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Market Moves

January 18, 2011 – 5:56 pm

Market swings are a normal part of the investor’s life. Short term swings are ones that should in general be ignored. It is in the change and depth of these swings that give investors pause.

A normal correction is about 10% and is one that is very difficult to trade and even more difficult to predict. To better understand if you are in a correction or a new direction for the market and one that should feared, it is important that the investor understand the economic conditions that currently exist and the likelihood that we are in the process of those conditions changing.

The stock market always reacts several months before it is obvious that the economy has changed. That is why it is considered a leading economic indicator. It is your job as an investor to anticipate and gauge the future and that is fraught with complications. No one can read the tea leaves with any certainty and consistency.

There are hints and suggestions but no certainty. So when do you decide to exit the stock market? Making that decision is always a task that gives so called experts indigestion. Still it is their job and some are better than others.

Ignore the short term swings and instead decide if the economy is going to grow or begin to shrink in the months ahead. As difficult as it is you need to react to that possibility.

Good Trading
Steve Peasley

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