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Earnings Season

June 23, 2010 – 5:05 pm

Every quarter the month following the quarter’s end the earnings season begins. Almost all public corporations report their numbers and more importantly guide public perception regarding future sales and earnings. This all begins next month. However, the month before the end of the quarter is referred to as the earnings ‘warning’ season.

Warnings are the CEO’s efforts to give the market place a heads up that they are not going to meet the numbers that the market expects when they actually announce their earnings the following month. They are trying to soften the blow.

This Month, June, is the month before quarter’s end and we have had very few earnings warnings. We have had far less warnings than normal. Therefore, earnings when they start coming in are going to be good and could be very good. That just might give us a short term rally. How strong a rally is always impossible to know. In fact when it comes to stock prices, trying to guess direction is almost impossible.

There are yearly patterns and the summer normally has a pullback and a rally. That and the fact that stock prices are low lead me to believe we will have the summer rally at some point and it could be strong. Of course that is barring any more oil well blow ups or a collapsing European economy.

Good Trading
Steve Peasley

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