Economic Indicators

Picking up where we left off :-)

One of the more important things to be aware of in the news is the economic indicators calendar. This is a well known calendar among the pros and most of them have memorized when certain data will be released throughout the month. For example, this past Friday, October 15th, initial claims and CPI (Consumer Price Index), among many others, were released. The data released that morning did a number on how the market opened. Combine that with the US earnings calendar and the market ended in the red for the day.

How does this help you as an investor? Well, for one, being aware of the economic data released will help you figure out if the stock or ETF you want to purchase that day will be higher or lower than the price you have in mind (same goes for selling a security). Most times, there will be estimates as to what the economic data numbers will look like. You can try and gauge from these estimates whether you should buy/sell a security before or after the economic data release. This is especially important for active day traders who move in and out of positions frequently.

For the average long term investor, checking the economic indicators calendar is a good habit to practice before making purchases. At least you know what type of news environment you make your purchase in. Many times, investors can purchase a brand name stock during a dip in the general market so you don't have to pay "full retail price" for a security that has had a great run in stock price for the year. Actually, this is similar to purchasing items during a random friends and family sale at the store. It's not on clearance just yet and it's not as good as the holiday sales, but it's better than full price.

Other economic indicators, like the new construction and existing home sales, can be especially important for investors interested in purchasing stocks in home building and construction related industries. What better way to figure out whether a company will have a better than expected earnings release after looking at the history of construction permits?

As I keep mentioning in any post in this blog, please do your research, walk away, then conduct more research when you invest. Information is a wonderful tool to help you make some money in the stock market.