Auto, Truck Sales Data Due Out at 3 pm Eastern

Two key economic figures are due out at 3:00 EST Tuesday, and traders are eagerly awaiting both to see how the market might react in late-day trading. The Monthly Auto and Truck Sales figures are each scheduled to be released this afternoon, providing a glimpse into how well auto and truck manufacturers did in July. The expectations are 4.1 million sales for autos and 5.2 million sales for trucks. Last month, autos came in at 3.86 million while trucks were in at 4.98 million. Clearly, the markets are expecting an uptick from last month. But will they get it? And what will happen if they miss? The Dow is already down huge today, so perhaps good data will show up as a late-day reversal. Conversely, will bad data lead to a continuation of its slump downward today? Early reports are not very positive. General Motors missed their mark, coming in at a 6% increase rather than 7%. That could well hold the overall numbers down, considering how they are calculated. Each auto maker reports sales individually. The reports are typically released over the course of the first three business days of the month. Using the individual reports, a total annual sales pace can be calculated after applying Commerce Department seasonal factors. It is this annual sales pace that the market refers to when discussing auto and truck sales for the month. Auto and Truck Sales measure the monthly sales of all domestically produced vehicles. They are considered an important indicator of consumer demand, accounting for roughly 25% of total retail sales. Demand for big ticket items such as autos and trucks tends to be interest rate sensitive, making the motor vehicle sector a leading indicator of business cycles. In other words, if the data come in short of expectations, we may see more panic selling. However, even if they hit their mark, there is no guarantee that stocks will rise. Why? Because, as I mentioned, the market is down big...and no one can really explain why. Look at the greater political movement. Wall Street got a big win today, as the debt ceiling debacle passed. The manufactured crisis was averted. Wall Street avoided tax increases, which were on the table, and spending cuts, which mostly went to programs that help poor people. By all political measures, today should have been a coke-fueled bonanza on Wall Street. And yet, the market is down 150 points right now. Economic data from earlier in the day certainly doesn't indicate that level of sell off is warranted. Construction spending exceeded expectations, and personal income met expectations. Personal spending was underwater, but given the income data it suggests that perhaps people are socking a little more cash away for a late-summer trip. Either that, or perhaps we're due for a dip in consumer confidence and perhaps another recession. ACTION ITEMS:

Bullish:
Traders who believe that auto sales numbers are on the rise might want to consider the following trades:

• Any of the automaker stocks, including General Motors GM and Ford F

• Rising auto sales indicate a good economy, which could point you in the direction of market ETFs like the S&P 500 ETF SPY or the Dow Jones Industrial Average ETF DIA.

Bearish:
Traders who believe that auto sales are down and the economy is headed down with them may consider an alternate positions:

• Short any of the bullish positions.

• It may seem risky, considering the boost the commodity has taken in the last year, but perhaps buying gold in any form would be a good idea. Look to gold ETFs like GLD, GDX, and GDXJ, which offer varying levels of risk and reward.

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