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Market Jitters

September 10, 2010 – 4:55 pm

The trade data reported this week for July reported a sharp fall in the deficit. It was a 14% shrinkage. Exports rose to a two year high while imports fell. That was a stark turnaround from the month before. The fall surprised the experts as did the rise the month before. A shrinkage in imports is not necessarily good news as it shows a soft consumer market in the U.S. Still, you can not argue with record exports. That is very good news and hints at a healthily industrial base, maybe not a strong one, but still slowly growing here in the U.S.

September is acting well compared to its history of being the worst month of the year. At least it is acting well so far. I feel August might have borrowed September’s bad reputation as the August performance of the indexes was one of the worst in history. Then again it followed July which was one of the best performing Julys in history.

Do you see a small pattern? If so I would not rely on it. However, you can rely on the fact that we will continue to have high volatility so September could do almost anything. You can also rely on the fact that stock prices are very low and that too is based on history. At some point prices won’t be low but ill return to fair value. For that to occur a rally would have to happen and I believe it will before year end. You need to position yourself now to take advantage of it.

Good Trading
Steve Peasley

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