Stock investors are flush, nervous, looking for cl

Stock investors are flush, nervous, looking for clues
Revenue is key as profits top low bars; Tesla, Priceline, Disney ahead
SAN FRANCISCO (MarketWatch) — Stock investors are sitting fat, happy—and nervous.
With indexes near records and equity funds swelling, professional stock-pickers have been warning the rally has to take a breather. Corporate earnings, including nearly 80 in the week ahead from S&P 500 members like Priceline.com and Whole Foods Market, may determine whether a pullback happens, and how severe it is.

But forget profits. These have been low-balled so often by company executives that Wall Street is on the hunt for less adulterated measures of corporate health. Try looking at sales.

“Investors have and should at this stage in the business cycle pay attention to revenue numbers,” said Brad Sorensen, director of market and sector research at Charles Schwab. “Revenue numbers over the past quarter or two have been more important than they have been over the past decade.”

Stocks ended the week with a mixed showing. The Dow Jones Industrial Average (DJI JIA) rose 0.3%, the S&P 500 Index (SNC:SPX) gained 0.1%, and the Nasdaq Composite Index (NASDAQ:COMP) lost 0.5%, as strong manufacturing data countered concerns that the Federal Reserve may begin tapering asset purchases sooner than expected.

All three indexes posted their best October since 2011. And if they hold to year-to-date gains of about 20% through the end of the year, they’re on track for at least their best year since 2009. But investor nervousness over these levels is apparent. The Dow is off 0.7% from its all-time high of 15,721, the S&P 500 is 0.8% shy of its high, and the Nasdaq is 1.1% off its latest 13-year high.

Plus, earnings season hasn’t been anything to write home about, said Schwab’s Sorensen, given that accounting tricks and lowered expectations have allowed corporate America to beat bottom-line consensus numbers easily.

On paper, results look pretty good. With nearly three-fourths of the S&P 500 having reported earnings so far this season, 74% of companies on the index have topped the earnings consensus, above the four-year average of 73%, according to John Butters, senior earnings analyst for FactSet.

Revenue numbers, however, are telling a different story. Only 53% of companies on the S&P 500 are beating the revenue consensus, compared with the four-year average of 59%, according to Butters. http://www.marketwatch.com/story/stock-invest...2013-11-03