4 Charts for Tuesday Afternoon -- Earnings, Natural Gas, Gold

Chart #1: Analysts Cut Earnings Estimates for S&P 500

Alcoa (AA) kicked off earnings season after the close.  Earnings beat estimates, though it came in a bit light on revenues. Importantly, it says global demand for aluminum is solid.

Analysts have been hacking away at earnings estimates. More than usual. On the chart, you can see how earnings usually go after a quarter ends.

Chart #2: Earnings Volatility

This chart from Bespoke Investment Group shows how volatile stocks in different sectors are on earnings day. Utilities stocks move the least in reaction to their earnings reports, with an average one-day change of just +/-2.15%.  Financial stocks are the second least volatile at +/-3.61%.

The most volatile? Technology stocks are the most volatile around earnings, with an average one-day change of +/-7.14%.  Consumer Discretionary stocks are the second-most volatile at +/-6.18%.

Read the original Bespoke report HERE.

Chart #3: Half of Power Plant Capacity Additions in 2013 Came from Natural Gas

Natural gas-fired power plants accounted for just over 50% of new utility-scale generating capacity added in 2013. Solar provided nearly 22%, a jump up from less than 6% in 2012. Coal provided 11% and wind nearly 8%. Almost half of all capacity added in 2013 was located in California. In total, a little over 13,500 megawatts (MW) of new capacity was added in 2013, less than half the capacity added in 2012.

Read the whole EIA report HERE.

Chart #4: Gold Bounces

(Updated chart)

And here are the screaming fundamentals for owning gold (with more chartage).

Oh, and Wall Street considers this next batch The Most Important Charts in The World. Do you agree?

How Much Longer Will the Bull Market Run?

There's a lot of market analysis out there today; I want to group some of it one place.

First, Barron's says the "Bull Market Looks Good, But Beware Ides of March". And it includes two charts ...

Barrons used this chart to illustrate that "March has been the home to some important turning points during the past decade and a half."

And then Barrons used this next chart to show that "Last week's upside breakout is still in effect" and technically speaking, the market looks strong.

Read the whole Barrons article.

the Reformed Broker says that talk of the past five years being "easy money" is retarded. Some excerpts ...

What they’re saying now is that “It’s been easy money” over the last five years, and that “anyone could’ve made profits.” Forgive me, but this is complete and total bullshit.

 It’s been one of the hardest environments in market history. Never before have investors’ wounds been so raw. Never before have there been so many voices polluting the popular consciousness with half-baked conspiracy theories and calls for collapse.

In the last five years, investors have dealt with a non-functioning congress, a downgrade of the US Treasury, mass unemployment, exploding deficits, record debt, a possible dissolution of Europe and a slow-motion crash in China and the emerging markets – and that’s before we even get into any specifics. 

And not only have the threats been unprecedented, the amplification of them – thanks to the desperation of the mainstream media for attention coupled with the advent of a whole new chattering class on social media – has been like an orchestra of clanging pots and pans. If you’ve caught some or all of what the market has given us these last five years, you are a hero. 

Read the whole thing

Third, Bespoke Investment Group points out that The bull market is entering its sixth year, and is less than two weeks from taking out the 1982-1987 stretch to become the fifth longest of all time

Bespoke points out in another article that, while investors have turned more bullish, they are far from overly optimistic.

Finally, Bloomberg makes the case that the market is NOT overvalued ...

While the S&P 500’s multiple of 17 times reported earnings is close to the average since 1937, it’s about 40 percent below where it was in 2000, data compiled by Bloomberg and S&P show.

The lower valuation reflects faster earnings expansion. Profits for S&P 500 companies have climbed an average 21 percent a quarter since 2009, almost double the growth rate during the dot-com boom, according to data compiled by S&P.

Go read the whole Bloomberg article.

Certainly it's a mixed picture. For now, we're all keeping our eyes on China .

Good luck and good trades.

We're In a Stock Pickers Market Now

Here's something interesting: stocks are no longer moving in tandem with the broad market. 

From the Wall Street Journal: "The 65-day average correlation of stocks fell to 0.52 in January. While the correlation briefly fell lower in 2011—to an average 0.51 in February—the measure rose to 0.84 later that year. A correlation of 1 would mean that all stocks traded exactly in lock step. From 2009 through the end of 2013, the correlation was an average 0.63."

My view: It's a sign of a maturing market; stock-pickers should do well. Index-buyers, not so much.

In fact, the current bull market is the strongest expansion since 1960

Why The Market's Next Move Could Be Much Higher

It's not a sure thing.  We could see even see another consolidation to the bottom of the range, especially if Goldman's recent warning that the market is "overvalued by almost any measure" gains some traction. But this chart also shows the upside potential ...

Source: Stock Trader's Almanac Blog, via Reformed Broker.