Economic Monitor at Trade10.com- The science of trading market momentum for stocks, options, futures and bonds.

Critical Day Analysis

Our critical day analysis is all about trend reversals. We tell you when there is a high potential for a reversal of the short trend and we've been doing it since 1994 with an 80%* accuracy.

Trade10 Home | Advertisement Opportunities | Recent Signals

Home

QuoteChart Opinion Profile

Enter Symbol:

WALK THROUGH A CRITICAL DAY

OUR SERVICE

MARKETS

UNDERSTAND THE CHARTS

JOIN!!!

ECONOMIC MONITOR

Economic performance and indicators are shown on the graphs to provide a longer view of economic changes and a better perception of the economic trends that ultimately lead equity prices.  The importance of monitoring the economy domestically lies in understanding the current earnings environment for companies and being aware of trends in selected indicators that may impact on trading decisions in a changing economy.

The rate of unemployment is a key barometer of labor market conditions. The Bureau of Labor Statistics of the U.S. Department of Labor releases the Unemployment rate each month. Employment patterns vary seasonally. Monitoring labor conditions ultimately lead to a perception of consumer confidence and spending. Consumer spending engines 2/3rds of the economy.

Banks borrow from the Fed, in order to meet reserve requirements that are set by the Fed. The discount rate is the rate the Feds charge the banks. This is the mechanism that influences the Fed Funds Rate. The Fed Funds Rate is the rate that banks will charge each other for intra-day and overnight loans. The Federal Open Market Committee set the discount rate which can be very influential for economic and market conditions.

The Consumer Price Index (CPI) is an indicator of the general level of prices. The Index is a measure of current prices compared to base-year prices. Although it relies on a market basket of goods that don't account for substitution or changing consumer choices, it is an indication of the rate of inflation.

Consumer spending is volatile reflected by month to month changes in the Retail Sales totals. Higher interest rates usually puts a crimp in demand for goods. Lower interest rates have the opposite effect of stimulating demand and spending levels.   Retail sales are viewed for information about spending trends, consumer confidence, sector performance and as a gauge for future levels of consumer spending and retail sales.

The US Department of Labor release the Producer Price Index monthly. Producers prices are a measure of inflationary pressures.  The PPI is a measure of a basket of goods at an early stage in the distribution system and serves as one of the leading indicators for policymakers as it signals changes in the general price level some time before actually materializing.

A good measure of economic activity, Housing Starts is released by the Bureau of Census monthly.  Housing starts can indicate future strength in the housing sector of the economy and is closely related to interest rates, economic activity, and consumer spending and confidence. Housing starts is an indication of consumer confidence in making long term financial commitments.

Industrial Production is released by the Federal Reserve Board monthly. It gives a measure of industrial production that is subject to revision for 4 months. Its a measure of the change in output in US manufacturing, mining, and electric and gas utilities. Output refers to the physical quantity of items produced.

Walk through a critical day

The graphs show a price plot of the Dow Jones Industrials from Sept 28/00 to early November. The First graph ends on November 3/00, two days before an upcoming critical day on November 7/00. Our members looking at the market are expecting a trend reversal to occur due to the high rate of success in our research. Ideally a member will be using their own skills to judge the supply and demand changes, using technical and fundamental indications to confirm suspicions of a reversal, and trade accordingly.
On the second graph we see that the price action on November 6 was a bullish day, reversing the short trend so that the short trend leading into the critical day is now up. A critical day is an expectation of a reversal of the short trend that immediately precedes the critical day. In the case of the November 7 signal, given to members 3 days before, is an indication that the upward moving trend, recognized at the close of November 6 is expected to reverse direction.
On the third graph we can see that November 7 was a low volatility after a large gain on November 6 of about 160 points for the Dow Jones Industrials. The subsequent move over the three days following the November 7 signal saw the Dow Jones Industrials fall 376 points. The next day, November 13, the Dow Jones Industrials lost an additional 83 points with intra-day low a full 609 point loss since the open on the critical day.

Most recent signals

A closer view of the most recent signals. You can see the short trend immediately prior to a successful critical day, reverses coming away from the critical day. Often a failed critical day will indicate a stronger bias in the market for continuation of the trend that was in place prior to the critical day. A failed signal can therefore provide as much information and opportunity as a successful one. Take a look at tech studies to develop a sense of trend reversals and use.