Dow Jones Industrial Index ETF (DIA:NYSE) 3-month price chart above (click to enlarge)
Dow Jones Industrial comprised of the thirty largest companies in the U.S. managed to squeeze a positive close of 0.11% today despite one its member companies falling almost 5% on the day. The company in mention is Pfizer, the world’s largest drug maker. The company released its quarterly earnings this morning missing both on earnings and revenue expectations. Pfizer reported Q1 earnings of $0.54 per share on sales of $13.5 billion versus analyst estimates of $0.55 on sales of $14.1 billion.
So what Pfizer missed earnings? It wouldn’t be important if it wasn’t the third high profile company in the Dow Jones to miss earnings in recent days. The other two being IBM (IBM:NYSE) and Procter and Gamble (PG:NYSE). These companies are the respective stalwarts in their industry.
So when you have the leaders starting to disappoint and show earnings growth slowdown, it is a definite cause for concern.
In addition to earnings misses the complacent investor sentiment, deteriorating technical and economic data suggests the risk in the market is much higher at this time then most investors realize.
SiAlpha has yesterday signalled a NEGATIVE rating on the Dow Jones (DIA) as well as the S&P 500 Index (SPY) in the immediate term and short-term. Which essentially means the risk to reward is not sufficient to be invested in these markets.
Heading into the month of May, our SiAlpha multi-strategy portfolio is holding 30% in cash and has hedged all large cap positions by either selling in the money calls or buying puts.
SiAlpha indicates “sell in May and go away” for a month or two is a good idea.