Hey guys, I'd like to compile a list of which Economic/ News releases are the most important to watch. I have often heard traders talking about Non-Farm Payroll numbers (tomorrow), FOMC minutes, etc. The last thing I want to do is be stuck in a trade when the market gets erratic. I'd appreciate if you can clue me in on the most important releases so that I can watch out for them.
Usually the market prices in what is expected. The market goes crazy when the actual numbers are significantly off from what the market is expecting.
Joesph Ellis in his book Ahead Of The Curve said it this way... The consumer is king, if year over year consumer wages are increasing (real-wages deflated by CPI * the number of people employed) you will get a good idea of future consumer spending. Consumer spending drives the stock market. What we have seen over the past year, who can question that logic? Take a look at the economic model below. When the Green Line (per discussed above) moves up or down around 3% the stock market (purple line) soon follows. This may seem simple, but it includes a ton of information including CPI, wages, and year over year employment levels. MTR Timing Model I will share what I do. If the model above looks like a buy, and the trading signal below issues a buy I will allocate more funds to the market. If the economic model above looks like a buy but I do not get a buy on the timing model below I may enter the market but would do so with tight stops, on stay in cash. MTR Timing Model Ahead of The Curve Web Site http://www.aheadofthecurve-thebook.com/ Also the following book is very good. It has details on all economic reports and lists the following as MOST IMPORTANT. * Employment Situation Report * ISM Report * Weekly Claims for Unemployment * Consumer Prices * Producer Prices * Retail Sales * Consumer Confidence (well this is a coincidence indicator so that in itself tells you the worth) * Personal Income and Spending * Durable Goods * GDP
Imo, economic reports and their effect on the market run in cycles. One report may move the market in Q1 may not move the market in subsequent quarter. We may focus on the numbers and shrug it off as a non event when it reality, a different report becomes the frontrunner and no one cares about the previous market moving report. But I'm sure we all can agree the FOMC is the big dog.
As the market's focus changes, what matters to the market changes too. Right now, housing and construction numbers matter, and inflation gets less attention. Although I'm very concerned about inflation in the long run, it's arguable that we won't get out of this economic slump until housing recovers. So right now, existing home sales and construction spending matter more than cpi and ppi But when the economy was rocking, it was the other way around. We watched inflation closely because we were concerned about interest rates, and the possibility that they might go higher. Meanwhile, the housing and construction numbers weren't as crucial; housing market was on fire, but it wasn't the main focus.
Briefing.com has an economic calendar with a little added value, they give each item a rating on it's importance to traders. Usually they are correct, you will see a lower rated item come in way off expectations and it won't affect markets much.. they probably are thinking short term..