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4 Key market indicators cut the noise

4 Key economic indicators stack up

4 large cartons represent reports of house prices, auto sales, employment and the FED fund rate that together, point to the stock market direction.

4 not so secret market indicators clearly signal stock market direction!

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You and me count! You, me and everybody else make up a huge part of the economy! Together we have lots of money and we spend it! That matters!

The total of all of our economic activities together reliably shows economic trends. Understanding and getting a grip on our economic activity gives us a very good view of our economic future!

With indicators that let us see the future, we can peek at most future stock market trends! This powerful stuff can be used to make money!

This is Part 1 of 2 in the White Top View series: Key Market Indicators

It is about more than us

We are not the total economy by any means. But when we want to know where the stock market is going, we need to know how financial matters are looking for most people. When most of us can and do spend money, the market goes higher. When we can’t or don’t spend, the market will not rise. So we need to know how people feel about spending.

Economic tracking is not just a guy thing!

We can always ask how people are feeling about money! However, the very best indications of how people feel in financial and economic matters shows in their actions. Tracking their financial and economic actions is far easier than learning about and tracking their feelings! Or am I just being a guy?! Tell me how you feel!? Don’t!

Getting a grasp of key consumer market behavior gives us good economic vision. Such indicators are not perfect, but are excellent! Just like parts of me, excellent, but not perfect!

Still, stock market trends reliably and closely follow these key market indicators. So tracking indications of how everyone is doing financially, gives a good look at the prospects for the stock market.

The 4 Key Market Indicators

  1. Employment 3 and 6 month trends

  2. House price 3 and 6 month trends

  3. Auto sales 3 and 6 month trends

  4. U.S. Federal Reserve funds rate trend

You can easily follow and use those 4 significant, dare I say trendy, indicators to keep track of the stock market and economy.

No jobs – no pay – no spend: the most important economic indicator

It always begins with jobs. You need to get paid before your can spend. We each need an income. Be it delivering the goods or providing a professional service, the essential economic key remains constant. People must collect paychecks. More collecting – good! Fewer collecting – bad!

To get a feel of how the economy and stock market will do, begin at home. What is the employment outlook for you, your neighbors and community. Expand your observations to your region and nation. Follow employment numbers, house and car sales and the U.S. Federal Reserve funds rate and you can treat all the other analysis as noise!

All the key indicators are readily accessible and widely reported by the mainstream media. The headline will always be based on the data released for the month just passed. That can be important and is always interesting. But the key numbers are the 3 and 6 month trends.

Economic trends are not absolutes

Note that we are talking about trends, not absolutes. For each indicator that means being aware of the trend direction over 3 and 6 months. Up is good, down a concern.

Car and house sales need paychecks

As long as your neighbors have jobs they can buy houses and cars. That will be positive for the local market. When national key market indicators all show positive trends, we expect both the economy and stock market to be or stay positive.

House price 3 and 6 month trendsID-10011910

Real estate is always a local market. So prices and sales in Prince George, British Columbia have nothing to do with or any influence on real estate in Toronto, Los Angeles or Miami.

So for your best understanding of the economic and stock market outlook, when looking at real estate, we must look both near and far. To have the best understanding of the possibilities for real estate, look at both your local and national real estate statistics. National trends up are good indicators for the stock market.

Locally a boom or depression, if not reflected in the general or national economy, indicates only a local issue. Local statistics alone can give no insight to the general or national economy.

To avoid being misled either up or down by a local situation, simply check trends in several major centers across the country. That way, local or regional differences can not mislead you.

Condo sales in a community relate to overall market conditions, in that community. However, the trends in condo sales can significantly differ from house sale trends. However, only in exceptional circumstances, do condo and house sales move in opposite directions for many months.

The size of either the price or unit sales does not matter. When both trend up, we are good! Growing numbers and prices good, declining, not so good! Remember, one or a very few months of either good or bad news, does not show a trend or a change in trend.

Almost always, some local real estate markets struggle, while other local markets boom. Apart from those exceptions, the general overall national housing picture is typically positive. At this time, national housing growth is underway. I expect the positive sales trend to continue for some time. So we count this key major market indicator as positive.

Next part in this series, White Top View, Key Market Indicator series, Part 2: Autos, jobs and the Fed we discuss the other key market indicators.

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Your comments and questions are welcome here. Or email me at WhiteTop@WhiteTopInvestor.com. Bite-sized White Top View posts are lessons to help non-investors on the way to becoming knowledgeable, comfortable, confident investors. By demystifying investing and giving you a better understanding of markets, one small step at a time, you can become the master of your financial security and independence. The White Top Views email list will never be shared or sold.

Have a prosperous day!

Bryan

White Top Investor
whitetop@WhiteTopInvestor.com
www.WhiteTopInvestor.com
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These discussions and information intend to help you better understand markets and investing. I am not a financial or investment advisor; opinions are for informational and educational purposes only and are not intended as investment advice. For syndication of the site or blog, please contact info@WhiteTopInvestor.com. © 2014 Bryan Kelly

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