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Action and Reaction

March 9, 2012 – 6:23 pm

The direction of our economy and production of jobs is the foundation of where the stock market is going to go. Currently, here in the U.S. the numbers are moving in the right direction. That underlying strength, as small as it is, supports stock prices.

There are a number of headlines that could cause short term price fluctuations, commonly known as corrections. Europe of course comes to mind as the number one concern. However, we saw a negative reaction to China’s slowing economy where they are guiding expectations to 7.5% growth from their many years of 10% growth. Therefore, the market will react to things outside our own economy. The world has become more integrated.

There is a wild card out there as well and that is the Iran/Israel conflict. President Obama has been more strident in his rhetoric and Israel feels very threatened by Iran’s push to get the bomb. That could come to a head this year.

The market will react to these things but stay focused on the fundamental background of a slowly growing economy. If the event, whatever it is, does not upset the world economy or it is just a very temporary consequence then the fall in stock prices will be an opportunity.

Good Trading
Steve Peasley

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