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August 18, 2010 – 5:06 pm

This morning, unlike yesterday morning, there was no economic data for the market to chew on. Instead there were strong earnings from several companies but a weak outlook for Target. That seems to be a theme of late where the earnings reported are very strong for retailers but they are hesitant about the future, thus stock investors are tentative.

Yesterday, we had better than expected housing starts and Industrial Production reports for July. Also, there was an uptick in the PPI that was a surprise, giving pause
to those who thought deflation was more a danger than inflation. That data plus merger talk from several sources boosted stocks strongly.

This morning the futures said we were going to start the day higher but in fact we opened lower. Investors and traders are going to be watching very carefully the economic numbers for July and August. June showed a clear slow down in the economy and yesterday’s data hints at a stop to the slow down as the economy finds it new level of lower growth.

The U.S. might be slowing down but not Asia and certainly not Germany. Those places with their strong growth will likely stabilize our economy. The double dip is still a possibility but it appears it is fading as a probability. The economic numbers over the next couple weeks will give us more guidance.

Good Trading
Steve Peasley

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