Friday the 13th Was A Lucky Day for S&P 500

The index rose 2.4% on Friday. So it is down 16.1% since January 3, a bit further away from the edge.The forward P/E fell to 16.7 on Thursday and rose to 17.1 on Friday. Using the current forward earnings per share of $235 per share, we can derive the stock price index at various P/Es: 18 > 4230, 17 > 3995, 16 > 3760, 15 > 3525, 14 > 3290, etc. We are currently expecting 16 to hold (as it did on Thursday) rather than to fold.

We expect forward earnings to continue to rise to new record highs, as we see only a 30% chance of a recession. Here is the same exercise as above with forward earnings rising to $250 by the end of this year: 18 > 4500, 17 > 4250, 16 > 4000, 15 > 3750, 14 > 3500, etc.Among S&P 500 sectors, Friday's winners—especially Consumer Discretionary, Information Technology, and Communication Services—have been among the biggest losers of the current correction. Financials was among Friday's underperformers. Energy continued to be among the outperforming sectors.