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A Pause

November 8, 2010 – 5:48 pm

This should be a calm week as everyone takes a breather from last week’s blizzard of news. The election is behind us, the Fed meeting is over and the earnings season is winding down. Add to that a slow week in economic news for the economy and the result should be some selling pressure as investors and traders consolidate their winning positions.

Rather than selling aggressively, the investment community will likely reposition themselves for the year end. It is likely that mutual funds will add the quarter’s stock winners to show that they owned them by the end of the year and that will push those winners higher. Money may well flow out of bonds as those investors look for higher yields, and those investors who missed the run up in stock prices will be looking for a place to get in.

This is all positive except for the fact that at some point profit taking will take place. I see that eventuality, if it happens, as a great opportunity to invest.

There are too many good fundamental reasons to stay in the market. Money is easy as the Fed keeps pushing interest rates down, the stock market is not over priced and earnings are still rising at a good pace. Also, we are entering the best time of the year for stocks and most experts are calling for the best retail holiday season in four years.

Yes, there are still very serious problems in our economy but things are slowly improving.

Good Trading
Steve Peasley

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