Leuthold Group analysts Andrew Engel and Eric Weigel say that for the past "five consecutive quarters, ther ratio of up/down earnings for the 'one month' results has declined from the previous quarterly ratio." A cause for concern? Not really, since that is typical of January and not as many companies report in January, because it takes longer to file full-year results. But, the analysts note, "The latest ratio is 1.82, and is now clearly below the 1984 to date average of 1.87. Earnings momentum is fading. "
But . . . there is always a but . . . the analysts say aggregate S&P 500 earnings were good in 2011 "despite macro uncertainties." They continue, "with close to 50% of S&P 500 companies having reported Q4 numbers, the YOY growth for 2011 appears likely to be around 15%, a wonderful result demonstrating the resiliency of companies in the face of monumental macro uncertainties." Further, about 60% of the companies who have reported Q4 results exceeded excpectations." (Emphasis NOT added.)
"The disconnect between the macro-picture and the company level micro picture is expected to continue in 2012, as global GDP expectations are trending down while the S&P 500 is expected to deliver top-line growth of 4.2% and a 10% EPS growth rate." The financial sector may show the strongest EPS growth in 2012; utilities "among the main sectors expected to exhibit negative growth."
The Leuthold Group, which runs the LCORX fund, among others, concludes: "We believe the stock market has further upside from here."