The S&P’s Unspoken Profit Percentage
The S&P 500’s earnings report was better than expected, but this number hides something big that traders need to be aware of. A lot of the companies here only just barely beat analyst predictions, and many were well below where they should have been. But because of the fact that there were a few stocks that did much better than expected, the overall number is a little skewed. 66 percent of the companies listed surpassed their earnings estimates, which is a great number, but when you take out all of the ones that beat earnings by more than 5 percent, the total number is just 43 percent, meaning that 23 percent of companies were carrying the index.
Action like this is mathematically common, but it does indicate a deeper issue. It means that a lot of companies are struggling right now, but the overall number (which is what most people look at) doesn’t reveal this. It means that 34 percent of companies are below where they should be, and 43 percent are just barely there. That means 77 percent of companies are either just doing what they’re supposed to or behind schedule within the S&P 500. This is the most trusted and stable index out there, and if a deep-seated issue is present, investors need to know about it. And if investors need to know, short term traders need to know, too.
In fact, short term trading might be the best way to go with this right now. If the issues with profitability really are that prevalent, if you want to trade the fund, either as an ETF or an index binary option, you should be managing the time exposure that you have in order to minimize your risk. With a short term binary option, this is extremely well regulated and done automatically for you.
Right now, the market is moving upward. A lot of investors are scared to enter the market because of these high prices and recent turbulence in the markets, but short term traders do not need to worry about these things. If time control is paid attention to, entries and exits can be made before problems occur, assuming the market does drop in the near future. That’s the beauty of a disciplined short term approach. The problem is that most people do not have a method to manage this type of trading effectively. Setting up a trading plan is the only way to make sure that you have a plan in place to manage your money and make sure you are staying where you’re supposed to be. A few great trades early on can create a false sense of success, and this is a good way to get cocky and encourage you to make bad trades. With a trading plan, you are less likely to do this.
For the S&P, the next quarter’s earnings percentage is now at 7.6 percent. It was originally posted at 11.1 percent but the number has been downgraded because of recent events within the market. This is a big drop, actually, and is something to pay attention to. Experts agree that the markets are going to keep going up, but the rate is slowing down, which will likely deter more long term investors. But increases seem to still be expected for the next couple months, which is a very good thing for short term traders to know. If you want to go this route, just keep your eyes on what analysts are saying and read between the lines of what they report. Confirming info for yourself is also going to be a great tool. Profits are out there, you just ahve to be aware of how to get them.