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Uncertainty

February 11, 2010 – 10:26 pm

A very large rally yesterday provided some relief from our correction but make no mistake we are still in a stock market corrective phase. What that rally says is that investors are looking for a place to re-enter the market but are just not sure at what level. This morning the market was weak at the open and then fell when Bernanke released the notes on his speech which details the Fed’s method of tightening rates when the time comes to do so. When that came out the market took a downward turn.

It doesn’t help that the massive snow storms on the east coast has drastically reduced the number of traders in New York. Light volume usually translates into more volatility.

The stock market does not like uncertainty and we have a lot of questions in our economy and the economies around the world that need to be clarified. In Europe it’s the weakness in the PIGS-  Portugal, Italy, Greece and Spain, all of which are having debt problems and in the U.S. its rule changes for the banking industry and Obamacare. Where are we going?

All these things relate to future corporate earnings. Clarity is often an illusion but investors and traders will react on what they believe will happen and at this point they are unsure.

Good Trading
Steve Peasley

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