Forex Signal (Thu May 12 2011, 8:30am NY Time EST) - US Core Retail Sales

[Henry Liu]

We’ll be getting the U.S. Core Retail Sales (and Retail Sales) figure out tomorrow. As high impact news releases are concerned, Retail Sales make up about 2/3 of U.S. GDP (Gross Domestic Product); Core Retail Sales report excludes Auto sales which comprises 20% of total retail sales. Therefore, we are more focused on daily consumer spending on goods found in such places as department stores, gas stations, and restaurants.

Here’s the forecast:

8:30am (NY Time) US Core Retail Sales Forecast 0.7% Previous 0.8%
ACTION: 1.2% BUY USDJPY / 0.2% BUY GBPUSD

The Trade Plan
The plan to trade this release is straight forward. We are going to wait for 1.2% release or better to BUY USD/JPY, or a 0.2% or worse to BUY GBP/USD. If we get a in-between release, we’ll need to look at the pre-release market condition and sentiment in order to make a decision, or just stay out of the market altogether.

We will trade this news release using after news retracement method, I will pay attention to both headline and Core Retail Sales figures, but my focus will be on the Core figure.

For more information on my trading method:
Henry Liu's Trading Method

The Market
Today’s report will give us an indication of the economy’s current health. Bloomberg reports that sales are expected to have climbed in the past month which demonstrates that employment gains are carrying consumers through soaring fuel and food costs. Retail Sales climbed 0.6% in April after a 0.4% increase in March and Core Retail Sales are expected to jump 0.5% as well.

Last Month, 244,000 payrolls were created despite a 9% rise in the jobless rate. Still, the improving job prospects is leading the way for consumer spending while gas prices have soared to almost 30 cents above the previous national average. Despite the increase at the pump, high prices are also contributing to the positive retail sales report.

Additional Thoughts
Since both releases (Core Retail Sales and Retail Sales) are scheduled together, if we get a conflict in the releases, we should stay out regardless whether or not we get our tradable deviation.

Pre-news Consideration
There should be no pre-news trading.

DEFINITION:
“(Retail Sales Core) Derivative of Retail Sales that excludes the Automobile Sales component. Automobile Sales make up roughly 25% of Retail Sales, but they can be very volatile from month to month and can distort the picture. Retail Sales with the exclusion of this volatile component is thought to be a better indicator of the underlying trend in consumer spending.”

Historical Chart and Data for US Core Retail Sales




Thanks,

 

[Pranab Deb]

Thank you very much for the fundamental analysis.

Pranab Deb

 

[yurps]

Careful

unfortunately his broader long-term analysis has failed spectacularily and Henry Liu has burnt out alot of people's trading accounts and lost subscribers 100's of thousands of Dollars, charging them a monthly subscription for the privilage.

Alot of the issues stem from the fact that he is very very stubborn and trades without stops. He thinks he must always be correct, but this is the 1st lesson u learn about trading. Even when u research alot and do your analysis, the market can defy logic and do the opposite.