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Editor's Note: Keith wrote this article before Boeing reported earnings on Oct. 24. The company did, in fact, "blow the doors off" expectations, raising earnings and revenue guidance for the year.
I've been as steadfast as I've been consistent.
The "dead cat bounce" others claimed would turn into a more substantial rally two weeks ago was nothing more than a head fake. "There's still more downside ahead," a comment I repeated Oct. 22 during an appearance on Varney & Co.
You almost never hear about that from Wall Street.
But you should, especially this time around…
You see, this earnings season is NOT about the numbers. Contrary to what most people will believe, it's the commentary that will make or break your bank account.
We've known this was coming for weeks – months, actually – so we're well prepared. Sadly, though, millions of investors have gotten caught flatfooted with each new leg down.
The Dow dropped 500 points early on Oct. 23, following disappointing earnings from Caterpillar Inc. (NYSE: CAT) and 3M Co. (NYSE:MMM). It's also the fifth straight week of declines, and puts the major indices down at least 5.8%, as I type (on Oct. 23).
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Caterpillar led the bear-brawl by noting that manufacturing costs were higher because of higher material and freight costs, which is what most people were bracing for. What they – the big traders – had not counted on, though, was the accompanying narrative that material costs were directly driven higher by rising prices and, of course, tariffs.
3M's numbers were pretty straightforward and much the same story… lower quarterly earnings and revenue expectations. Here, the bogeyman was lowered sales growth.
From there, it was a short hop, skip, and a jump to bank shares and tech stocks as the selling accelerated.
There are three key takeaways:
About the Author
Keith Fitz-Gerald has been the Chief Investment Strategist for the Money Morning team since 2007. He's a seasoned market analyst with decades of experience, and a highly accurate track record. Keith regularly travels the world in search of investment opportunities others don't yet see or understand. In addition to heading The Money Map Report, Keith runs High Velocity Profits, which aims to get in, target gains, and get out clean, and he's also the founding editor of Straight Line Profits, a service devoted to revealing the "dark side" of Wall Street... In his weekly Total Wealth, Keith has broken down his 30-plus years of success into three parts: Trends, Risk Assessment, and Tactics – meaning the exact techniques for making money. Sign up is free at totalwealthresearch.com.