Earnings Don't Matter

I don't really believe that.

But I think the importance of earnings for 4Q 2004 is far less than the importance of the guidance for 2005 and even that might not help the market.

It is generally accepted (but maybe will be wrong) that the earnings growth rate in the market for 2005 will be about half of what it was in 2004. We will start to hear guidance about this now and again in April. In this circumstance it is not a stretch to think that some of the guidance might stink.

Since last year was a sector pickers market (spin on one of the dumbest Wall St cliche's) I might expect bad guidance to run in sectors, maybe companies that rely heavily on consumption of resources (like Alcoa) or companies that have high energy costs (like airlines). I'm not sure but that makes sense to me.

I know a lot more people have been bullish on gold for the last year or so, and it may just be me but I think there may be a problem on the chart. There has been a nasty downtrend since gold topped out in early December. There is a very clear downtrend (resistance) in place and the current price looks to be running up into it. There are plenty of people that know more about gold's fundamentals and plenty of people that know charts better than I do but is gold in trouble? is the right question to ask these days. You can see the chart above to get a feel for the way I am seeing it.

As I have written before, all of my clients own a gold stock as a counter strategy (historically gold and gold stocks have a low correlation to stocks).

The response I received to my newsletter announcement exceeded my expectations, so thank you to everyone that has signed up so far.