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Fear and Volatility

June 7, 2010 – 5:01 pm

Friday’s fall was caused by the weak jobs report. The weakness was bad enough even though jobs did grow, but I think investors and traders were looking for a much better number than expected because of the comments made by the President a couple days prior stating that this jobs report was going to be strong. It was not strong but weak. This added to the disappointment thus a much steeper fall in prices than there would have been.

We are also dealing with the continued fear of the fiscal crisis in Europe. Last Friday Hungary, a country that has no impact on anything because of its size, affected the Euro when there were unsubstantiated rumors that they were having financial problems. This caused the Euro to fall to just below key support levels. This morning Hungary reassured the skeptics that they do not have a Greece-like problem. The weak Euro means a strong dollar and that has been putting pressure downward on our stock market.

Friday’s events demonstrate how fear is bubbling and ready to burst out like the gulf oil spill. Of course the result is a very volatile market. It was only last Wednesday the market rose 200 points and then on Friday closed down 300 points. Expect this volatility to continue.

Good Trading
Steve Peasley

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