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All 2018 gains are gone…
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The Biggest Sinners in the Dow.
All 30 companies in the Dow Jones Industrial Average have now reported earnings for the third quarter. As required, they reported these earnings under Generally Accepted Accounting Principles (GAAP). These standardized accounting rules are supposed to allow investors to compare the results of different companies. But that’s too harsh a fate for many of our corporate heroes, and so they proffer their own and much more pleasing accounting strategies – as expressed in “adjusted” earnings and “adjusted” earnings per share (EPS).
Of the 30 companies in the DJIA, 14 reported “adjusted” or “non-GAAP” earnings in Q3 that were significantly higher than their GAAP earnings. Total “adjusted” EPS of these 14 Dow components exceeded their total EPS under GAAP by 26%! Nice work!
Was it ever in doubt?
Oh just one thing…
Earnings expectations have plunged over 6% since the last time The Dow was here.
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– Behold: Insanity (ZeroHedge, Aug 24, 2015):
This is not normal… Dow futures moved over 4,500 points intraday today!!!
– BofA Pushes The Panic Buttton: “Dow Theory Sell Signal, Key Supports Broken, Semis Sinking, No Capitulation” (ZeroHedge, Aug 21, 2015):
Dow Theory flashes sell signal. S&P 500, NYSE & Russell 2000 all closed below key supports.
No tactical capitulation. Not 90% down. ARMS below 2.0. 10-day total put/call ratio not showing panic. But VXV/VIX oversold.
All the charts you need here:
– Dow-Stockalypse-Wow: Bonds & Bullion Soar As Equities Crash (ZeroHedge, Aug 20, 2015)
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– Dow Dumps 1200 Points From Record Highs To 7-Month Lows – Unchanged Since The End Of QE3 (ZeroHedge, Aug 20, 2015)
– Dow Down 1000 Points From Highs, Small Caps Swing Red Year-To-Date (ZeroHedge, Aug 7, 2015):
But but but… the smart men on TV said a) rate-hikes are priced-in, 2) rate-hikes are bullisher for stocks than rate-cuts (why would The Fed raise rates if everything was not awesome?), and thirdly) buy the dip! It appears The Fed knows it is going to need some ammo sooner rather than later…
From 18,351.36 on May 19th, The Dow (cash) is now at 17,345…
But it’s not just the mega-caps, The Russell 2000 (small caps) has tumbled back into the red year-to-date…
– Dow Dumps Almost 1000 Points From Highs To 6-Month Lows, Crude Carnage Continues (ZeroHedge, Aug 6, 2015)
– Dow Over 18,000: Stocks Surge To Record-est Highs, Bond Bloodbath Ensues (ZeroHedge, Dec 23, 2014)
– Historic Short Squeeze, Biggest In 3 Years, Sends Small-Caps Soaring; Dow Tops 17,000 (ZeroHedge, Oct 28, 2014):
n a strangely familiar case of deja vu all over again, stocks surged (alone in the cross-asset class world of economic reality) on the day before an FOMC statement. The Russell 2000 has had its best 10-day run in 3 years, best day of the year, and managed to scramble back to its 100- & 200-day moving-average. Dow 17,000 was another key technical level that was achieved. S&P 500 was levitated on volume around 40% below average into the green for October. VIX was banged under 15 and tracked stocks. Away from the equity-vol complex, asset-classes were unimpressed – HY credit, bonds, JPY, and the USD all diverged from stocks. USD weakened slightly, and commodities all gained on the day. TSY yields were up 2-3bps and HY closed practically unchanged. “Most shorted” stocks rose almost 3% – the biggest squeeze since Dec 2011 – smashing the Russell 2000 higher.
– Dow Drops 1500 Points In 3 Weeks, Nasdaq Enters ‘Correction’ As VIX Breaks 30 (ZeroHedge, Oct 15, 2014):
From 17,350 intraday highs “proving the recovery is here,” we are 1500 points down just 3 weeks later. The Nasdaq just fell 10.5% from its highs, officially in correction. VIX broke above 30. Perhaps, just perhaps, the gap to fundamentals is finally about to be filled…
– The DJIA Stock Market Index Is A Hoax (The Burning Platform, March 29, 2014):
The Dow Jones Industrial Average (DJIA) Index is the only stock market index that covers both the second and the third industrial revolution. Calculating share indexes such as the Dow Jones Industrial Average and showing this index in a historical graph is a useful way to show which phase the industrial revolution is in. Changes in the DJIA shares basket, changes in the formula and stock splits during the take-off phase and acceleration phase of industrial revolutions are perfect transition-indicators. The similarities of these indicators during the last two revolutions are fascinating, but also a reason for concern. In fact the graph of the DJIA is a classic example of fictional truth, a hoax.