Good News but Will it Last

After last quarters earnings releases, market participants were not sure what to expect moving forward.  Most analysts began cutting estimates for the following quarter, as we have seen with this quarters earnings releases, those estimates may have been cut too low.  As of 07/31/2009 we are almost 70% of the way through earnings season and so far 80% of the companies that have released earnings have either beat or met expectations.  In this case that may show Analyst’s lowered their expectations too much after the 1st Quarters releases.  The question moving forward is what happens next quarter, just as Analyst’s can get too cold (causing the market to move higher because so many companies beat expectations), they can also get too hot (causing the market to move lower because not enough companies beat expectations).  Moving forward we will continue to monitor analyst expectations to obtain a gauge of what will happen next quarter. DC