Trading an Accelerating American Industrial Sector

By www.ProfitableTradingTips.com

http://profitabletradingtips.com/trading-investing/trading-an-accelerating-american-industrial-sector
American industry has been on the
upswing pretty much since the low
point of the recession.

Our interest is in trading an
accelerating American industrial
sector.

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Trading Alpha noted the surge in U.S.
Industrial Production recently.

industrial output increased sharply in
november vs. the previous month,
rising at a rate that beat expectations
by a wide margin (+1.3% vs.
econoday.com’s consensus forecast
of +0.7%).

this morning’s monthly release
strengthens the case for expecting
that the federal reserve will begin
raising interest rates next year,

perhaps sooner than the mid-2015
forecast that’s been widely cited in
recent weeks.

meantime, today’s numbers clearly
show that the us economy so far
appears to be immune to the
economic slowdown that’s weighing
on china and the stagnation that
continues to afflict the eurozone.

today’s bullish report on industrial
activity follows surprisingly strong
november numbers on retail sales
and payrolls for the us.

With economies in Europe, Asia and
many developing nations in the
doldrums the US is the sole bright
spot these days for growth and
investment.

Where is the best place to put your
money and when is the best time for
trading an accelerating American
industrial sector?

Oil Prices, Interest Rates and the
Value of the US Dollar

The US oil fracking boom plus
continued high production by OPEC
has driven oil down to unforeseen
lows.

To the extent that this continues it is
time to buy in trading an accelerating
American industrial sector.

If the US Federal Reserve comes to
believe that the US economic
recovery is sufficiently far along they
will likely raise interest rates which
makes doing business more
expensive.

Depending on how soon and how far
they raise rates it may be time to put
things on hold in trading an
sector.

And, when the Fed raises rates the
value of the US dollar will go up
versus other currencies.

This will have two consequences.
Investment capital will flow more
readily into the USA and the price of
US exports will rise.

The eventual result of this would be a
deceleration of US industrial growth
and a reason to sell in trading an
sector.

The consensus seems to be that
rates are going up.

An article in the Dallas Morning News
comments of the effects if interest
rates are heading higher

with the economy gaining
momentum, economists generally
expect the federal reserve to start
raising interest rates next year.

although a major boost seems
unlikely, any upturn will increase
borrowing costs for consumers.

those increases would most directly
affect rates charged on variable-rate
credit cards - almost all credit cards
these days have variable, not fixed,
rates - home equity loans, adjustable-
rate mortgages, and student and auto
loans.

fixed-rate mortgages - which were
averaging 3.93 percent on a 30-year
loan last week, according to freddie
mac’s nationwide survey - should
head higher even earlier, mcbride
said.

“you’ll likely see them begin to move
up as the timetable for fed action
comes into focus,” he said.

The effects of an interest rate hike
make everyone’s life more expensive
directly adding to costs of doing
business and reducing demand from
consumers dealing with higher
interest rates.

In the Fed raises rates too far and too
fast will certainly be time to put any
purchase orders on hold in trading an
sector.

What to Trade

An all-around good way to trade the
American industrial sector is the S&P
500 Industrial Sector Index.

An ETF such as SP500-20 or SP500-
20TR are good choices for tracking
this sector.

In the last two years or so
the INDEXSP:SP500-20 risen from
just ove $3000 a share to $480 a
share as seen on Google Finance.

How long with this growth last and
when is the time to bail out when
trading an accelerating American
industrial sector?

You will need to track the basics and
market sentiment as this story
unfolds.

Trading an Accelerating American Industrial Sector

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Trading an Accelerating American Industrial Sector