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Statistics and Corrections

April 26, 2010 – 7:01 pm

This morning the market is struggling higher as it continues to worry over Greek’s debt problems, the huge sale of shares of Citigroup by the government (1.5 billion shares) and the very good earnings report from Caterpillar.

This week we will have another flood of earnings reports marking the tail end of this season. Of course there will be more earnings in the weeks ahead but the number of reports fall off dramatically in May. The numbers have been very impressive so far and there is no reason to think they won’t continue to be so, at least for the rest of this week.

On the economic front it appears the economy is gaining strength. Last week’s numbers added to that belief, but the only important stat this week will be on Friday when the GDP number for the first quarter is reported and it is expected to be up 3.4%.

The market has rallied nicely from the correction we experienced earlier in the year and the good news mentioned above is already built into stock market prices. The market is due for another correction. May is a prime time for that to happen, but also this rally has defied the norms.

The correction, if we get it, will be a health restoring event and may not be very deep or long. Producing a little cash to be able to buy is wise. Investors who have missed this rally are primed to invest as they are already sitting on a large cash hoard. I believe they will enter the market on any weakness not wanting to miss the next rally.

Good Trading
Steve Peasley

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