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Bad Numbers

March 27, 2009 – 10:29 am

Today we learned that the fourth quarter GDP numbers were indeed one of the worst ever recorded. Only in the Great Depression can we find a more severe three months of a collapsing economy. Add to that the record income and wealth destruction and you have a free fall in our economy.

So why has the market rallied for three weeks in a row? It is simple. Economic numbers are reported from past events and the stock market looks forward to future events. The market is telling us the worst is over. As one of the most reliable economic indicators you can be confident that the economy, though still weak, will have bouts of further weakness, that over all it is likely going to be better six to twelve months down the road.

 

Expect another fall in stock prices. The move up is too fast. The market fell fifteen of seventeen days before this rally and now we have had three weeks of a strong bounce. There is an ebb and flow of prices. If indeed we get a pullback that will be the one to buy as long as the indexes hold above their old lows.

Good Trading
Steve Peasley

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