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‘THE’ Bottom or ‘A’ Bottom .. Only Time Will Tell

July 29, 2009 – 9:39 am

While earnings season has and is continuing to show us that companies are generally beating expectations the economic news this week is mixed. A great housing report has been followed by a weak consumer confidence report and a poor durable goods report.

While housing is very important and will eventually give us a chance to move the economy forward the worry about when this might happen is still very pervasive. Investors are just not ready to believe that improvement is under way or that it is sustainable if it is underway.

This is a classic response at this stage of an economic downturn. How bad is bad? Will we every get out of this deep recession? Is there more bad news coming? It seems everyone is expecting it.

As investors you can’t guess at the bottom. Watch your stocks and watch the indexes. They have been moving up and they are your best leading economic indicators. Of course that does not mean the economy or the stock market will continue to improve. It means that investors believe that we have hit the bottom. Or at least ‘A’ bottom. I think investors will be proven correct. It will just take time.

Good Trading
Steve Peasley

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