The second half of 2017 ended with strong gains and surprisingly little volatility. All the major indexes added to first quarter gains with the technology focused NASDAQ continuing to lead. Corporate earnings have lived up to positive expectations driving eight of ten sectors higher. The S&P 500 closed the second quarter up 8.2{908bb81a8ab0b16778e7093c43eda429502c67f718526925312015b65456a646}. The Dow Jones Industrial Average ended the quarter up 8.0{908bb81a8ab0b16778e7093c43eda429502c67f718526925312015b65456a646} while the NASDAQ Composite finished up 14.0{908bb81a8ab0b16778e7093c43eda429502c67f718526925312015b65456a646}.

In 2017, it appears that earnings will increase dramatically after several years of sideways performance. As the U.S. economy improved after the 2008 recession, analysts forecasted accelerating earnings. Every year the initial forecast hit a new high mark only to be slashed as the year progressed and companies came up short. The 2018 estimate is noteworthy in that it breaks the trend with only a minor revision. As companies report 2017 earnings results we will watch the 2018 estimate changes carefully. If the $145.87 is significantly too optimistic we will see a correction. However, if the estimate holds up, stocks could still move higher year and still appear reasonably valued.

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