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Jobs and Earnings

March 31, 2010 – 9:13 am

ADP, the private payroll company, provides a jobs report every month a few days before the official report from the commerce department. This morning their report showed a surprising shrinkage of 23,000 jobs when the expectation was for a growth of 40,000. They do not count government jobs only those in the private sector. Friday the official report will show growth simply because of the census bureau hiring of up to 200,000. Those are temporary jobs but at least it is something.

Earnings season is rapidly approaching. There have been very few earnings warnings, companies reporting that their earnings may not meet expectations, which bodes well for a very good season this quarter. It is going to have to be to push stock prices higher.

There is a stark difference between what is happening to people with high unemployment and home foreclosures and to corporations with very good earnings and historic high cash on their balance sheets.

When jobs actually do start to show up, that can only improve the bottom line for companies which are already doing very well. Therefore the question is will the stock market reflect this improvement or is the improvement already built into stock prices? I would suggest you stay with the trend which is up. Just do not be greedy. It is prudent to take profits but buy back in on any weakness those stocks that are growing in this tough environment.

Good Trading
Steve Peasley

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