How to Analyze Trends in Business
Analyzing business trends was difficult before the Internet, the advent of electronic transactions and real-time news. Now, however, investors can learn about interest rates, inflation and changes in other economic factors at the same time as regulators do. These economic factors provide economic clues about trends in business that can be used to help determine the direction of stock prices for certain companies that follow business trends.
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Instructions
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Create a calendar that tracks announcements about key developments in the economy. Most investment research sites will provide you with an economic cycle and economic date calendar.
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Go to the website econcomicindicators.gov to look up the most popular economic indicators along with historical reports. The site is maintained by the Economics and Statistics Administration, a division in the U.S. Department of Commerce.
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Select the right indicators to analyze for trends. The way you analyze the indicator will depend on what type of indicator it is.
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Determine if the indicator is a leading indicator. A leading indicator signals future events; bond yields are thought to be a good leading indicator for stock prices.
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Determine if it is a lagging indicator. Lagging indicators follow an event; they confirm that a pattern has taken place, like a recession or unemployment.
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Coincident indicators occur at the same time as the conditions they signify. Personal income is a coincidental indicator for business: low personal incomes suggest a weak economy and high personal incomes speak to a strong economy.
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Track at least two different indicators from each group type over a set period. You will begin to notice trends up, down or sideways after six months.
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