What are Price Index Indicators?

May 14, 2010 - PRLog -- We wanted to offer some explanation regarding financial instruments that traders and investors use to monitor the current movement of the stock market, as well as to predict what future movement will be.  This movement, which consists of political, environmental, economic, and other similar factors are referred to as a fundamental analysis that people involved with the stock market depend on.  Along with fundamental analysis, technical analysis is also an important indicator to develop a successful trading/investing strategy.

Keep in mind that between a fundamental and technical analysis, significant differences are seen.  For instance, the fundamental analysis would need to know a specific market just before moving to the technical analysis.  However, the technical analysis follows more than one market, as well as several market instruments.  In other words, an emphasis is placed on what needs to happen within a market with the fundamental analysis whereas emphasis is placed on market movement with the technical analysis.

Now, for the fundamental analysis to be used, several things have to factor in, which include the following:

•   Supply and Demand
•   Weather
•   Governmental Policy
•   Seasonal Cycles

What happens is that the fundamental analyst would focus on the various causes of market movement but the analysis working with a technical analysis would focus on how these market movements effect.  To help make sound estimates, currency changes would be closely monitored, along with a country’s current economy.  For this, traders and investors within the United States use several economic indicators but in addition to the numeral value these indicators provide, a forecast depend on anticipation and prediction of the market, as well as impact on the relationship between what is being anticipated and actual numbers.

The quality of data used by traders and investors can vary, which means that each economic indicator becomes more valuable when being used to improve forecasts of what the market would do in the future.  Within the United States, all economic indicators are published on weekdays and two of the most important economic factors that experts will use include the CPI or Consumer Price Index and the CCI, which stands for Consumer Confidence Index.

For the CPI or Consumer Price Index, traders and investors are able to determine what inflation will be for price movement.  This means that the Consumer Price Index is a type of economic indicator used to identify the effectiveness of current government policies.  This index is tracked on a monthly basis and considered a key economic indicator and market mover.  When the Consumer Price Index increases, inflation would be indicated.

The other important factor used is the CCI or Consumer Confidence Index.  For this, a survey is conducted that uses 5,000 households within the United States.  The outcome of this “survey” is what determines an accurate indicator of consumer confidence.  For instance, when there is a need for additional jobs, higher earning, and lower interest rates, spending power is enhanced and confidence goes up.  Members of these households are asked specific questions pertaining to current income, market condition, and if they anticipate or hope for a pay raise sometime in the future. http://www.economywatch.com/economic-statistics/price-ind...

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