Related Topics
Stocks , Investing
Share This Page         

Look Beyond Earnings – Here’s Why

Avoid market missteps that could cost you big

by Bob Stokes
Updated: April 19, 2018

A long-held assumption on Wall Street is that earnings drive stock prices: Good earnings mean prices rise; disappointing earnings mean prices fall.

Sounds logical, but is that assumption based on sound evidence?

Consider this chart and commentary from the December 2009 Elliott Wave Financial Forecast:

Earnings Yesterdays News

...quarterly earnings reports announce a company's achievements from the previous quarter. Trying to predict future stock price movements based on what happened three months ago is akin to driving down the highway looking only in the rearview mirror. The trends in earnings and stock prices sometimes even move in opposite directions, such as in the 1973-74 bear market when S&P earnings rose every quarter as the S&P declined 50%. More recently, earnings have been cycling with stocks, but that still leaves the problem of reporting delays, which leave investors eating the market's dust when the trend changes.

Despite facts like these, market pundits still like to speculate about the effect of earnings on stocks.

For example, an April 16 CNBC headline asked:

Will earnings extend the bull market?

Interestingly, just three days before, another CNBC headline and subheadline said (April 13):

Dow drops 200 points as JP Morgan falls 3.5%

... J.P. Morgan Chase reported quarterly earnings and revenue that surpassed analyst expectations.

Then, on April 17, a Business Insider headline had the same kind of message, just with a different company:

IBM down more than 5% despite delivering a beat in quarterly earnings

Truth is, it's a myth that corporate earnings consistently drive price patterns.

But this false assumption about earnings and stocks is by no means the only market myth. There are many more.

Investors like you need to be familiar with all of them so you can avoid market missteps that could do serious damage to your portfolio. In our publications, we strive to dispel common myths and show you the true market drivers.

Here's What the Wave Principle Provides You:

" … a context for market analysis. This context provides both a basis for disciplined thinking and a perspective on the market's general position and outlook."

That's straight from the Wall Street classic book, Elliott Wave Principle: Key to Market Behavior.

When you see how our analysts put the recent stock market volatility into context, it all MAKES SENSE.

Get their "perspective on the market's general position and outlook" now -- 100% RISK-FREE.

Keep reading to get details about the Financial Forecast Service

Elliott Wave International’s Financial Forecast Service

All month long, FFS shows you the patterns in U.S. stock indexes, bonds, gold, silver, the U.S. dollar, as well as market psychology and cultural trends. We show you where the trend is now, and when prices should turn -- specifically, we show the pattern at multiple degrees of trend, with precise risk/reward calculations. If you have fewer surprises, you can be better prepared.

Here’s how it works:



Subscribe now and read the current issues within FFS.



Fine-tune your portfolio plan.



Relax. Watch the markets with your targets in mind.

Your Financial Forecast Service Team Helps Put YOU in Control of the Market’s Trends and Turns

Your Financial Forecast Service guides -- three of the best-known market analysts in the world:

  1. 1. Robert Prechter, Author of 16 market-related books, New York Times Best-Selling Author and Editor of Elliott Wave Theorist
  2. 2. Steven Hochberg, Editor of the Short Term Update and Co-editor of The Elliott Wave Financial Forecast
  3. 3. Peter Kendall, Author of The Mania Chronicles and Co-editor of The Elliott Wave Financial Forecast

As featured in:

Here's what you get with the Financial Forecast Service

Every Month

At the end of each month, you get a 30-60 day look ahead at the markets. Elliott Wave Financial Forecast lays out expected trends and turns in stocks, gold, USD and bonds.

Three Days Per Week

At market close every Monday, Wednesday, and Friday, you get the Short Term Update, alerting you to what’s changed and what’s upcoming in the next several days.

Latest Research

Every month, Robert Prechter sends you his latest research about waves of social mood in the markets in the Elliott Wave Theorist, so you always know the full picture.

You can be ready for risks and opportunities that catch most investors by surprise

Risk-Free, Start Your Subscription Now


for 1 month of unparalleled market insights