The Federal Reserve is focusing very intently on the US labor market for signs that their rate hiking cycle is starting to cool demand. The way the market has been translating US economic data over the last few weeks is that ‘bad economic news is good news for US stocks’. The logic is that a slowdown in the US economy will mean lower interest rates and easier economic conditions for US companies, so bad news supports stocks….for now.
On Friday we have the US NFP print and markets are expecting a further slowdown in jobs. However, if the slowdown is more marked than is currently expected then watch for that bad news becoming good news for stocks. The Markey’s minimum expectation for headline jobs is 40K, so a reading below that will be a surprise.
Looking at the seasonality of the S&P 500 around the turn of the month is really interesting from the day before to 2 days after the month's end. The S&P 500 has had an average return of 0.41% and over 60% winning trades over the last 95 years, so if we do see a big miss in the NFP job headline, then it would not be unreasonable to expect the S&P 500 to gain into Friday’s close and follow through with those gains on Monday.
Major Trade Risks: The major trade risk is that eventually ‘bad news becomes bad news!’ and also that prior seasonal patterns do not necessarily repeat themselves each year.
Disclaimer: Past results and past seasonal patterns are no indication of future performance, in particular, future market trends. seasonax GmbH neither recommends nor approves of any particular ...
Disclaimer: Past results and past seasonal patterns are no indication of future performance, in particular, future market trends. seasonax GmbH neither recommends nor approves of any particular financial instrument, group of securities, segment of industry, analysis interval or any particular idea, approach, strategy or attitude nor provides consulting nor brokerage nor asset management services. seasonax GmbH hereby excludes any explicit or implied trading recommendation, in particular, any promise, implication or guarantee that profits are earned and losses excluded, provided, however, that in case of doubt, these terms shall be interpreted in abroad sense. Any information provided by seasonax GmbH or on this website or any other kind of data media shall not be construed as any kind of guarantee, warranty or representation, in particular as set forth in a prospectus. Any user is solely responsible for the results or the trading strategy that is created, developed or applied. Indicators, trading strategies and functions provided by seasonax GmbH or on this website or any other kind of data media may contain logical or other errors leading to unexpected results, faulty trading signals and/or substantial losses. seasonax GmbH neither warrants nor guarantees the accuracy, completeness, quality, adequacy or content of the information provided by it or on this website or any other kind of data media. Any user is obligated to comply with any applicable capital market rules of the applicable jurisdiction. All published content and images on this website or any other kind of data media are protected by copyright. Any duplication, processing, distribution or any form of utilisation beyond the scope of copyright law shall require the prior written consent of the author or authors in question. Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones’ financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results. Testimonials appearing on this website may not be representative of other clients or customers and is not a guarantee of future performance or success.
