Which nontraditional market indicators should we use to get an edge in our trading strategies?

EthanR answered 2 years ago …

Wow, great question. I don't know how unconventional I am, but I assess the strength or weakness of my local real estate market by tracking the number of closed sales, ratio of closed price to list price, and number of active listings on the market. As a Realtor, I have access to the local Multiple Listing Service (MLS) to do this. So I always have a pretty good idea of the direction the market is going in, and can usually predict the National home sales figures each month by projecting my local area numbers to the larger market. Right now things are pretty stinky!

As for stocks, I find myself using the Peter Lynch method more and more these days, counting cars in the store parking lots and seeing how many people are or are not filling the seats in the franchise restaurants. Another thing I do is to ask employees of the local stores how their business is doing lately. Granted, it is subjective, and only one or two stores, but you would be amazed how often their report matches the overall earnings of the company! After all, booms or recessions are usually national, as well as regional.

Recently I learned that my local Best Buy (BBY) had terrific Christmas sales numbers, but that Starbucks (SBUX) was slow, and the Darden restaurants (DRI) were really slow. And I will say that every time I go to Home Depot (HD) and Lowes (LOW) these days, I am able to find a parking spot relatively easy. Two years ago it was impossible to find parking anywhere near these stores. As this is all subjective, use your own due dilligence, but I would not want to be long either of those two companies for their next earnings report!