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Three indicators for figuring out stock market direction

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Top Three Indicators for Gauging the Direction of the Market

There are many indicators that you would need to look at when it comes to gauging the direction that the market is going. Some of them include the US dollar, the confidence of the consumers and unemployment claims. These are just a few of the things that you would need to keep an eye on, so make sure that you know how they can affect the market and what to look for. If you are starting to invest, then make sure that you learn how to watch these or if you are already investing that you continue to keep an eye on these areas.

Consumer Confidence

The confidence of the consumers is something that is extremely crucial and it should be taken into consideration. This is how they feel about their current personal finance status as well as the status of the economy. This matters since the spending that the consumers do is some 70% of the GDP or gross domestic product. When these same consumers become worried over the future, then they tend to not spend as much as they would otherwise. However, if they have some confidence in the future, then they will spend more and an increase in the spending can help to lift the levels of the stock market as well as the economy, especially when people don’t need to worry about where the money is coming from.

Unemployment Claims

The one thing that you might not think would affect the market is the number of unemployment claims that can rise or fall. This is reported on a weekly basis and the details come directly from the US Department of Labor. These numbers are critical to the market since if the numbers are a high level, then the economy will be weaker. When there is a decline in the number of unemployed people, then it is one of the early indicators that the layoff pace is being slowed down.

This shows that the executives are slowly becoming more and more confident and they aren’t worried about losing money. This will also help to increase the confidence of the consumers since they won’t have to worry about whether or not they will have the money to pay the bills. When the consumers are happy and earning money, then both the stock market as well as the economy will thrive and enjoy higher levels.

US Dollar Rate

The US dollar is the premier currency of the world and the weakness or strength of it has a direct impact on the stock market and the economy. Recently, when the US dollar gained strength, especially when it was measured against some of the various key currencies like the British pound, the Euro and the Yen, there was a drop in the stock market. However, it also shows that when the dollar weakened, then the stock market increased.

It is crucial that you keep an eye on the increases of the dollar, especially if that is the currency that you are trading in. If it goes down, then make your choices wisely, but try to trade when the value goes up. If you are looking to make a good trade, then think about trading in various currencies so that you can cash in when the dollar is lower and the others are higher. This can, however, have a great risk, so make sure that you know how much you can afford to lose.

These are just a few of the areas that you should make sure that you keep an eye on so that you know when to trade. You should ensure that you are watching the rate of the dollar and only trade when it is high so that you can make the most money. Also, you need to keep an eye on the unemployment rates, which are updated weekly since this can have a huge impact on the economy as well. Consumer confidence is also something that should be looked at since if the consumers are worried they won’t be actively contributing to the economy, but instead holding on to their cash. Ensure that you watch all of these areas to find out when you should make your trades or when you need to hold off for a bit.

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