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Next Stop, Perfect Games, Pepper and Salt

Written by Admin | Aug 13, 2009 4:00:00 AM
Earnings are for the most part now in the rear view mirror.  As a result, stocks may likely take their short term trading cues from macroeconomic factors in coming weeks.  On this front, retail sales were a mixed bag today, with results for July below expectations in spite of the successful Cash for Clunkers automobile program.  Wal Mart and Kohl's were also guarded in their outlooks.

For the most part, however, the readings have remained positive.  Yesterday, high end homebuilder Toll Brothers indicated that net contract signings were positive year over year for the first time since 2005, or sixteen quarters.  In addition, the Fed commented that the recession was likely nearer its end, while both France and Germany reported GDP statistics that were slightly positive, indicating that they have likely emerged from their recessions already.

The markets are consolidating their gains after being in an overbought territory, similar to what we experienced in June.  As we look to September, the focus will once again turn to earnings and whether or not improved production levels associated with inventory rebuilding will be sustained on the basis of increasing demand.  We believe it will, but time will tell. 

A few blog entries ago, I commented on Mark Buehrle's perfect game with the White Sox, noting that momentum plays an important role in many sports as it does in the stock market.  I also suggested that after a stellar 45 straight outs, Mark might expect a prolonged slump at some point down the road.  Sure enough, and perhaps quicker than I would have expected, Mark rang up an 8.35 ERA over his next three starts, easily his worst stretch of the year.

We've had a great run and I believe the future will continue to brighten.  But it is also important to recognize that there will be setbacks along the way.  Perfect game or perfect mess, it's often best to stay humble and not get caught up in the hype of success or the agony of defeat.   Easier said than done, of course, but it's likely an admirable goal for both pocketbook and psyche.