The Economy. Use Stock, Commodity and Economic Indicators to Forecast
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Use current gold prices, oil prices, and stock indexes to Forecast. Also consider Country ETFs, forecasts of GDP, and Leading Indicators to estimate your own forecast the USA Economy for the next Year.
Trading Markets try to Forecast
Facts are important like current unemployment, gross domestic product (GDP), consumer spending and retail sales. Market prices can be an even better source to forecast Probabilities that a particular forecast of USA total economy.
Though I took 8 courses in economics at Bowdoin and University of Chicago, I am not an economist. I trade stocks using no money at Kaching.com Trading stocks and ETFs daily has made me more sensitive to the market prices and indicators presented here.
This page is written as a reference for Investors and for Business People. It is not intended to support short term trading. It is designed for you to create your own opinions, not as advice.
Note that for real time quotes and charts, I most often use finance.google.com. I maintain and check stock and ETF lists at FreeRealTime,com. When I really want closest to real time, as opposed to off by a second or two, I use moneycentral.msn.com.
My Primary Indicators are the DJIA, the Semiconductor ETF, Gold and Oil
Each day I use these four indicators. Probabilities change all the time. Reports of facts arrive that are not the same as expected.
Stock market averages, Oil and Gold are each strongly affected by the near term forecasts for the Economy.
A chart of QQQQ Powershares
If QQQQ goes below 30, it is a forecast that the Economy will not do well. Trading above 40 forecasts that the Economy will do well.
For use displaying on this page, Yahoo does not support DIA (for the Dow Jones Industrials) or SPY (for the Standard and Poors 500), therefore on this page we use the NASDAQ 100 Powershares index, QQQQ.
The QQQQ index includes companies across major industry groups including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. It does not contain securities of financial companies including investment companies.
Using the Dow Jones Industrial Average. The prices for stock market averages are perhaps the best for forecasting the near term economy. If the DJIA is below 7700, that is a forecast that the Economy will be down. DJIA of 8200 to 8700 forecasts that the near term will be flat, little or no GDP growth for a quarter or two.
Semiconductor company ETF index, symbol is SMH
Semiconductor Companies are very sensitive to whether the Economy will grow. Semiconductor stocks rise very early when a sustained stock rally is expected.
As of 10 July 2009, the Semiconductor Index prices are "convinced" that the economy is improving. If the Index trades below $19.00, that is a forecast that the Economy will not do well.
Gold Prices, ETF is GLD
Gold prices are strongly affected by near term economy forecasts. Gold is also affected by concerns about inflation and sometimes by war and other fears.
Oil Prices are strongly affected by forecasts for the Economy in the near term. Oil above $75 a barrel says the economy is very likely growing now or in the next Quarter. Below $55 would reflect probabilities that the economy will be down.
Economic Indicators and Country Funds to Watch
From the Conference Board we get monthly reports of Leading Economic Indicators. Note that in May and June 2009 USA Leading Indicators were up.
Consumer Confidence is improving. Down a little in June to 49.3, it had impressive gains in April and May. “Looking ahead, Expectations continue to suggest less negative conditions in the months ahead, as opposed to strong growth."
GDP for the 4th quarter of 2008 was at an annual rate of $14.200.3 Trillon ???, 2007 was 13.807.
GDP decreased at an annual rate of 5.5 percent in the first quarter of 2009 to an annual rate of 14,097.2 trillion,
(that is, from the fourth quarter to the first quarter), according to final estimates released by the
Bureau of Economic Analysis. During the 1st quarter Personal Consumption was flat rather than down.
In the fourth quarter, real GDP decreased 6.3 percent.
Country ETFs to Watch include PIN for India, FXI for China, and Brazil's EWZ.
The price for gasoline at retail is not a Strong Indicator. Use actively traded prices of oil and of gasoline instead.
How do you forecast the Near Term for the Economy? Please suggest other Indicators that are important, and links to websites that provide help in your process.