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The Fear Gauge

December 21, 2009 – 11:30 am

There is not much in the way of economic numbers this morning but the stock market decided to show some holiday cheer. I mentioned in Friday’s Newsletter that the last two weeks of the year are usually positive and of course we are all hoping that pattern holds up this year, unlike 2008 when the market was falling apart.

Tomorrow November’s existing housing sales will be released and on Wednesday new home sales. There is always a lot of interest in these two reports so they may well move the market. Also on Wednesday Personal Income and Consumption will be reported and on Thursday the November durable goods report will come out.

These are major monthly reports but they are all backward looking in nature. They will tell us what ‘has’ happened but give us little information about the future. They may provide a glimpse of a pattern developing of better times ahead with a steadily improving economy.

Therein lies the problem. We have seen slow improvement, but there are so many bumps in the road to recovery few investors feel confident, thus fear is still weighing heavily on everyone’s mind. To make matters more uncertain the strong market rally in a very short period only adds to the fear, not subtracts from it.

Good Trading
Steve Peasley

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