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The Fear of Good News

January 20, 2012 – 5:58 pm

A lower jobless claims report yesterday with no inflation adds to the assumption that the Fed is not going to change interest rates anytime soon. Also, the Fed does not want to be seen as influencing this year’s election so it is very probable that no matter what happens the Fed is on hold regarding interest rates.

That does not mean they won’t implement some kind of QE3 program this year but so far it is not in the cards. Europe has calmed down though their issue is still very much on the table. It will depend on the depth of their recession this year as to what other countries including the U.S. will do. We have already seen China take some small steps to offset the effect of one of their largest trading partners falling apart and India has announced some major spending to boost their economy. Europe is the wild card this year once again.

Earnings are rolling in and this season is shaping up to be a little weaker than expected. That has not hampered the stock market so far but the rally we have seen is showing signs of age with little volume to suggest a long term trend breaker. The old highs for the indexes made in the summer are going to act as resistance to a higher market. Traders and investors are watching that carefully.

Good Trading
Steve Peasley

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