The three day weekend following the Non Farms Payroll Report presents too much risk for a weekly trade entry.
This week has been a roller-coaster ride, not the ideal activity for non-directional traders. On Monday, SPX had a range of almost 25 points, and Tuesday brought another round of selling. This morning's gap of 19 points to the low of 2048 no doubt triggered many stop losses. As of this writing it appears that the lows of the day have been reached, but it is still early so it's anyone's guess what the afternoon session will bring.
The SPX 6 month chart below indicates what I see as short term support at 2050, which was pierced this morning with the gap down. If that does not hold, I think the next level at 2040 will be tested.
SPX 6 month chart
Putting today aside, we still have quite a bit of economic news to get through before the market closes early for the Holiday weekend on Thursday, including:
8:30 am Jobless Claims
8:30 am International Trade
8:30 am Janet Yellen Speaks
10:00 am Factory Orders
Markets Closed: US Holiday
8:30 am Employment Situation
8:30 am Fed Narayana Kocherlakota Speaks
12:30 pm Fed James Bullard Speaks
For those of who have been following/trading the weekly SPX Iron Condor, you are aware that there are certain weeks where I don't feel the water is "safe" for this non-directional, short term trade. This week is one of those times where I prefer to keep cash as my position going into the long weekend.
If I had any doubt in the decision to sit on the sidelines this week, the release of the Monthly Employment Situation report on Friday when the market is closed erased any of those feelings. While it could be a "non event", investors will not be able to trade on the report until Monday morning. If the report does present any unexpected surprises, it could be a very volatile open to the trading week. Weekends always present more risk for the weekly trade, and a three-day weekend following one of the most influential economic report releases adds to that risk.
We will continue to monitor the monthly RUT Iron Condor for April, and look forward to new trade entries next week.
As always, stay keen on your risk management and trade carefully,