When it comes to the stock market, the only thing more important than earnings is earnings expectations.
According to data compiled by FactSet, Q3 earnings have come in lower than expected six months ago. Also, estimates for Q4 earnings have only been coming down.
Furthermore, analysts' estimates for the first half of 2013 have also been coming down.
"Since the end of the third quarter (September 30), analysts have also reduced earnings growth
expectations for Q1 2013 (to 2.7% from 5.3%) and Q2 2013 (to 7.1% from 9.1%)," writes FactSet's John Butters.
Meanwhile, the S&P 500 has trended higher during that period. In technical terms, market multiples are expanding.
This has got to be driving market skeptics and outright bears crazy.
Here's a chart from FactSet overlaying the S&P 500 with two quarters of trailing earnings.
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