More good economic news today, but still trading volume remains light, so uncertainty still underlies the market. As I said yesterday, the reducing unemployment is one key to relieving uncertainty, and that make take some time. In the near term, though, along with the reasons I outlined yesterday (as well as others not mentioned), the market should respond with a rally based on the positive economic news floating about these days, such as the news that came out today.
The market got another dose of positive news on the economy Friday when the Commerce Department reported that wholesale inventories and sales increased sharply in July, well ahead of expectations. It’s a bullish sign when wholesalers build up inventories because it indicates they expect retail sales will pick up.
The important point above is the expectation of sales. Businesses are preparing for a solid holiday shopping season, which, if it happens, will help with the labor market problem. Not only will businesses hire in a busy season, but, if sales are strong, inventories will drop, meaning businesses will hire as inventories are built up again.
Flipping quickly to another subject, I received the email below, which gives me the opportunity to talk about a point I have made recently, and in the past – becoming a successful trader means learning as much as you can about everything related to trading markets.
I just completed a basic course in technical analysis, and I am now planning to do a CMT (chartered market technician) course. I just wanna know will it be worth doing this course? Please guide me.
A guide I am not, but I can offer information that will give you some things to ponder.
Yes, it is worth doing the course, if you can afford it. Yes, it is worth doing the course if it will help you get a job as a trader. Yes, it is worth doing the course because you will learn some important and necessary things about trading the markets. It is a good step to take, but, as always, in my opinion, it is not the end of the learning road.
For example, Europe currently is a focal point of the market. Now, to understand why, and, more importantly, to understand how Europe affects the trades we make in a variety of markets, one has to understand how the European economic system works. One way to understand this is to listen to Europeans discuss European economic issues, and to listen to them correlate those issues to our own economy and markets. Squawk Box Europe (CNBC) is one way to do this.
It is one thing to read that Europe has issues with sovereign debt. It is another to hear Europeans discuss the actual European banks and the actual percentages of sovereign debt those banks hold. It is further enlightening to hear the discussion move to the amount of bad commercial debt those banks hold and the amount of the so-called “toxic assets” the same banks still hold in conjunction with sovereign debt. Getting a deeper understanding of the issue gives one a better handle on choosing trades, as the economic state of Europe impacts markets worldwide.
Trade in the day; invest in your life …
