2) upside earnings surprises
though less likely and
On the positive side, earnings surprises
and multi-year low valuations at 5.5 times the forward earnings could trigger a rally.
A strong catalyst in the form of i) avoidance of blacklisting in next FATF review, ii) upside earnings surprises
though less likely, and iii) positive surprises on upcoming macro reads (i.e.
If positive earnings surprises
remain near 78%, this will reduce the threat of hitting an earnings recession and may in fact show a slight growth in Earnings Per Share (EPS) for Q1.
Our results are consistent with our prediction: Heavily shorted lottery stocks exhibit reduced PEAD following positive earnings surprises
and magnified PEAD after negative earnings news, and low RSI show greater PEAD following positive earnings news and smaller PEAD after negative earnings surprises
This finding is particularly pronounced among firms that display a combination of (1) positive earnings surprises
and headquarters' locations close to cities hosting sports teams that lost in a big sports event, and to a lesser extent, (2) negative earnings surprises
and headquarters' locations close to cities hosting teams that won in a big sports event.
"Given the overall market's significant outperformance, we may need positive earnings surprises
to fuel the rally going forward.
Griffin and Lott's study showed that during a 17-year period, large positive quarterly earnings surprises
increased considerably but were essentially flat for earnings reported under mandatory GAAP metrics.
Ten sectors have higher growth rates today (compared to June 30), due to upward estimate revisions and positive earnings surprises
"Investors have gotten used to the FAANG stocks as an almighty force delivering outperformance driven by high growth rates, above-average profitability, and consistent earnings surprises
," Peter Garnry, head of Equity Strategy at Saxo Bank said.
He said earnings surprises
from index stocks could help sway the main index.
"The market is rewarding positive earnings surprises
much less than average and punishing negative earnings surprises
in line with recent averages," according to FactSet.