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No Clarity But a Little Less Foggy

March 12, 2010 – 11:15 pm

We finally had some important economic data out this week with the release of the retail sales report this morning for February. It was up .3% when expectation was for it to be down .3%. If you exclude autos it was up .8%. This was for a month in which weather conditions in the East had adversely affected the numbers.

The market did not react much to this good news and when March’s early consumer sentiment numbers came out a little later the market weakened. Sentiment dropped to 72.5 from 73.6, not much of a move, but down was not expected. Also, inventory which has been expanding for a couple months came in flat for February.

More mixed signals on the economy continue to confuse investors and traders. The trend is clearly stronger but at a very modest pace.

Of all the numbers the most important is retail sales. Our economy is built on the backs of consumers. High unemployment will remain unless the consumers start spending again. Consumers have been saving at a rate of about 5% and at the same time reducing their debt, but we need them to open their wallets to some degree. It looks like they are beginning to, but it is a delicate thing.

The economy is looking up, at least for now. Will that be enough to push stock prices higher? In that there is more uncertainty.

Good Trading
Steve Peasley

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