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Corrections and Recoveries

February 8, 2010 – 2:15 pm

The market is still in the midst of its pullback as investors and traders decide their next move. They are confident that this is a correction but are undecided on its depth. For long term investors it’s an opportunity and for short term investors, the ones pushing prices around, they’re deciding if the fall in prices is deep enough for them to step back in.

Either way this correction restores health to our market. Stock prices do no go in one direction without pause either up or down.The odds are good that we will see another leg up once the correction has shaken out the weak hands.

The earnings reports and more importantly the economic data is clearly showing an improving economy. With outsized government spending taking place, this year the economy should gain strength and that will mean strong corporate earnings for most of this year. The market will recognize that at some point.

At the moment, investors and traders are focused on debt. However, one way to trump debt is by a growing economy which will produce more tax dollars. Cutting spending is the only other way to control debt, but that will have to wait. It’s not possible in this political environment, and maybe we shouldn’t cut debt as the economy is very fragile.

Good Trading
Steve Peasley

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