NFP Preview: 'Good News Is Bad News' May Not Work This Time
Michael Kramer | Dec 08, 2023 08:52
Yesterday was a very boring day in my view. The job report comes today, and it feels like everything I read is about November being a strong job report because of the autoworkers and screenwriters coming back to work.
I never even noticed they were gone when looking at the stats over the past few months.
Expectations are for nonfarm payrolls to rise by 183,000 in November from 150,000 in October. The unemployment rate is seen staying flat at 3.9%, while wage growth ticks lower to 4.0% from 4.1%.
The equity market doesn’t seem very concerned with a VIX around 13, but the IV for today’s expiration is around 17%, and it is then expected to drop to around 10.5% on Monday.
So, implied volatility for today is higher, but even at 17, it doesn’t seem overly high.
At least from the standpoint of the options market, it looks like the S&P 500 105% options are trading with tighter implied volatility to the 95% moneyness options for today’s print, and then the spread normalizes starting next week.
There appears to be a desire to own calls into today’s report.
But there appears to be a lot more call gamma on the board than put gamma, and the 4,600 level appears to be a wall, which may act to hold the index in place through Opex next Friday because that 4,600 level has a lot of gamma built up around it.
So while it appears that traders are betting on the higher index, at least based on the options positioning for today and heading into next week, there is nowhere to go.
It could change if the payroll report somehow stuns the market higher, but I’m not sure what a stunning report would look like. Maybe just 150k jobs were created or something.
Get The App
Anything higher than the estimates would probably push rates higher, and anything less than 100k would not be a good indication for the economy. So we will have to wait and see.
So far, at least the index hasn’t moved beyond last week’s high, and that is, at this point, the only thing that is keeping my count alive.
If we move beyond last week’s high, that would mean the July high would be challenged, and that would mean my count is wrong.
Optically, it looks like 5 waves are down in July and three waves up starting in October.
The nice thing about Elliott wave is that you are right until you are wrong, and then you can fix the count to make it all work again so that you look like you were right. It’s one of the main reasons I do not like it.
The gap from yesterday’s close could be filled quickly, And the index still looks like it is consolidating. It still looks like a diamond pattern after adjusting for yesterday’s decline, which now tells us there wasn’t a break of the pattern, yet.
The VIX is also consolidating similarly to the S&P 500, which supports the S&P 500 chart above.
We will see what today brings. The equity market needs a print that will be just right; anything too hot or cold won’t work this time.
Original Post
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.