Tuesday, June 26, 2012

Interesting Correlation Between Earnings Season and S&P Performance

Just a quick update that I found after scrolling through my MarketWatch news stream feed that I am really enjoying since its inauguration weeks back. The concise and live news stream website can be found here at MarketWatch. It is pretty much like the pages of Bloomberg and Reuters that presents a live-updating website that gives you up-to-date news articles but the MarketWatch people really did it artistically and very ergonomically; works like a charm for me.

Anyway, to the crux of my posting today - a fast one. I saw this interesting % comparison of the S&P 500 gain days during earning seasons and in the lull period in between. Let's not forget that Alcoa will kick off the earnings period in 2nd week July which is not a really far away date for many investors to feast themselves on some really good shopping buys.

In fact, I am quite amazed by the startling statistic that the S&P 500 does really well, with an average 3.14% gain during the earnings season as compared to an average decline during any other period. That really sieves out plenty of noise and gives us a better idea that this is when liquidity fueled rallies and hyped up demand starts to reveal. This is really where you will want to be trading given the additional firepower and price momentum that I have always been emphasising. 

Nonetheless, take these data with a pinch of salt since there isn't really real breakdown in the statistical calculations offered by FactSet Research Systems and probably some high gain days actually skewed the data to the benefit of the earning seasons performance. If I do find some time this weekend after work to lay my hands on some S&P 500 data I could do some further analysis and present it right here for more debate and discussion before the earnings period does sneak up on us soon.

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