Today I'm starting a new series, a series that will help me, and hopefully you as a reader, to learn of new sources of trading information scattered about the web. I'll look at big popular sites as well as smaller niche sites. Whatever strikes my fancy for the day.
The site I'll start with today is EconoDay.
The primary feature in which I'm interested at EconoDay is their Economic Outlook Calendar. When opening that web page, it automatically
redirects you to a one week calendar listing the current Economic Events for the US. Each
brief entry in the calendar contains the indicator's name as well as the time the Economic
Indicator is to be released. For many upcoming significant events, they offer a 'Consensus'
value of what analysts predict the value will be upon release. For past events, a 'Report'
is provided of what the actual released value was.
Each entry is a URL linked to a descriptive web page which provides information such as
the following:
- The release schedule (for recurring events, the day of the year it is released)
- A Definition
- Why Do Investors Care? (where background is presented of market impact)
As an example of it's coverage, today it covered the Empire State Mfg Survey which had a
consensus of 20 and an actual value of 9.1; it had a Bank of Canada Announcement which was
unchanged at 4.25%; and coverage of the 4-Week Bill, 3-Month Bill and 6-Month Bill Auctions.
For tomorrow, January 17, the significant Economic Indicators appear to be PPI (Producer
Price Index) with a Consensus Month to Month change of 0.5%; the Industrial Production
indicator with a Consensus Month to Month change of 0.1%; and the NAHB-WF (National
Association of Home Builders) Housing Market Index.
I seem to recall that the Housing Market Index can be a significant market moving
indicator. We'll see what happens tomorrow.
Well, on that last point, I stand corrected. I took a look at Bernard Baumohl's book
"The Secrets of Economic Indicators". On page 187 he writes that it '... has a proven track
record of being a decent leading indicator of future home sales'. But for various and
sundry reasons, it doesn't have significant market impact in and of itself.
If you are interested in more details on what Economic Indicators are, how they work, how
they affect and are affected by the economy, which are popular and which are not, and how
they are sourced and composed, Baumohl's book would be a good one to pick up.
In a little over 350 pages, most, if not all of the relevant indicators are covered through
sections such as: Market Sensitivity, sources on the internet, release schedule, why it is
important, how it is computed, how to use it for crystal balling the economy, and how it
might impact various markets such as Bonds, Stocks, and Currencies.
A companion book to Baumohl's book might be Richard Yamarone's book called 'The Traders
Guide to Key Economic Indicators'. It is a shorter book at just over 260 pages and with
slightly larger print. It covers fewer indicators by focussing slighlty more on general
topics. It does provide a better description of indicator inter-relationships. As such,
these descriptive interactions provide tactile food for thought for traders, and help a
trader understand how a market may move because of the them.
Chapters in the book include:
- Gross Domestic Product
- Indicies of Leading, Lagging, and Coincident Indicators
- The Employment Situation
- Industrial Production and Capacity Utilization
- Institute for Supply Management Indicies
- Manufacturer's Shipments, Inventories, and Orders
- Manufacturing and Trade Inventories and Sales
- New Residential Construction
- Conference Board Consumer Confidence and University of Michigan Consumer Sentiment
Indicies
- Advance Monthly Sales for Retail Trade and Food Services
- Personal Income and Outlays
- Consumer and Producer Price Indicies
Within each chapter, the authors follows a consistent outline. He'll start the
discussion
by describing what the indicator is and how it evolved. Next he'll explain the sources of
the data. He'll then tie it all together with charts and text of the indicators in action.
Each chapter ends with a section on how to use what you've learned, and a section on some
'Tricks from the Trenches'.
As you watch the markets on a day to day basis, some days are influenced by indicators,
others by commodities, others by specific instruments, and others due to various random
factors. For the days with news on significant Economic Indicators, the information from
these two books as well as the EconoDay web site will help you get a feel for the trend for
the day's trading. And as a number of indicators stack up, a good feeling for the economy
will help in trading the longer term trends.