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The Important Numbers

March 26, 2010 – 9:50 am

The final revision of 4th quarter GDP growth was reported this morning. It was 5.6%. The initial number that comes out at the beginning of each quarter is revised twice during the following quarter. Now we will get the first number for the current quarter within the next couple of weeks. Expect it to be much smaller than 5.6% but it will be positive.

The new month starts next Thursday and that means earnings season. Earnings reports will start slowly until the middle of April but the first reports will give us hints of the strength or weakness of the season to come.

I think earnings will be very good but I also think expectations are high. I would rather they were low because when they are high there is little room for error. If they come in as expected stock prices will not go up and may in fact fall. If they disappoint the market is in for another correction. Therefore, they have to come in not only higher but much higher to keep this rally going and that might not be achievable. On the bright side, earnings will continue to rise for most of this year so the bias is on the up side.

Good Trading
Steve Peasley

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