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Market Commentary: Where From Here?

January 12, 2009 – 2:04 pm

  We are at the start of earnings season as we look back at the fourth quarter of 2008 to see how poorly companies performed during the depth of the financial crisis.  Most experts expect a dismal earnings season. Tonight Alcoa will lead off, and expect a poor report from them. 

It’s not that everyone expects bad earnings that matters to the market. What matters is whether or not prices of stocks reflect this season’s earnings report or will the market be surprised on the down side? Will there be relief that earnings are not as bad as everyone expected? 

It is impossible to know the reaction to lower earnings and lower expectations looking forward. There is a lot of negative sentiment built into the prices of stocks. Will it get worse or better from here? The crystal ball never works when you need it.  

In every past recession stock prices start to move up long before any economic recovery, but the timing is always the issue. We know history tells us that about six months before the recovery starts stock prices begin to move up. That means bad earnings reports will continue to follow even while stock prices rise.  

The market is going to be very choppy with no clear direction but when that direction is clear it will be too late. Pick your spots and buy stocks that you think will grow both in sales and earnings even with a recession.  

For ideas think about PresidentElect Obama. He is going to be spending a lot of tax dollars, so which stocks will benefit? 

Good Trading
Steve Peasley 

  1. One Response to “Market Commentary: Where From Here?”

  2. I really liked your article you, have very keen insight. I did not know that when the market starts it recovery the the over all economy will pick up six months later.

    Thanks for the great information,

    By Mike Farris on Jan 12, 2009

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