Morgan Stanley in weekly outlook says “We are proponents of the view that the most important variable for the direction of stocks is the direction of forward 12 month EPS forecasts. The same goes for the overall equity market index. It is rare for the S&P 500 to experience a multi month decline in the forward 12 month EPS forecast. In fact, it has only happened 7 times in the past 30 years and each time the major averages fell at least 5-10 percent . The last time was a year ago.