Earnings

There is no dispute that corporate earnings are directly responsible for the underlying, long-term trend in the stock market. Although prices may fluctuate in a wider range than do earnings, due to the emotions and expectations of investors, earnings ultimately determine the value of the stock market and its ability to provide a return to investors. Standard & Poor’s publishes on their Web site [5] the anticipated earnings for the S&P 500 out several years ahead. They publish the actual earnings with a considerable delay, usually about a quarter or three months. However, the near-term estimates are accurate for calculating the moving averages until the real numbers come in. I use one-month delay between the month-end earnings estimates and the crossover signal, believing that one month is enough time to learn of reported earnings figures. Usually they are out in several weeks after the quarter end.