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Where is Santa?

December 15, 2010 – 6:25 pm

In this first part of the week we have had a number of good economic reports for November: Retail sales up, inventories up, Industrial production and capacity up, and the New York region of manufacturing was up to 10.6 for December when it was down 11.1 in November, while at the same time inflation was up just .1%. It is obvious the economy is improving.

Economists are in the midst of raising their forecast for GDP growth in 2011, most suggesting a 3% increase which is much closer to the U.S. long term average.

At the same time the stock market is struggling. This is certainly a case in which the market has anticipated the better news. It will take better than expected news, which we had this morning, but also some certainty about taxes next year would help. No one knows what specifically will move the market on a day to day basis but all this improving news certainly bodes well for earnings growth for corporations, and increasing earnings and anticipated better earnings push stocks higher.

Maybe the market is sluggish because there is too much bullishness and we are seeing sideways movement to shake some of that out. Usually, a pullback does that nicely so don’t be surprised by one if it happens. Santa Claus typically gives us a rally but maybe he came early this year.

Good Trading
Steve Peasley

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