S&P 500 Earnings Appear to Reach Cycle Peak
Submitted by Wespac Advisors, LLC on October 9th, 2015- A peak in S&P 500 operating earnings were an early sign of market tops in both 2000 and in 2007.
- While market peaks were within a few months of the earnings peaks, the actual market reversals into bear markets occurred 5-7 months later:
- In 2000, S&P 500 quarterly operating earnings peaked in 2Q00; the market peak was in March 2000 and the ultimate market reversal occurred in November 2000.
- In 2007, S&P 500 quarterly operating earnings peaked in 2Q07; the market peak was in October 2007 and the ultimate market reversal occurred in January 2008.
- In this cycle, S&P 500 operating earnings, so far, peaked in 3Q14. So far, the market peak was in May 2015.
- In the last two market reversals, the cumulative growth rate of the S&P 500 was 3x the cumulative growth rate of S&P 500 operating earnings — this occurred again in 4Q14.
