CORPORATE EXECUTIVES ARE SCURRRRRED
Just as the entire world is pessimistic about the future of the entire world, CEOs, CFOs and everybody in between that are allowed to make decisions at your local Fortune 500 company are also pessimistic. Company executives are going to have ZERO incentive to come across as pompous mavericks proclaiming that they are immune from the perceived problems of the world. There will be a fairly consistent cautious and probably pessimistic tone in a majority of the conference calls that are to come.
Therefore it would be wise to expect corporate execs to be very conservative in their guidance for the coming quarters. It sets the markets up for upside surprises, which I think will start being factored into stock prices in the weeks following the earnings parade that is to come.
I don't think the conservative stance of corporate America will end up derailing the markets. I just think it will throw the markets into uncertainty/sideways mode. That is until the picture becomes clear that the economic worries are perhaps overstated and estimates based on the somber attitude of corporate execs are too low.
The lows we experienced last Tuesday have a strong possibility of being the lows for the remainder of the year. That doesn't mean you won't get a better opportunity to buy them in the coming weeks somewhere between S&P 1180 and 1140.
A depressed tone and cautious outlook certainly won't be sending the S&P through 1250. We'll have to wait to clear out earnings and get into November for that.
All the more reason I will taking off a good bit of my long exposure tomorrow morning.
Bottomline: The only catalysts to come are sideways catalysts at best. Upside catalysts in Q3 earnings report will be derailed by conservative, fearful guidance from corporate execs for future quarters. A choppy 1-2 weeks ahead.
