HOW TO TRADE NFP (FREE COURSE)
This Friday's NFP (Non-Farm Payroll) is likely to cause heavy movements in the markets. In this FREE course, we'll teach you how to trade around the news. Topics include:
👉 What Is NFP?
👉 When Does NFP Occur?
👉 When To Trade NFP
👉 Example Scenario
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The market ripped higher this morning only to give back all of its gains today after touching a new high at $5,523. Investors are not quite sure of what to think of market sentiment after the latest PCE reading which last month's number was revised higher. The presidential debate also caused uncertainty about what the potential outcome of the election could be. It seems that trading an intraday momentum play is the only real strategy working for most traders. If the bears get exhausted from this mid day sell off, the market could still drift higher.
Читать полностью…Unemployment claims remain steady for months suggesting a slowing labor market. Pending home sales came in lower as well, but house prices remain stubborn. No one is selling their homes with high mortgage rates. With house prices high and mortgage rates high, no one wants to buy a house. Sales will likely stay low, and a cooler jobs market could mean even less demand to spend on big purchases such as a house.
Data from the A1 EdgeFinder
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Retail is now mixed indices and gold, while being long other metals, SPX500, Oil and small caps. The only short positions on retail sentiment are GER30 and USDJPY.
Data from the A1 EdgeFinder
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Looking at smaller timeframes on the SPX500 show that each drift higher is followed by quick sell offs and reset the gains for the day. Different areas of the market move in different directions from each other as well. When NVDA was down, other sectors were getting bought which ended up flatlining the gains.
The direction of stocks is really uncertain based off what's going on in the US economy and the lack of direction. From seeing unrealistic bull rallies in the past, this summer could just be a lull in direction. Even with all the warning signs of a giant correction, it can very well push higher until the bubble seems well beyond the expected move. -Frank
S&P 500
The SPX500 is back to a bullish reading on the EdgeFinder with the rest of the indices. Retail sentiment is now majority short stocks after COT reports showed an increase in buying activity for the week. In this slow week of news, it is possible to see the market drift higher by the end of the week. However, stocks are not showing a clear sign of direction yet. The recent choppiness is still putting pressure on the market’s optimism as the major indices may be looking to cool off from the latest run higher.
-Frank
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EUR/USD
EURUSD falls on dollar strength this morning for the same reason gold might be falling. Price is now near a supportive trend line on the 1D timeframe where it has bounced before. If the pair can’t hold above this level, it may move lower to test the 1.064s. -Frank
S&P 500
Looking at the S&P after a minor pullback, stocks seem to want to cling to the uptrend. The summer months could be slow, and a lack of demand in the market might suggest sideways movement. Consumer confidence came out as expected this morning and lower than the previous month. Since January, consumer confidence has steadily declined nearly 14 points. It’s possible the market has topped for now, and support lies around $5,400.
BTCUSD 4H Chart
Nice start to this trade! Shared this buy signal yesterday during the selloff.
Longer term hold for me, as I'd like to have some exposure to crypto in my portfolio - but fully accept the volatility that comes with it!
Any crypto purchases could go to absolute zero, but the potential upside is very high if it becomes more mainstream over the years.
- Nick
GBP/USD
GU is up today as the indices fall in premarket and the dollar remains elevated. The pound might look stronger than the dollar right now due to falling inflation at the BoE rate target, and their central bank decided to keep interest rates unchanged. Meanwhile, the dollar is experiencing sticky inflation and still expecting a rate cut this year.
Gold
Gold prices can’t make a decision for the same reason as the indices. The whole market has caught a lengthy lull from Fed indecision and uncertainty around an interest rate cut this year. We know at some point, price will break one way or the other, and I think the jobs data will be enough to push us in a direction for next week.
NASDAQ
Since June 20, price has not moved at all. Technicals indicate that price could come back to the trend line on the 1D timeframe. It’s hard to say whether we will see a full reversal or not, but it does seem like prices need to cool down a bit before resuming the uptrend. Powell is set to speak this morning on monetary policy again in Sintra, Portugal. He will likely not tell us anything directional today, but saying nothing will likely add to the uncertainty in the market.
-Frank
July is an historically bullish month for stocks according to our seasonality scanner, so the melt up may not be over quite yet. We're about to enter the second half of the year after a red hot stock market. Growing concerns about interest rates will continue to put pressure on stocks, but it might not be enough to break the market until we see a fundamental shift from the Fed/CPI. Now that we are at this level, it is probably time to start thinking of getting more defensive on our positions going forward. Q3 and 4 could be very turbulent as we approach the presidential election and more FOMCs to come -Frank
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COT data is now updated to display the latest filings from last week. There was now a sell-off in CAD, small caps and EUR. USD saw one of the largest gains last week while SPX and NAS were getting bought again.
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So what can we trade in such a mixed market? We could probably look long term. Think of the odds of high interest rates in the next 5 years. The Fed's forecast is now at a 3.75% interest rate by 2026. Regardless of where the market moves, the expectation is that rates will be lower over time.
The Fed is even expected to cut this year. Rates are going to come down at some point, and the first cut will be the sign of future rate cuts. We can look at the increase of bond prices over time as interest rates fall.
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Gold, 4H chart:
Price bounced! 2300 clearly has some buyers present. With presidential debates happening this evening, markets may be a bit jittery.
We see yields falling sharply today, leading to a nice bounce in commodities and a dip in the USD.
I'm staying long. Will stop out if 2300 breaks.
Updates will be provided in VIP! - Nick
When you see an overly bullish market, you tend to also see small caps outperform as well. The pressure that small caps are feeling are from the fear of higher interest rates. But if the market continues higher without the RUSSELL, there may be a catch-up trade in the small caps.
However, it is likely that the large cap tech companies' AI move could carry SPX and NAS higher and leave RUSSELL in the behind. There's too much speculation and potential risks involved that it is hard to trade a directional play unless you stare at your screen all day.
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Читать полностью…DXY Daily Chart:
Price looks like it may continue higher for the time being, with this strong price action today. Higher highs and higher lows can be seen on the 4H chart.
Meanwhile, Australian & Canadian inflation came out higher than expected this week, so the dollar may struggle at the previous highs if we get there.
If we see a strong breakout on higher than expected inflation readings on Friday (Core PCE is released), it could lead to a breakout through the highs. Conversely, a lower than expected read may reverse this dollar strength.
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Gold
More weakness in the gold market occurred after consumer confidence today. Price is still stuck in a consolidation zone and is having a hard time making any moves. The 2 year treasury yield is higher as today which could be a result of higher interest rate expectations for longer. -Frank
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Gold 4H Chart:
I am still long, curious to see if price action can find support in this area.
Fundamentally I still like the global trend towards rate cuts, uncertainty with upcoming elections, and geopolitics globally still under the surface.
- Nick