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Markets in Full Recovery

Aug 21 2009

Markets rallied to close the week strong as Ben Bernanke made positive statements about the overall economy and home starts showed a very good improvement over past readings.

Ben Bernanke

Federal Reserve Chairman Ben Bernanke commented during a speech on Friday that the economy is near recovery. This news sent the indexes higher during a week that was a little volatile at the beginning but moved higher the final four days. The one area of contention is lending to consumers and business has not completely returned to normal. On Friday all the major averages advanced with the Dow Jones Industrial Average up 1.69% near the close of the day.

Home Sales

The National Association of Realtors reported that existing home sales rose 7.2% during July compared to a reading of 4.89% in June. This represented one of the best readings in 10 years. Government tax credits are partly responsible for the rapid sales in addition to pent up demand in housing. Similar to the Cash for Clunkers program, consumers waited to see how the economy was going to progress and then jumped in to secure government aid prior to tax credit programs ending.

Ultra S&P 500 Proshares (SSO)

On of my favorite ways to trade the macro economic trends is with the Ultra Proshares S&P500 exchange traded funds. There is the Ultra (SSO) which tracks double positive moves in the S&P 500 and there is the Ultra Short (SDS) which moves in the opposite direction to the SSO. Therefore depending on the current trend, holding a position in one or the other can provide nice returns with minimal volatility.

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