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September 16, 2011 – 5:00 pm

It was a light week for economic statistics with some retail sales numbers and inflation data released, but the market rallied despite the weakness in those numbers. It was interesting that consumer sentiment numbers out this morning were a little better than last month which was a surprise but sentiment is still pretty negative.

Obviously, the rally this week was not about our economic data as that has been weakening. It was about calming nerves over European debt and the banks holding on to that debt. That calm could be shattered at any time since there is no permanent solution as yet.

For the market the question is will we fall into another recession? Chances of that happening have increased but if we don’t the stock market is going to continue to rally into the end of the year. I think the key is the consumer. There have been several surveys where the consumer has said they are going to spend the same amount or more money over the next six months. That bodes well for not falling into a recession but consumers can and do change their minds. The European issue will be resolved and our politics will only add to volatility but it is the consumer that makes the difference in our economy.

Good Trading
Steve Peasley

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