Every quarter, like clockwork, the talking heads eagerly wait for the gross domestic product (GDP) report to be released.
Now, you can think of GDP like the report card for the country’s economy’s very own “report card” in that it shows the current growth of the economy.
The first quarter GDP report was released, beating economists’ expectations by nearly a whole percent - marking 10 year of economic expansion in July.
But while many investors took this report as an A+ for the economy - the underlying numbers aren’t quite painting the same picture for the future.
And while most are falling for the report’s positive results - if you follow the herd mentality, you could find your wallet completely empty in no time.
Sticking to rules-based trading is key to playing the GDP.
Now, the GDP expectations were already high, with economists forecasting a solid 2.3% outcome. But when the final number hit the financial news - a shocking 3.2% - investors took this as a green light for lucrative economic future.
And when you take a closer look at the numbers, you’ll realize that the economy isn’t doing as well as you might believe.
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One of the most important sectors when it comes to economy, private sector consumption and investment, came nearly to a halt in the first quarter, with a 1.3% annual rate - the slowest growth in nearly six years as you can see below:
But that’s not the only alarming number…
Consumer spending rose only 1.2% after a healthy 2.5% growth in the previous quarter. Spending on durable goods plunged over 5%, and business investments fell nearly 3% from the last report.
On top of this, investments in industries like factories, offices, stores, and oil wells moved lower for the third straight quarter in a row. While investment in equipment, like computers, airplanes, and machinery showed nearly no growth at all.
And while these numbers are enough to make me raise an eyebrow at the recent GPS report - the real problem I have with a GPD report-based plan is that the report has no established pattern. Meaning that over the last 10 years - the market hasn’t established a clear direction surrounding these quarterly reports.
So, while most investors waste their time analyzing the recent numbers - the best thing you can do when it comes to trading the GDP report is nothing at all…
Instead, this is a great reminder of our three rules when it comes to our trading game:
Spot rules based opportunities, but know that not every opportunity is guaranteed 100%.
Be comfortable with the amount of risk you’re taking.
Plan, execute, and manage your trades.
By sticking to your rules and blocking out the noise - you’ll set yourself up for the biggest and most consistent profits.
I’ll talk to you soon,
America’s #1 Pattern Trader
This article was supplied courtesy of Power Profit Trades