Non Farm Payrolls up --> Market bullish --> Gap up --> But we Short --> $320 profits
5 min Emini Nasdaq 100
Hi,
Market gapped up on bullish non-farm payroll numbers which were larger than expected...
I did not play the gap... too late... and gaps always have a tendency to close... I waited till 10:00 am when price momentum began to show signs of weakening... Stochastic began to turn down and I shorted 1 contract at 1942 and another 2 more contracts at 1939.5 ... I rode the stochastics down all the way till the oversold region and price closed the gap and went beyond that to touch the moving averages.. there was a slight rebound and I exited at 1935.. with profits of $320.
Fundamentals:
Two of the most important economic releases were bullish. May nonfarm payrolls were up a larger than expected 157,000. April was revised modestly lower to an 80,000 increase from an originally reported 88,000 gain. The May increase represents a 1.1% annual rate of increase. That, along with wage gains, is enough to keep consumer spending rising at a 2.5% to 3.5% pace. That in turn will help real GDP stay on track for 2% to 2.5% growth the next couple of quarters (housing remains a drag that will keep growth below the long-term trend of 3%).
Hourly earnings in the employment data were up 0.3% for May. That left the year-over-year increase at 3.8%. CPI is up 2.6% over the past year, so that represents about 1% real growth in wages. As noted above, real wage growth and payroll growth will keep consumer spending rising at a good pace.
In fact, the April personal consumption expenditure data also released this morning showed spending up 0.5% in May. That provides a good foundation to start second quarter GDP towards the widely expected 2% to 2.5% real rate of growth.