Wall St. Week Ahead: Stocks may be vulnerable in earnings blitz

(Reuters) - The initial reads on earnings have been mixed, and yet U.S. stocks are hovering near all-time highs. Next week, investors will see whether the first companies out of the gate were a harbinger of what's to come. 

More than 60 S&P 500 companies are scheduled to release results next week, including more than half a dozen Dow components. The reports will give the fullest picture yet of how corporations are faring and whether the market can advance further as Fed stimulus begins to recede. 

"Given that equities are fully valued and arguably overvalued, we need earnings and revenue to come through to support the gains we've already made," said Jack Ablin, chief investment officer at BMO Private Bank in Chicago. "There's a reasonable chance we could see a 10 percent correction in the event we get some high-profile disappointments."

Only a ten percent correction?  That is nothing more than noise of the ups and downs of security prices.  From peak to trough DYI  is forecasting a 45% to 60% decline.  Stock prices are so high that dismal returns are now bake into the cake.  All of the classic symptoms are present, Shiller PE10 at a nose bleed level of 25.63 and an absurd low dividend yield of 1.90% future returns will be dismal.

Estimated 10yr return on Stocks

Using 5.4% as the historical growth rate of dividends and 4.0% as the ending yield.

Starting Yield*---------return**
1.0%-----------------------(-5.7%)
1.5%-----------------------(-1.7%) 
2.0%------------------------1.3% ---YOU ARE HERE!
2.5%------------------------3.8%

3.0%------------------------5.9%
3.5%------------------------7.8%
4.0%------------------------9.4%
4.5%-----------------------10.9%

5.0%-----------------------12.3%
5.5%-----------------------13.6%
6.0%-----------------------14.8%
6.5%-----------------------15.9%

7.0%-----------------------17.0%
7.5%-----------------------18.0%
8.0%-----------------------19.0%

*Starting dividend yield of the S&P500-**10yr estimated average annual rate of return.

DYI