Market Update – February 5, 2009

Another week and it is the same old same old. It seems somewhat safe to say at this point that we are in a trading range on the S & P 500 from about 800 to 900 and it does not look like we will break that anytime soon as we still have no clarity on the new administrations plan to deal with the crisis in the banking system. The good news believe it or not is that all of the bad news about layoffs and record lows in consumer confidence has not driven the market through previous lows. In fact we are still about 10% above the low set back in the fourth quarter of 2008. What has helped is the fact that earnings estimates have been mixed as some companies have actually beaten analyst’s expectations.

You have heard me argue in previous newsletters, various media outlets, and my radio show that each day that goes by where the market stays above previously set lows is another day for the markets to heal and someday move forward. I still adhere to this philosophy and have heard many other financial professionals saying the same thing.

I think it will be a while before we claw our way out of this worldwide recession but I expect that we will emerge with a much stronger banking system than we had before. Until then try to keep smiling even if it hurts.

Until next week or some crazy event in between.