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Obama – Week 1

In his first week, Obama was able to get an $819 billion stimulus bill passed that will include  spending increases and tax cuts in to revive a badly ailing economy. This was after a day in which bank stocks soared with Citibank rising over 18% and bank of America extended its gains by almost 14%.  The fed also made it clear that they are willing to whatever they can to get our economy back on course.  All this is quite positive after the many earnings reports that have hit the street in the last week or so.

Wall Street has always traded on humans two biggest emotions: Fear and Greed: it just so happens this time around, we witnessed extremes of greed and fear in an extremely short period of time, causing the major indices to plummet.  We now have a market that is just hoping for things to improve. Market sentiment can change in quite a hurry, when fear starts to wane and long term investors start to realize that the US economy will survive and things will indeed get better. They start to analyze the blue chip stocks and see there share prices at Historic lows.

In Obamas first week in office, I believe he given the World a look into what will here for the next 4 years. A man driven to make a change. That he will do whatever necessary to create jobs and to stabilize the housing industry. He will not be right in all his decision making, however he posses the confidence to make you believe that change is coming. This is exactly the confidence that will drive this market higher. If the market believes that things will get better, than prices will soon start to reflect this. Remember, the stock market usually prices in 6 months in advance.  The financial sector is one of the biggest reasons for the collapse. therefore, if we continue to see the banks trading with high volume to the upside, there is great probabilty that the worst is behind us and the market will indeed move higher.  But as always , let the order flow dictate your trading!

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