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A Ray of Sunshine, a Rare Thing of Late

August 15, 2012 – 5:04 pm

As retail sales numbers for July came in yesterday morning the market liked what it saw and began on an up note. From a deeper perspective however the report suggests a direction change from a three month slide. Sales were up .8% when the experts were looking for an increase of only .3%. Also, the gain was across the board. Not one sector of the report failed to rise and even excluding autos sales still rose .8%.

By no means is this a strong number but everything is relative. After following three down months this one strong up month at least hints that our economy may be stabilizing. A pleasant reprieve in the incipient weakness in the numbers for the entire second quarter.

This is only one report, an important one, but still only one. It will need to be the first of a string of reports to give investors and traders a sense of direction other than down for our economy. It is a fragile balance at this point with the nod going to the down side. However, with retail sales and housing looking a little better the U.S. may just be able to sustain GDP growth for 2012. And dare we hope for stronger growth as the year ends? It is very possible. It would be nice if Europe does not crush that hope. I don’t think they have that ability but just the fear of that possibility could cause consumers to further retract so the ‘fear’ of a collapsing Europe would certainly destroy the hope of a strong finish for the year. On the other hand, at some point consumers, traders and investors will become immune to Europe’s constant problems and begin to ignore them until or unless something dramatic happens.

Good Trading
Steve Peasley

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