NFP Data On Tap, S&P 500 Slowly Grinds Higher, Overbought?

Holiday-style trade, narrow ranges, and low volatility have been this week’s theme in the S&P 500 thus far. What is the slow chug leading up to, with Friday's BIG Jobs Number?

It seems like we just got the last jobs number yesterday, but here we are again awaiting the big data drop on Friday at 8:30 AM ET. The market consensus seems to be for 700K jobs added during the month of June, with some consensus indicators showing 690K. The expectations have seemed to increase over the last week, as expectations have risen from ~ 660K.

Last month, the Non-Farm Payroll number missed expectations; printing at 559K versus 645K expected, and the US Equity and bond markets did not care, as both marched higher.

But that was so last month. How could the markets behave on Friday’s data release?

I tend to avoid having leveraged open positions heading into big data releases like NFP and CPI. Longer-term swing trades and position trades are just fine to hold onto, however.

There is some seasonality for the S&P 500 to move higher heading into the 4th of July. Some analysis shows getting long 2 days prior to the release yields certain results over X amount over a number of years, and other analysis seems to show getting long the day before is good too. You can read about what veteran Trader Larry Williams had to say about this last year.

Analyzing the SPY today for the ETF Traders out there:

Figure 1 - SPDR S&P 500 ETF February 18, 2021 - July 1, 2021, 10:20 AM, Daily Candles Source stockcharts.com

Looking at the SPY, we have been higher eight out of the last nine trading sessions! That is a rare feat in the index. Given the recent selloff to the 50-day moving average that we were waiting for, it does make sense that we have continued higher, but eight out of the last nine sessions is rare. This is just some food for thought. In addition, we are seeing Daily RSI(14) at 67, which could indicate the SPY approaching short-term technically overbought levels in the trading days ahead. It is not all that often where the SPY will hold an RSI(14) Daily level above 70 for a lengthy period.

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Disclaimer: This content is for informational and analytical purposes only. All essays, research, and information found above represent analyses and opinions of Rafael Zorabedian, and Sunshine ...

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