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Falling Numbers

August 3, 2011 – 4:09 pm

We had no market rebound from the debt ceiling as everyone focused on economic numbers this week and they have turned decidedly down. According to the stats we are still growing but at a slower pace and of course once again Europe comes to the forefront with Italy and Spain taking the headlines.

You have to go back to 1978 to match the number of days in a row of falling stock prices. It has been very sharp and for 9 days in a row which has taken everyone, including myself, by surprise. We have a technical break down on the charts and this negative pattern only reinforces the downward move.

Is this an over reaction? The answer is yes and we are likely to have an oversold rally. However, the basic question that the market is asking is will we fall into another recession? The fear today is that the economy is so frail that recession is very possible. If there is not a recession the market is a great buy. If recession hits we are going down further. The odds still favor no recession. But, we are on recession watch.

Good Trading

Steve Peasley

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