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Bull and Bear

December 13, 2010 – 6:47 pm

Over the weekend, before the start of trading, events in Asia and here in the U.S. gave a lift to the markets. In Asia China reported strong economic numbers with a small dark cloud in higher inflation still worrying the overall outlook for 2011. In the U.S. a survey of most economists has shown that they have boosted their GDP growth outlook to 3% from 2.5% on average for next year. Also, mergers and acquisitions were in the news. All of this data is positive for stocks and the economy.

It appears to me that too many people are too bullish at this point. Therein lies the seeds of a bear market. I am not calling for a bear market as there are many factors that lead me to conclude that it’s too early for a correction. No one knows where a market will go. It generally gets very oversold in a Bear Market and very overbought in a Bull Market. We are in a bull phase and as long as it continues you have to stay with it.

However, in every bull market a bear market lies. On the other hand when a trend is in place it serves no one to fight it. It’s in its length and strength that causes consternation. For the time being it is clearly the right decision to ride the bull. The trend is your friend don’t discard the bull just yet.

Good Trading
Steve Peasley

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