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Problems and Solutions

February 16, 2010 – 11:57 am

With this being a holiday week and with little economic data out this morning the market decided to push stock prices higher. It may be caused by nothing ‘bad’  happening over the long weekend in the world. Maybe traders feel the correction phase of the market is coming to an end though the indexes only fell about 7% which is light for a correction. Of course all we have had are light corrections since the rally began last year.

Greece is still a problem as the rest of the EU talks about a bailout without calling it a bailout. Greece itself seems to be walking around like a zombie telling anyone who will listen that they have no problem.

There are many issues that could upset the worldwide recovery as China deals with a budding inflation problem. So far they have tightened their money supply twice this year to hold down inflation.

Despite these headwinds there is a rather large tail wind for our economy. Only about a third of the stimulus package passed last year has been spent. As a result, this year and next will see massive spending in our country and at a time where economic stats are showing us the beginnings of a recovery already. That spending is a major push and should support continued growth.

Will that push stock prices higher? Earnings and growth are the key. The chances are good that both will do well this year.

Good Trading
Steve Peasley

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