Did you get caught in the bear trap? Listening to all the doomsday correction pundits?
Ready For the Monthly US Employment Report – February 2014?
The US Non-Farm Payroll report is a popular day for professional traders. The day usually brings a sharp move the moment the report is released on the first Friday of the month at 8:30 AM (EST). Traders usually like to take advantage of the sharp move and close out a position seconds, minutes, or hours later. However, if you hold on for too long, you might be disappointed, as the moves may come back to earth. Be prepared with some statistics for the ETFs that track the S&P 500 (SPY), Gold, (GLD), and US Ten Year Treasury Rates (IEF). The numbers below represent, in absolute value, the size of the moves of the given category. For example, the overnight move (Day Before Close to Open on NFP) for SPY (S&P500) is on average $1.78 up or down. So if you are making a directional trade or a volatility play, understand the size of the move you can expect.
| Ticker | Spot Price | Open to Close on NFP Day | Day Before Close to Open on NFP Day | Day Before Close to Close on NFP Day | Typical 1 Standard Deviation 1 Day |
| SPY | $177.04 | $1.30 | $1.78 | $1.35 | $2.15 |
| GLD | $121.20 | $0.80 | $1.60 | $1.25 | $1.59 |
| IEF | $101.75 | $0.24 | $0.35 | $0.26 | $0.46 |
Don’t let trades outlive their usefulness.
Good luck and trade rationally.
Market Commentary – February 3, 2014
Last week saw a lot of choppiness in the market with a bearish tone in the market. The S&P 500 rallies were mostly met with selling. The news of the emerging market outflows continued to dominate the headlines. Underwhelming earnings and guidance from some important companies did not help either. However the rallies did show that there were interested buyers. They just did not get any instant gratification and are being forced to sweat. Now onto this week.
Market Comments – January 27, 2014
Hope you are ready for some action. Last week’s price action was pretty weak for equities. There were concerns over emerging markets such as Argentina and Turkey. Some stories of signs of a slowdown in the Chinese economy. Earnings have not been particularly stellar save for a few exceptions. The continued expectation of the US Fed tapering their bond purchasing program. All of these factors were reported in regards to the sell off. The post sell off reaction along with a flurry of news and reports should lead to a busy week for trading. Highlights will include:
Monday – Apple Earnings, New Home Sales. Tuesday – Durable Goods Orders, Ford Earnings. Wednesday – FOMC Announcement, Boeing Earnings. Thursday GDP, Amazon and Google Earnings. Friday – Mastercard Earnings, Personal Income.
Market Comments – January 20, 2014
- The function of education is to teach one to think intensively and to think critically. Intelligence plus character – that is the goal of true education.
- The time is always right to do what is right.
-Rev. Dr. Martin Luther King, Jr.
Last week we started off with a decidedly bearish day where the market was relentless with it’s downward price action. What a difference 24 hours later. While a little less dramatic the trend on Tuesday was clearly bullish and most of Monday’s action was reversed. Then things quieted down a bit the rest of the week. Somewhat interesting, was the lack of fighting between buyers and sellers on Monday. Tuesday offered only mild resistance compared to Monday but no clear signs that the buyers were in jeopardy. It made it easy if you were positioned in the right direction. The follow through for the rest of the week showed little conviction in either direction. This can happen during the earnings season. Investors and traders are more interested in individual stocks or they are trying to get a picture of the condition of the economy as companies are providing information on sales and other trends. This can also be a sign of market indecision and lack of commitment of investment capital. This fickleness of the market leads to higher perceived volatility. In other words, if you stare at the chart every minute of each trading day you will think the volatility is off the charts. If you only observed prices twice a month you would think nothing much is happening.
Market Comments – January 13, 2013
The new year has been off to a pretty quiet start in terms of market movements. Not surprising due to the slow trickle of market participants coming back from holiday schedules.
In terms of economic news the monthly U.S. job report made things unclear since it was a worse report than expected. This continues the “bad economic news = good news for asset prices” cycle we have been in since the U.S. Federal Reserve Board has been participating in the markets through quantitative easing. Lately with all the prior month revisions, weather, government effects the report results have seemed to become less relevant. The event is more important. Here the prevailing opinion is that the numbers themselves don’t move markets, it’s the pent up demand or reaction trading that moves it. In a nutshell, think of the economic release as an opportunity to buy or sell and since everyone thinks the same there will be increased buying or selling. The point is that the news itself doesn’t move the markets, it’s the market using the news as an opportunity to move. More on that in a later post.