Commentary for July 13, 2009

Stocks continued to give ground grudgingly as investors wonder whether the “green shoots” theory has turned into “brown roots.”  Over the past nine weeks we have maintained that a correction, the cause of which is unforeseeable of perhaps up to ten percent, could come at any time but would allow investors an entry point.  However, after a period of consolidation or of correcting as noted above, we believe that this rally still has legs.  We find it encouraging that the economic, corporate and consumer data has been coming in at or above expectations, indicating to us that the fifty-five plus percent drop from the top as registered by most major indices had priced in a severe recession.  Investors eagerly await second quarter earnings due out in earnest this week to help them decide whether this has been a bear market rally or a new cyclical bull market.  Once again, we would encourage equity investors to add to positions on fear and weakness rather than strength but also recognize that due to the fact that many investors remain skittish, the choppiness in the stock market could last through the third calendar quarter.

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