Major Stock Buy Signal?

Plunging Earnings Trigger Buy Signal?

It's a paradox but when companies earnings are plunging, it is bullish for the stock market. But it can't go down just a little. The ideal is a drop in consensus estimates of 12% or more.
That is a major buy signal and you should buy with both fists.
Where are we now? Should we buy?
The chart shows consensus earnings estimates. But they have divided estimates into two categories, all estimates and all estimates excluding energy.
All estimates are dropping about 8% from their high which is still bearish. The market doesn't like declining earnings because it means that the value of stocks is declining. Now take a look at estimates excluding energy. That is down about 12%!
My statement that sharply declining estimates are bullish is based on back testing going back to WWII. I only tested all estimates.
So officially, I have to say that this chart is still bearish.
But the ex-energy number is right at a buy signal.
Why in the world would sharply decliming estimates be bullish?
Because it means the economy is in a deep recession and the Fed Is about to start easing. Fed ease, stocks rally. It's that simple.
So ex-energy we are at buy signal.
But all my trading has been based on the total earnings estimates so I will keep focused on that in my Asset Allocation Model.
I'm using the ex-energy as an early warning sign for the total earnings.
You can learn my complete Asset Allocation Model in the Wealthbuilder Insider membership program (plus lots more!) by clicking here.