Friday, May 30, 2008

Thoughts on Current Market


Buyers seem to continue to gain confidence as time passes. We got thrown back last week, but have slowly plowed forward this week. GDP was revised up, but not as much as some had hoped. It has been kind of a "curb your enthusiasm" week though, and prices have reflected that. We could be range bound for a bit as we wait for economic data, and to see what fuel prices do.

We're seeing more and more critical commentary pointed toward Washington, and I think that trend will intensify. Congress can interview traders and oil company execs, but they have done so poorly in working to make us energy independent.

If economic conditions worsen, it will be a slow grind. We're past the sharp decline phase that we saw over the past six months. These things take time. Some questions that need to be answered are: How much lower will home prices drop? Can companies and consumers handle $4.00 gasoline? Will the global economy and emerging markets continue to grow at a strong pace? Can our government come up with anything resembling and energy policy?

Being in this trading range, I'm buying when we hit the lower end of the range, like last week. I continue to like steel, natural gas, and industrial/infrastructure companies.

Have a nice weekend!

image borrowed from barrons.com

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