Trading Context
The Standard & Poor's 500 index edged up 0.3% this week as investors considered the potential effects of weaker-than-expected monthly payroll data.
Impact Snapshot
PPI Inflation - Wednesday
CPI Inflation - Thursday
Unemployment Claims - Thursday
Consumer Sentiment - Friday
Macro Viewpoint
US stocks traded lower on Friday, though finished higher on the week, as investors digested another weak labor report and stagnant manufacturing business sentiment against talk of a resilient US consumer and increased Fed rate cut expectations.
NFP Session re-cap
The competition in trading is fierce. No more than 2-5% of short-term retail traders make money. If you want to trade and be competitive, you're going to be very much like the professional athlete that keeps training, constantly evolving with the sport, and learning new nuances that will give them an edge.
Trading is no different. To be successful, it requires a skill mix, including quick decision-making, emotional control, and the ability to analyze the markets efficiently, while emotional reactions like fear, greed, and impatience can cloud judgment.
Putting this into context, we’re reflecting on the market outlook we shared exclusively with our paid subscribers ahead of Friday’s NFP release. 👇
As highlighted in our outlook (hours before the fact), we anticipated an aggressive directional swing following the release, one that would initially reflect market sentiment but ultimately present a prime shorting opportunity, followed by a corrective move.
When the NFP data dropped at 8:30 a.m., most traders fixated on the headline figure, interpreting it as a strong signal that the Fed was more likely to cut interest rates.
Many became emotionally attached to the economic number, chasing the move higher without recognizing the significant risk they were taking on. Now imagine if you knew this piece of information and you were well prepared for the correction follow-up, with profit-taking exactly at the first pivot we’ve shared.
By understanding some of the nuances we’re sharing on a daily basis and adding context to price action, you’ll get a significant edge over the competition.
Prime Intelligence
Following the softer than expected jobs print on Friday, institutional desk flows were active and near universally tilted towards put buying across a range of tenors.
Whether buying in the shorter or longer dated space, we saw a range of accounts continue to buy protection in SPX and NDX after the print. Vol still looks attractive to us, especially in SPX out to October.
In today’s brief, we analyze the latest market state and share some trade ideas insights that were recently performed by institutional money managers as hedges using options and futures.
Join hundreds of subscribers already on the inside! 👇
