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Market Commentary: Trends & Hope

February 23, 2009 – 9:10 pm

The trend in the DOW is certainly down and breaking down to new lows. The other indexes are not far behind though they have not fallen below previous lows made last year. Everyone is feeling that the economy is not going to recover anytime soon and the stock market has been leading the charge in that sentiment. There certainly has been no bounce from the new administration. President Obama’s stimulus package has hit the public with a loud thud. When the President himself expresses little confidence in it working how you do think the rest of the public, including the stock traders, are going to feel?

On another note, the government has said that they stand by the big banks and are not interested in taking ownership. At the same time Citigroup is in talks with the government in which Citi would give up to 40% ownership to Uncle Sam in exchange for a cash infusion. That may not be outright ownership but it certainly would constitute controlling interest.

Uncertainty and fear reign and until that changes there will be no sustained rally. We will likely have a relief rally from an oversold situation, but when and how much is a difficult call.

On a brighter note, the economy will recover and there are some small signs that the recession is lessening its grip. Small signs are much better than none. The turn is coming and the stock market is looking for any sign of it.

Good Trading
Steve Peasley

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