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A Bit Less Uncertainty

July 1, 2011 – 4:57 pm

This has been a strong final week of June for the market. It certainly qualifies as a relief rally from our 7% correction. The most obvious cause for the rally was the acceptance of the Greek austerity package.

However, that does not explain the sharpness and strength of the rally. Traders and investors were waiting for something to give them an excuse to jump back in so they seized on the Greek issue. To be sure there were other factors as well. The economic news, while not very good had some hints that going forward we are exiting the soft patch.

For instance this morning before the ISM numbers for June were released the market was flat. As soon as they came out, showing better than expected results for June, the market took off. The number, while better than expected, was not that strong just stronger than last month which was a small surprise. That tells me investors and traders are just waiting for a reason to get in the market, not out.

We have gone through the first correction of the summer. We are likely to have another. It would be nice to know how deep the next one will be. Will it be bigger or smaller than the first one? I can’t tell you, but it will be a correction not a return to the bear market, therefore it will be a correction to buy.

Good Trading
Steve Peasley

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