Hey friend,
A lot of economic data this morning.
First, there’s the PCE Index – the Fed’s preferred inflation gauge.
It came in 0.1% higher than forecast – 0.4% monthly and 3.7% annually – which will likely increase pressure on the Fed to not cut or even raise rates.
Then, there was personal income and consumer spending.
Both figures also came in ahead of expectations, although personal income had the bigger surprise.
Finally, there were updated estimates of second-quarter GDP growth.
This one came in bang on with estimates – at 1.5%.
Let’s see how markets have been moving.
The Daily Direction
Note: All indexes closed slightly higher yesterday and have generally been slightly positive today – sending the short-term direction for the Russell 2000 and the Nasdaq back upward.
The Daily Nugget
Don’t get anchored to the first number.
There’s a well-known mental trap called anchoring bias.
It happens when the first number you hear starts influencing everything that comes after it.
An analyst says earnings should come in at $2.00 a share.
Now $2.00 becomes the number in your head.
A strategist says the S&P should finish the year at 7,000.
Same thing.
Even after new information comes in, that original number can hang around longer than it should.
That’s the trap.
The first estimate starts feeling like the “right” one…
When really, it was just the best guess someone had at the time.
Markets change. Sales improve.
Margins move. Demand strengthens or weakens.
The economy surprises.
Once that happens, the old estimate may not deserve nearly as much weight.
Good traders are always happy to change their minds.
They don’t keep defending an old number just because it was the one they started with.
That doesn’t mean changing your view every time a headline hits.
It means checking whether your anchor still makes sense.
Ask yourself:
If I were looking at this fresh today, with everything I know now, would I still use the same estimate?
If the answer is no, move the anchor.
Your first forecast is a starting point.
It shouldn’t become handcuffs.
The Traders Agency Team
P.S. Head Trader Ross Givens made a similar point earlier today: Wall Street has spent much of this year raising its numbers as reality came in stronger than expected.
And in just a few hours at 3 p.m. Eastern today…
He’s going LIVE to show you one way he looks for those gaps at the individual-company level – before the wider market fully catches up.
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And it could have had you sitting on open gains like 797%… 273%… and even 1,447%.
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And Ross will see you at 3 p.m. ET in a bit.
P.P.S. If you’re planning to attend on a mobile device, make sure you download the presentation app now so you don’t miss anything when it starts. See you there.
iOS: https://apps.apple.com/us/app/goto/id1465614785
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