It’s the Big E

It is still early in the third quarter reporting period, but indications point toward a good solid earnings season. Our U.S. economy is growing at around a 3 percent rate and inflation is tracking at approximately a 2.5 percent pace, so the business backdrop is favorable. There are times when businesses are fighting a tough environment; this is clearly not one of them! Most heartening is that good earnings are coming from many different types of businesses. This fact is also reflected in how broad the advance in the stock market has been.

The technical indicators from our stock market continue to be positive. Money flows are positive, the advance/decline ratio has recently broken out, and the daily price action continues to support a strong stock market. The one looming event is the presidential election! This could still become a challenge for investors, depending how well it is conducted and whether the result is decisive. Therefore, the potential for increased volatility still exists. This is why Riverplace Capital is carrying greater than normal cash reserves. Hopefully, these reserves will allow us to pick up good bargains during this period. We have already gotten a few. In the meantime, stay steady my friends.

-The Lonely Bull