The Impact of Non-Farm Employment Change on the Stock Market

4TH Nov zoom room opened very early as we had so much news and analysis to do
So Vahid opened at 07:10 EST ..Yes an early start !

The news was around the Non Farm Payroll. It measures …Change in the number of employed people during the previous month, excluding the farming industry;
Usual Effect ….greater than ‘Forecast’ is good for currency;
Next Release Dec 2, 2022
This is vital economic data released shortly after the month ends. The combination of importance and earliness makes for hefty market impacts;
Why do Traders Care. Job creation is an important leading indicator of consumer spending, which accounts for a majority of overall economic activity;

We analyzed the effect of the news for last month. The news on October 7th was bigger than forecast and this is usually good for the dollar and as we know often, what is good for the dollar is more than likely not so good for the US 500 market.

Vahid spent some time looking at the trend if you look at the chart below we saw a break though of the lower support line after the news broke which looked entirely consistent with the overall market sentiment which as you can see on the longer term chart is down.

Inevitably the sensible option in a downtrend and with the news sending the market lower, was the sell position which we took. Similar to yesterday the market sadly reversed rapidly showing bullish momentum, shortly afterwards we saw it wiping out our trade by triggering the stop loss of 2%.
With market strength now in evidence, and the resistance line also being broken (as can be seen on the 15 minute chart below), the obvious trade now was a “buy” position. We took this before seeing a big bearish candle wipe out our buy trade also stopping out with another 2% loss.

Vahid continues to try and keep things as simple as possible for us and today was no exception. About two weeks ago he revealed a strategy that can work well when we are likely to see a spike in either direction of a news event however.

Vahid told us to take two “pending” orders above and below the price, before the news event.
This way traders can utilize the breakout strategies because the objective is to scalp the market for a quick profit target.

As we know, Non-farm payroll data is an incredible volatility source that causes significant price swings.
One strategy could be, a few minutes prior to the release of important news, mark the lows and highs of the last few-hours of the trading period on the 15 minute chart.
Place sell order below the range’s low and a buy order above the range’s high.
For the two orders, place a secure stop-loss order on the opposite side of the range.
Wait for news and the initial reaction to trigger one of the orders.
After getting an open position size, cancel the pending order.
Set stop loss and take profit on existing position. Remember too that when in profit you can always move the stop loss in order to profit even if the market turns against you.

One thing we can all rely on is for Vahid to take the rough with the smooth and always tell us the truth. Since we are all in Demo more (or should be) it was no big deal, especially on the back of three consecutive winning days in November. We still see ourselves 1.6% ahead on the month so we aim to come back stronger and better on Monday.

For those interested, the charts below show each month of the news release today since June. And below is the breakdown of the NFP news for previous months so you can see the effect this had on the chart linked below.

Have a great weekend everybody. Thank you for your continued support of these reviews. More from me on Monday, direct from the trading ZOOM ROOM

Date actual result… forecast…..previous month

Nov 4 261k 196k 315k 07.30am
Oct 7, 2022 263K 248K 315K 8.30am
Sep 2, 2022 315K 295K 526K 8.30am
Aug 5, 2022 528K 250K 398K 8.30 am
Jul 8, 2022 372K 260 384K 8:30 am
Jun 3, 2022 390K 325K 436K 8:30am

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