How You Can Trade the News in Advance

Editor’s Note: Port Phillip Publishing is taking a short break for the holidays. We will be returning to our posts on 4 January, 2016. While our editors enjoy a few days off with friends and family, we thought you may enjoy reading some of their vintage pieces from 2015. You’ll see the date that these articles were originally published up top. Facts and figures have not been updated. Happy holidays.

This article was first published in Money Morning on 18 November 2015.

How You Can Trade the News in Advance

As we walked back from lunch in the Melbourne CDB last week my colleague Phil Anderson and I noticed something.

That was the amount of job vacancy signs in the retail shops that we walked past.

It was a mixed bag of businesses too. There was a hairdresser in an alleyway and two food stores on Swanston Street.

This observation is not scientific. It’s totally anecdotal. I accept that.

But you don’t see job vacant signs in shops unless businesses really need the staff, and quick.

I bring it up because some people suggest the recent employment numbers in Australia can’t be trusted…

What happened to the Australian recession?

In case you didn’t catch the news, last week the Australian Bureau of Statistics said Australia’s unemployment rate dropped to 5.9% in October.

That’s down from 6.2% in September.

Basically, according to the bean counters, things are looking up!

You’ve got to remember that a lot of people thought unemployment would get a lot worse in Australia with the end of the mining boom.

What explains it?

Well, the resource industry is suffering, no doubt about it. But there still some projects going ahead.

Yesterday, the Australian Financial Review reported that BG Group and its partners in the huge Queensland Curtis LNG venture will go ahead with a further $1.7 billion in drilling for more gas wells during the next two years.

Then of course there’s the new gas pipeline to be built between the Northern Territory and Queensland.

That’s due to be completed in 2018.

But there’s another sector doing very well which the mainstream still hasn’t picked up on.

That’s the dramatic increase in tourism. It’s most likely on the back of the falling Aussie dollar. It is having a huge impact on the local economy.

And it is starting to show, if the recent unemployment numbers are anything to go by.

See for yourself…

Source: Source: ABS, CommSec

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The recent employment data coincides with a bullish broker report Commsec released yesterday. The headline read: ‘Record vehicle sales; record air passengers’.

New car sales are a useful guide to general economic conditions. They give us a guide on consumer and business spending. Likewise passenger numbers flying Sydney–Melbourne.

New vehicles sold over the year to October was a record high in rolling annual terms. Annual sales of sports utility vehicles or SUVs hit fresh record highs too.

Source: Source: ABS, CommSec

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Source: Source: ABS, CommSec

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SUVs aren’t the cheapest class of car either.

As for passenger flight numbers on the Sydney–Melbourne route, September was a record. Smoothed annual growth is the best in two years.

Source: Source: ABS, CommSec

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It’s all very bullish, but does it surprise you? It shouldn’t.

We’ve been forecasting positive momentum for the Aussie economy to subscribers of Cycles, Trends and Forecasts all year.

One thing we do that not everyone else does is watch key stocks to let us know what to expect…

Record vehicle sales for this company

For example, I profiled AP Eagers Ltd [ASX:APE] back in July. AP Eagers is Australia’s oldest listed automotive retail group. You can see that posting too if you like. It’s all in public and on the record.

This was the key bit:

The chart is breaking into new highs….This is telling you in advance that car purchases are up……More broadly, we can use this company as a barometer of sorts for the general health of the economy.

A car purchase is a big ticket item. It is a purchase that signifies some confidence in your own job and the general economy. Car purchases are up and this does not gel with a waning economy….

Here is the AP Eagers monthly chart updated

Source: STEX

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Can you see the advantage of reading a chart? The market knows what’s coming long before you read about employment numbers in your local paper.

Here’s another example…

Strong passenger numbers on this key route

Last fortnight I covered Webjet Ltd [ASX:WEB] for Money Morning. I mentioned 88% of Webjet’s bookings are for domestic flights. In that post I had this to say:

From 2014 the share price has made a series of higher bottoms and is now threatening to punch into all-time highs…

Forget the doom and gloomers. Revenue must be growing for the share price to do this…It suggests domestic travel is stronger than many assume.

Consumers and business have money to spend and are moving aboutthese figures are at odds with the idea of a weak domestic economy…

We already knew Sydney–Melbourne passenger numbers were strong.

Your takeaway

When you have some basic chart reading ability, you can call reports like the one from Commsec in advance.

You can make a few bucks trading stocks based off that.

But imagine if you could forecast the general market, not months ahead, but years ahead. Can you see what an advantage that would be?

Well, with the knowledge we show you in Cycles, Trends and Forecasts, you can.

That’s why subscriber Darren had this to say about one of our recent issues…

Can I just say that the last edition of CT&F fortnightly report is one of the best I have read so far; quite simply I found it an amazing and eye opening edition, and I cannot wait for further editions to build on this one. A big congratulations on it, quite brilliant.’

If you’d like to know why Darren emailed us that, go here.


Terence Duffy,

Lead Researcher, Cycles, Trends and Forecasts

Join Markets and Money on Google+

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