Little Green Apples

God didn’t make little green apples
And it don’t rain in Indianapolis in the summertime

–Roger Miller, "Little Green Apples"

The chorus from the classic country ditty "Little Green Apples" seems particularly poignant this week. After the closing bell on Monday, quintessential personal technology maker Apple posted blowout earnings results that easily bested not only bottom-line earnings estimates, but also top-line revenue estimates. The strong earnings from Apple helped stocks vault higher, and we now are at another new high in the S&P 500 Index.

As you can see by the chart here of the S&P 500, we currently are knocking on the door of SPX 1,100. 

The latest surge in the S&P 500 comes courtesy of companies like Apple and others that have thus far come out with some pretty solid earnings results for the third quarter. Remember, however, that earnings are a backward-looking indicator, while the stock market is a forward-looking mechanism.

And unlike Apple, many companies have failed to beat earnings expectations on both the bottom line and the top line. In fact, I read a statistic that approximately 70% of all companies beating bottom-line earnings estimates this year have done so without either beating top-line revenue forecasts, or without growing revenue from the same period one year ago. This tells you that companies are making profits, but they have done so largely as a result of hefty cost cutting. This cost cutting can only last so long, and this gives me cause for concern when it comes to the future health of the current market rally.

But as the cliché goes; so far, so good for stocks, and until we see this market break down, my advice is to continue riding this bull for all its worth. But whatever you do, ride that bull with a safety net, i.e., with a firm stop loss in place on each of your invested positions.

Right now, subscribers to my Successful Investing , High Monthly Income and ETF Trader advisory services have stop losses on all of their invested positions. If you don’t have stops in place to protect your hard-earned wealth, then I invite you to explore each of these services.