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Will do the Right Thing?

July 27, 2012 – 5:21 pm

With a few words out of Europe the woes we discussed on Wednesday’s market commentary all of a sudden are not so worrisome, at least that is how the stock market reacted. I am not convinced reassurances from the ECB, that they are fully backing the Euro with follow on supportive comments from Merkel in Germany, means they have solved their problems. Talk, as they say, is cheap. There needs to be concrete steps to do two things. One, implement some kind of stimulus to stop the downward recessionary spiral and two, take steps to stop the upward spiral of the cost of debt in the Euro zone. Neither steps have been seen as yet.

What the calming words did show us is that the stock market is ready to rally. If it can move up sharply just on a few politicians talking what would it do if they actually did something? That goes for here in the U.S. as well. What if they actually avoided the fiscal cliff? What if a QE3 was announced and implemented? What if the presidential elections were behind us instead of ahead of us?

Of course we are talking about politicians actually doing something.

That might be a tall order.

Good Trading
Steve Peasley

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