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Where to Now?

May 28, 2010 – 4:53 pm

The big rally yesterday was a pleasant ride but this morning the markets are trying to digest the move and interpret new economic news out this morning.

Incomes rose for workers last month which ties in with the job increase, but spending was flat month over month. The good part of the report was that the previous month’s spending was up sharply so being flat is not bad. Also, since
the incomes were up the savings rate increased. That is never a bad thing in the long run.

Consumer sentiment was revised a little higher for the month at 73.6. I do not put much faith in these numbers because they do not necessarily tell us what the consumer is actually doing only how he or she feels and it is always backward looking. That is not something that the stock market focuses on.

The market has corrected deeply in May and now with yesterday’s relief rally will we now start a recovery? We won’t know that until next week and the week after. Reading tea leaves is always difficult.

Good Trading,

Steve Peasley

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