Congrats, Neil, you’re famous!
Even if you don’t have a stake in any of the banks, you should have a stake in their earnings information.
Understanding their performance (or not) and how they’ll affect future earnings, overall sentiment, and market direction is the difference between anticipating a market downturn and positioning yourself to profit AHEAD of the drop, or watching your portfolio flop in the next 3 months.
Here’s what I mean by that.
The market has run to SUCH an outstretched position, the criteria for this season of Earnings Reports is what Andrew has been referring to as “Perfection Only.”
Think about it like the last straw that broke a camel’s back. The camel is groaning under the weight of current market performance – it WANTS to break. It’s been stretched far too high for far too long and it’s just ASKING for an excuse to fall apart.
Earnings could be that excuse…
And bank earnings could lead the camel back breaking (ok, I’ll stop now).
Bank earnings are important because they set the tone for the rest of the earnings season. They’re first (shoutout to all the eldest children reading this, you know how it is), and they set the standard. If they underperform, they can influence the reaction to earnings reports that come afterwards, like a row of dominoes clicking the market lower. Even if they DON’T underperform, but they still don’t meet larger market expectations… they could still influence the reaction to results the rest of earnings season.
Earnings for quite some time have been rather “nonsensical.” Meaning, a stock can beat earnings… and it drops.
A stock can fall short of earnings… and pop.
It seems to make no sense, and that’s because it doesn’t. You need to realize that with the market THIS much higher, it literally cannot sustain itself. It is LOOKING for an excuse to drop.
It’s a girlfriend whose boyfriend has been out 5 nights in a row until 1am and stopped sharing his location with her. He’s cheating, she knows it, and things are going to explode. It’s only a matter of time.
THAT’S why we’re watching bank earnings so closely, Neil. Even if we own none of them (I personally don’t right now), we’re watching. What they could tell us – and what they could dictate for the next few months of trading hangs in the balance.
You’ll notice on our Option Pit Research Earnings Projections for the banks… that we didn’t use the projected EPS (Earnings Per Share) that the banks need to “beat.”
We established a second number… a HIGHER number… that we see as the ACTUAL number they need to beat.
That’s what “Perfection Only” means.
We believe that even beating the projected EPS numbers (Column: “EPS Forecast”) won’t be enough to hold the market up, and the numbers we listed (Column: “OPR Exceeds Expectations”) are the REAL numbers the market needs to continue its upward march.
Bank stocks MUST hit our “Exceeds Expectations” levels, or we do not think they will hold the market up.
Click Here to Download the Worksheet With Option Pit Research’s “Exceeds Expectations” Targets for Bank Stocks
