Earnings: A First Cut At 2013

I'm using a cone of probability for S&P 500 earnings in 2013 between 102 and 112.  It is hard for me to narrow this range because there are so many variables in play right now for this year.  I will use a midpoint right now of 106.50.  For the record we were looking for a midpoint earnings estimate of 103.75 and a midpoint S&P 500 estimate of 1475 for 2012.  

I will use a range for the S&P 500 in 2013 of between 1325 and 1650.  That's a big range but I think we could see a year with bigger moves going forward than what we've seen over the past year.  Keep in mind that 2012 was the first year since 2007 that we didn't see one of those big down gut wrenching weeks where stocks declined something like 5% in a very short period.  I think there's a possibility that kind of trading returns at some point.    I will start using as a midpoint for 2013 1,575.  That's a potential price return of about 7% from current levels and about 11% from where we closed 2012.   

I'll detail how I think we might get there and a few things that concern me in a future post.  One thing I'm pretty sure about is that there's not much return in bonds this year.  I'll detail why I think that soon.

One last thing stocks are overbought short term.

*Long ETFs related to the S&P 500 in client and personal accounts.