Speculations on the Consensus

At a purely intuitive level (and I hope I am not projecting here) I get the very distinct impression that the unremitting rise in the market this year has managed to shape and mould the consensus toward a very positive perspective on 2014.

Focus will shortly shift from 3rd and 4th quarter (which are accepted as strong and solid) to a more critical look at 2014. I just don't get the impression that anyone is expecting a pullback of any size. Having been wrong on that count since the bottom was put in back in 2009, the market is crushing any resistance. If anyone has been anti, then they have paid a very steep price.

For my part, although it is incredibly hard to go against the flow and there are no specific things to get overly worked up about, my contrarian radar is saying now is the time to make the hard trade. Put some money in the bank and see what the market throws up.

1Q Earnings - A sign of hope

1Q09 earnings are providing a ray of hope.

Earnings are coming in better than expected (no surprise). But the downward revisions are slowing, pointing to a potential bottom in the earnings revision cycle.

This is important, because analyst estimates (which simply mirror management guidance) are generally lagging. And so, much in the same way that analyst estimates are behind the curve on the way up in the earnings/economic cycle, they have been behind the curve on the way down. This playing catch-up, usually meets at the top and the bottom of the earnings cycle.