NFP 3 Main Numbers

[Caseynotes]

Contradiction in the NFP number and Unemployment rate often cause whipsawing. The 3 main numbers to consider in the data release are;

NFP expected 200K

Unemployment Rate expected to decrease from 5.0% to 4.9%

Average Hourly Earnings expected to increase from 2.3% to 2.4%

 

Algos and humans alike usually read them in that order and respond accordingly in that order, If there is contradiction and unexpected numbers there will be whipsawing but the figure that currently sets the longer time frame tone is Average Hourly Earning as this has greater influence on the likelyhood or not of Interest Rate hikes.

 

The trick as always is to stay out of any whipsaw and then look to join a controlled move to a new price level so wait for the bars to return to a more normal size.

Look for a spike and then channel continuation and join the channel, or a spike and then pullback then continuation and join after the pullback.

 

 

 

[Mercury]

Does anyone have any idea what to look for with NFP anymore?  I mean is a strong number set good for stock indices or bad because CBs will be less accomodative in policy?  Is a bad number showing an economy slowing and therefore bad for stocks?  In any case the NFP can't go on raising 200k+ jobs every month right?  At some point the economy must get to as fully employed a level as it is going to be right?  At which point NFP becomes not at all important or perhaps more so for an impending contraction?

 

This is the danger of becoming locked into received wisdom on so-called fundamentals.  It can be fine for a period of time but then the market enters a new phase and the fundamentals start to throw off mixed signals, like now maybe?  In an environment where one can't decide whether a strong number from NFP is good or bad the only sensible course of action is as  is suggesting, stay the **** out until the post NFP trend becomes clear.

[Caseynotes]

I love the big data releases, not because I want to predict, but because they often give an excellent opportunity to react. If the large institutions decide they need to reposition they can create trends lasting many hours if not days as they incrementally move price to a new 'fair value area' (remember, they can't just chuck in a monster order in one go).

 

Trying to play the actual data release is death (no matter what some gurus tell you). Everything is against you;

the horrendous increase in the spread,

the horrendous whipsawing,

the horrendous slippage,

all mean that even if you are right you will be wrong.

 

However, it is definitely worth adding your guess for the chance of winning a new IG Community badge. See NFP guesses thread.

 

 

[Caseynotes]

Replace 'flambe' with 'data releases'...

 

 

[Caseynotes]

Average Hourly Earnings 2.5%. Actually higher than forecast.

Confuses picture re rate hikes and the lower than forecast NFP

[Mercury]

Confusion good!  It breeds uncertainty and that brings out the Bear...

 

Could it be bad news (i.e. lower NFP data) is finally bad news for stocks?  Probably speaking too soon but still the initial reaction is bearish.

[Caseynotes]

NFP today serves up traders nightmare, great jobs figure gives spike in one direction then poor average earnings figure gives spike in opposite direction (even algos read the data sequentially), so both bulls and bears get entries triggered then immediately stopped out.

Average earnings figure is more closely linked to prospect of rate rises so could see dollar weakness into the weekend but watch out for end of week covering to close out positions bring every thing back to where it started.