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Where to Now?

April 29, 2011 – 4:52 pm

This morning the stock market is trading flat after another strong week both in rising prices and profits. The earnings season is winding down as we move into the traditionally weaker part of the year. May can be a difficult month for the stock market as summer approaches.

Corporate earnings and guidance for the coming quarters surprised most pundits by being stronger than expected despite a weather related weak February. The GDP number at 1.8% reflected the weather related issues for the first quarter but it is very likely that GDP will rebound up in the second quarter. That just might make the weaker part of the year not something to fear this time.

If we get a break at the pump with oil either falling or at least stabilizing, the consumer will continue spending. So far the consumer has not let high gas prices affect him as retail sales for the first quarter were fairly strong.

There is always something to worry about; QE2 will expire this quarter which may give pause for investors while at the same time spending out of Japan’s rebuilding effort will help the world economy starting in the third and fourth quarter of the year.

We are being faced with many opposing factors all tugging at the economy in different directions. However, the underlying direction is growth, not a revisit to a recession.

Good Trading
Steve Peasley

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