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Numbers and Expectations

July 6, 2010 – 5:05 pm

There will be very little in way of economic and earnings news this week though this is the start of earnings season. Of course there will be news; it’s just not going to be market moving news.

Next week earnings will gain traction and everyone is anticipating good numbers. However, the focus will be on the outlook for the middle and year end quarters. The worry of a double dip recession has depressed everyone’s expectations. If the double dip does not happen then there will be a very strong rally by year end.

The problem is that the structural damage caused by the recession and the need to spend to get us out of the recession is still on everyone’s mind. The stimulus spending has not done the job that was expected and the government, it is assumed, is going to raise taxes. Unfortunately, there has been nothing coming out of Washington that has allayed that fear.

There is still a lot of uncertainty. Markets don’t like that.

Good Trading
Steve Peasley

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