From Arthur Hill at TD Trader

This directly taken fron www.tdtrader.com i highly reccommend suscribing to it for anyone who is serious about trading.

***Top Line Decline*** Shrinking revenues reflect economic realities. Earnings are much more malleable than revenues. In other words, it is much easier to massage the numbers to meet or exceed earnings estimates. Revenues, on the other hand, are less flexible and provide a clearer picture of business conditions. Looking at earning reports over the last 1-2 weeks, it is clear that revenues are shrinking, and shrinking fast. Intel revenues fell 22.8% year-on-year, while revenues at Johnson Controls were down 22.6% year-on-year. These are not small declines. State Street warned yesterday and the shares were whacked for a 59% loss. Business conditions are bad, real bad. This means we are likely to see an "L" bottom at best. "V" and "U" bottoms are out of the picture right now. After such trauma, a period of flat trading (recuperation) is needed to build a base from which to launch a sustainable rally. In the prior bear market, SPY traded flat for some 47 weeks before breaking out and starting a new bull market. There is a silver lining in these abysmal 4th quarter 2008 reports. It makes it easier to report a rebound in the 4th quarter of 2009. This means we may see a stock market bottom in Sep-Oct 2009. A 47 week trading range based on the Nov-08 lows would target a final bottom in late September or early October.

When looking at these companies take a look at the revenues because the numbers can be worked to look good.