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Gaining Momentum

February 4, 2010 – 12:02 pm

Out this morning is the ISM report for the nonmanufacturing sector of our economy which gave us a number for January of 50.5 from 49.8 in December.  Earlier in the week the ISM Manufacturing report was well above 50. Above 50 is an expanding economy and below 50 is a shrinking economy. So, both the service and non service sectors are expanding.

Earnings season is winding down. 80% of all reported companies beat their expectations, but what is more important is that 60% of those reports beat their sales expectations as well. That is a sign that earnings growth may well be sustainable.

That is only true if the economy is expanding and the evidence is building that though the growth is not robust it is on track and gaining some momentum. This is a healthy background for the stock market but of course it does not ensure rising stock prices, only a strong probability.

Good Trading
Steve Peasley

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