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Trading Challenges

April 5, 2010 – 9:14 am

Baseball season opened over the weekend and though it means nothing to the job market or stock market it is nice to have the annual return of the boys of summer.

Summer is usually a time of stock market corrections and an overall slow down in trading. Vacations by traders and investors usually have a small effect. It is almost impossible to prove that traders should react one way or another to the summer season.

Regardless, as investors it is our job to protect and grow the portfolio. We will have corrections and there will be recovery from those corrections this summer. The overall trend of the market is up as we see improvement in the economy and that improvement means higher earnings for corporations.

Earnings season is here and everyone expects a good one. The problem with that expectation is that it is already built in to stock prices. Therefore, this earnings season has to be better than good if you want stocks to continue to rise. I think that is exactly what we are going to have, better than expected earnings.

After the earnings season ends, what then? I expect a correction but how much, and when exactly, and should we react to it? Again, back to the impossible. Do you try and time it and get out then back in? That has never worked. Still, producing a little cash to buy into the correction is prudent.

Good Trading
Steve Peasley

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