5. What causes the markets to move?
Retail Sales
Retail Sales are a measure of the
total receipts of retail stores.
Monthly percentage changes reflect
the rate of change of such sales and
are widely followed as an indicator
of consumer spending. Retails Sales
are a major indicator of consumer
spending because they account for
nearly one-half of total consumer
spending and approximately one-third
of aggregate economic activity.
Often, Retail Sales are followed
less auto sales because these are
generally much more volatile than
the rest of the Retail Sales and can
therefore obscure the more important
underlying trend.
Retail Sales are measured in nominal
terms and therefore include the
effects of inflation. Rising Retail
Sales are often associated with a
strong economy and therefore an
expectation of higher short-term
interest rates that are often
supportive to a currency at least in
the short term.
Housing Starts
Housing Starts are a measure of the
number of residential units on which
construction is begun each month and
the level of housing starts is
widely followed as an indicator of
residential construction activity.
The indicator is followed to assess
the commitment of builders to new
construction activity. High
construction activity is usually
associated with increased economic
activity and confidence, and is
therefore considered a harbinger of
higher short-term interest rates
that can be supportive of the
involved currency at least in the
short term.
6. Beginning on Technical Analysis
Technical
Analysis is the study of past price
and activity history in order to
predict future price movements. The
basic premise of technical analysis
is that the price discounts all
information available in the market
and that patterns in price movements
tend to repeat themselves.
Another important foundation of
technical analysis is that price
movements are not random, but tend
to trend in some direction most of
the time. Although this seems an
obvious fact to anybody that has
ever looked at a chart, it is in
fact a hotly disputed idea in
certain academic circles. But then
again, maybe that is why they are
academics rather than traders...
Frequently, there is an almost
hostile atmosphere between technical
and fundamental traders,
disrespecting the other's approach.
This is clearly wrong, as there are
merits to both approaches and the
combination of the two will often
give excellent results. The great
advantage of technical analysis is
the ability to fine-tune and
accurately time market entries and
exits, while the fundamental
approach will deal better with the
longer term directional views.
ISO
codes