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A Struggling Market

October 15, 2012 – 5:10 pm

The market is struggling which should not surprise anyone. Investors are seeing a lot of uncertainty. The election in less than a month in the U.S. is leaving the needed work on the fiscal issues floundering in apathy from the Congress. The European issue is still causing concern though the direction of the politicians in that part of the world appear to be moving down a reasonable path. In China the turnover of that government every 10 years is nearing its end but they too seem to be pushing for easing to turn around a disturbing trend of slower growth. With these major issues still up in the air it is no wonder that the market is not collapsing rather than just correcting.

At the same time earnings season is under way. Thus far it has been better than expected though those expectations were lowered all quarter long and being better than expected does not mean earnings are good. Still, even though we are at the beginning of earnings season the numbers have proven to show that there might be a little too much pessimism.

Housing is the one bright spot. Foreclosures hit a 5 year low and builders are beginning to feel that prospects are looking up. Construction spending and building is still very low in historical terms but for stock markets it is the trend that counts and it appears to be up.

There is a never ending flood of data and information that affects the market in the short term but it always comes down to earnings. Does the political turmoil and economic stimulus plans around the world mean that growth will stall or continue? Therein lies the solution as to where the market is going.

Good Trading
Steve Peasley

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