How to Confidently Profit in this Economy

On Friday morning, the University of Michigan's consumer confidence figure was released. The figure came in at 67.7, higher than the 65.8 the Street was expecting, and up from the prior reading of 64.1. This represented a six-month high. US equity futures rallied on Friday, as the Dow Jones Industrial Average surged nearly 200 points. Other assets like gold and crude oil also rallied. Benzinga's

alerted traders the moment the data was released. The confidence number may have had little affect on the broader move in the markets, as the results of the

summit may have dominated market sentiment.

Clearly, the reading was more positive than analysts had anticipated. This may indicate that consumers are going to ramp up their spending going forward. As consumer spending currently represents about 70% of US GDP, a more aggressive consumer could lead to economic growth and a better business outlook in the US. This, in turn, could lead to higher equity prices in the market as corporations continue to beat earnings, especially going into a potentially strong holiday season.

Confidence figures can be interpreted as positive, but their ultimate effect on the broader markets is somewhat unclear. For example, the last time the reading was this high was six months prior. Between then and now, the markets have been rocked by a variety of events including Standard & Poor's decision to downgrade the US sovereign credit rating and bleak conditions in Europe. Ultimately, then, consumer sentiment may be taken with a grain of salt: the market may be moved by circumstances unforeseen and out of the hands of US consumers.

Traders who believe that the confidence number beat is a

might want to consider the following trades:

Traders who believe that despite the consumer confidence reading, markets are in for difficult times may consider alternate positions: