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Earnings and News

December 8, 2010 – 7:23 pm

The market as little economic data to give it direction this week so
headlines news will cause stock prices to react and even there the news is
either old, such as the European problem, or minor causing the financial
news media to scramble for something to report.

The biggest news item this week so far was the extension of the current
income tax rates instead of reverting to higher rates at the end of this year.
That pushed prices up Tuesday morning but than trades gave up most of the rise by day’s end.

This morning McDonnald’s reported a 4.8% rise in same store sales for the month, Costco posted an $1.97 per share. These are news events that
matter but do not necessary push traders to react. The fundamentals of
the underlying corporate profits are very good and profits eventually are
reflected in stock prices. When we look back at 2010 it is very likely that
there was in 30% increase in year over year earnings. Stock prices did not
go up nearly that much so far, so prices actually fell when compared to earnings. That bodes well for the start of 2011.

Watch sales and earnings; as long as they keep going up the marke
should do well.

Good Trading
Steve Peasley

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