The US Commerce department reported on Monday that retail sales remain high. In March they were up .8% over March of 2011. The news seemed to catch the market by surprise. After the selloff late last week and earnings that were not invigorating many analysists were looking for the current retreat to continue.
The release of the data now suggests that consumers haven’t been overwhelmed by soaring gas prices, and they have been putting enough aside to get them through rough patch with rising prices.
Originally Wall Street felt that year over year growth of a little more than 1.3% would be where we are at this time of year, but this new data now projects that spending in 2012 will nearly double the projected pace.
Many factors were cited.
First gasoline prices that are up more than 15% since last fall are not having as big of a negative effect as many feared. The unusually warm winter has driven down natural gas prices that allowed many consumers to put those dollars into gasoline.
Second automobiles are far more fuel efficient than they were just five years ago. The average automobile today is getting over 24 miles to a gallon versus less than 21. That means that the majority cars are getting 15% more milage on every tank of gas.
The final factor is that real wages are rising. The average consumer is making enough extra income to more than pay for the rising cost of energy for their car.
Add all of these factors up and it makes for the prospect of a better stock market.
Is the market guaranteed to go up on this positive news? Of course not, but it is going higher again and this rally could lead to more gains. Perhaps the recent drawdown was the impetus that we need to go to new highs? Only time can tell us for sure, but the new clues that are being revealed give us the opportunity that we look for.
Trading the market takes discipline and that is what I can teach you, how to have the discipline to make good trades in any market.
Being prepared to react to the market is the key and that is what working with me one on one will help you to do. To contact one of my financial consultants and learn how I can teach you how to make successful trading decisions, simply click here:
Keep those stops tight.
Todd “Bubba” Horwitz
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