Trade The Journey

Trade The Journey

Happy Thanksgiving!!!

Happy Thanksgiving to all in the trading community! As we enjoy this holiday period, I’ll keep this post brief, akin to the shortened trading week we’re experiencing. Tomorrow is not just a day for Thanksgiving leftovers but also my birthday, an opportune time for me to lay out my plans for the coming year. Reflecting on my last birthday, spent in a San Diego hotel, I decided to commit to weight loss. To date, I’ve successfully lost forty pounds through a stringent diet and rigorous exercise regimen.

For the upcoming year, my focus will shift towards enhancing my personal life. I believe this will have a positive ripple effect on my trading performance. The current imbalance between work and leisure, with the scales tipped heavily towards trading, needs addressing. Though I relish the analytical challenges and the financial gains trading offers, achieving a healthier work-life balance is now a priority.

This past week has been relatively quiet in terms of economic data and earnings reports, with Nvidia being the notable exception. Their earnings and forward guidance were impressive. Next week, however, we’re bracing for a significant influx of economic data:

  • Monday: New Home Sales
  • Tuesday: Consumer Confidence
  • Wednesday: GDP – Second Estimate, Advanced Retail/Wholesale Inventories, Fed Beige Book
  • Thursday: Initial Claims, PCE, Pending Home Sales
  • Friday: ISM Manufacturing, Construction Spending

Economic Data: Conference Board Leading Indicators
The Leading Economic Index (LEI) has declined by 0.8%, with a 3.3% decrease over the past six months. Factors like tightened consumer spending and the looming resumption of student loan payments are contributing to the forecast of a minor recession. Non-financial components, particularly consumer expectations and ISM new orders, led the decline in the LEI. However, there are positives too, like the growth in manufacturer’s new orders for both consumer and capital goods, and an increase in building permits for private housing. Financially, the S&P 500 showed resilience, but the interest rate spread remains inverted, signaling caution.

The coincident economic index (CEI) rose by 0.9%, but industrial production showed a decline. Other components like payroll employment and manufacturing and trade sales saw increases. The lagging economic index (LEI) also recorded a slight increase of 0.1%.

FED Minutes
The Federal Reserve’s minutes didn’t significantly impact the market as their stance was mostly anticipated. The Fed continues to be cautious and data-dependent, with a moderated outlook for Q4. The return to the 2% inflation target is projected for 2026, contingent on the balancing of labor and product markets. The Fed acknowledged several downside risks, including tighter credit conditions and the potential for a government shutdown, but remains committed to its current policy stance.

Durable Goods Reports: October
There was a notable 5.4% drop in new orders for durable goods, highlighting the sector’s volatility. Excluding defense, the decline was even steeper at 6.7%. The transportation equipment sector particularly experienced a significant downturn in new orders and shipments.

Initial Claims: The Previous Week
Initial jobless claims were better than expected, decreasing to 209,000, with continuing job claims also declining. This indicates continued strength in the labor market, a crucial factor for consumer spending and overall economic health.

MBA Weekly Index: Previous Week
Mortgage application volume increased by 3%, with both refinance and purchase indices showing growth. This is likely a response to the lower bond yields leading to reduced mortgage rates. The average loan size for purchase applications was $403,000. The average rate for a 30-year fixed rate conforming loan declined twenty basis points to 7.41%. The average rate for a 30-year fixed rate umbo loan declined fourteen basis points to 7.41%.

This past week’s cash flow report:

This past week marked a period of positive financial progress. I successfully augmented my savings account, demonstrating fiscal discipline by refraining from making unnecessary purchases that would have otherwise increased my credit balance. Currently, my primary objective is to bring my credit balance to a more manageable level, recognizing the significance of maintaining accessible credit for future financial endeavors.

In terms of managing my finances, I have adopted a systematic approach to saving. Upon receipt of my paycheck, I allocate a predetermined amount to my savings, ensuring consistent financial growth. The remaining balance is then carefully saved with the arrival of the subsequent paycheck. This method is reflective of a principle highlighted in the book “The Richest Man in Babylon,” which emphasizes the importance of ‘Paying Yourself First’ as a foundational step in wealth accumulation. This strategy has proven effective in enhancing my overall financial position.

Grade: C

Reason: Continued Improvement

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