next 90 days, a new economic catastrophe will be headed our way.

    It will blindside most Americans. And this time, the government and the Federal Reserve will not be able to help.

    It will cause a surge in personal bankruptcies and massive layoffs. It will make the recession of 2008 pale in comparison.

    It will crash retirement plans: I'm talking stocks, bonds, maybe even your own bank account.

    To get a firsthand look at what we're so worried about now, a catastrophe that has already been set in motion, I urge you to...

    See the two most important pictures investors will see this year FREE when you click here.

I don’t want to be too optimistic about the near-term trading action in the stock market. There’s so much out there that can derail (pun not intended) the market’s recent progress. But, with corporate earnings coming in solid once again and overall stock market valuations that are reasonable, a 10% gain for 2011 is not unreasonable as far as I’m concerned.

The key going forward is certainty—it’s not about how much sovereign debt is out there or whether Greece will default on its loans or not. Capital markets want certainty that policy-makers have a plan in place to deal with the situation. With this, the marketplace will go back to placing their bets.

VN:F [1.9.22_1171]
Rating: 0.0/10 (0 votes cast)
VN:F [1.9.22_1171]
Rating: 0 (from 0 votes)

This is an entirely free service. No credit card required.

We hate spam as much as you do.
Check out our privacy policy.

Mitchell Clark - Equity Markets Specialist, Financial AdvisorMitchell Clark, B. Comm. is a Senior Editor at Lombardi Financial specializing in large- and micro-cap stocks. He’s the editor of a variety of popular Lombardi Financial newsletters, such as Income for Life and Micro-Cap Reporter. Mitchell, who has been with Lombardi Financial for 17 years, won the Jack Madden Prize in economic history and is a long-time student of equity markets. Prior to joining Lombardi, Mitchell was as a stock broker for a large investment bank. Add Mitchell Clark to your Google+ circles

The Great Crash of 2014

A stock market crash bigger than what happened in 2008 and early 2009 is headed our way.

In fact, we are predicting this crash will be even more devastating than the 1929 crash…

…the ramifications of which will hit the economy and Americans deeper than anything we’ve ever seen.

Our 27-year-old research firm feels so strongly about this, we’ve just produced a video to warn investors called, “The Great Crash of 2014.”

In case you are not familiar with our research work on the stock market:

In late 2001, in the aftermath of 9/11, we told our clients to buy small-cap stocks. They rose about 100% after we made that call.

We were one of the first major advisors to turn bullish on gold.

Throughout 2002, we urged our readers to buy gold stocks; many of which doubled and even tripled in price.

In November of 2007, we started begging our customers to get out of the stock market. Shortly afterwards, it was widely recognized that October 2007 was the top for stocks.

We correctly predicted the crash in the stock market of 2008 and early 2009.

And in March of 2009, we started telling our readers to jump into small caps. The Russell 2000 gained about 175% from when we made that call in 2009 to today.

Many investors will find our next prediction hard to believe until they see all the proof we have to back it up.

Even if you don’t own stocks, what’s about to happen will affect you!

I urge you to be among the first to get our next major prediction.
See it here now in this just-released alarming video.