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The Good, The Bad & The Difficult

September 25, 2009 – 10:07 am

The march of good news of a slowly recovering economy stumbled this week. The housing report for existing and new construction of homes was weaker than expected. Sales were slow while inventory fell and the expectation was for stronger sales. The durable goods report for August was much worse than expected down 2.4% when the experts were looking for a small gain. 

None of this should be a surprise. The economy is recovering in fits and starts and those fits and starts are showing in the reports. Positive signs this week came in the form of consumer sentiment which was up to 73 from 70 month over month.  

The huge move up from the March 9th low in stock prices is over. The next up leg is likely to be more subdued. This is normal. Just like the economic numbers there will be fits and starts but a steady improvement in the stock market with corrections along the way is likely. 

Of course something unexpected could happen but on balance the path seems to be set for at least the next six months. Long term the government will have to ease itself out of its over spending and over easing of the money supply. That is going to be a very slow process to say nothing of the difficulty. 

Good Trading
Steve Peasley

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