Will the payroll report Friday cause the market to break out one way or the other? We will sit on the sidelines for a weekly trade and let the news settle.
The market remains "stuck" with very low volume going into the Holiday weekend. Volume will continue to be close to non-existent for the rest of the week. The monthly Non Farms Payroll Report will be released at 8:30 Friday morning, which will hold the attention of all investors not already gone for the long weekend.
To quote Jim Brown in last night's Market Wrap: "Having the payroll report the day before a three-day weekend is always a traumatic event but this time around, it is even more worrisome because Feds have already said a hot report would push them towards a rate hike."
The benchmark index SPX has not moved more than 1% in over 30 trading days, and continues in a tight channel. The million dollar question is whether the payroll report Friday will cause a breakout in either direction. When this market does decide to move, it could be big, and I feel as much upside risk is possible as well as the downside.
Investors will return to their desks Tuesday morning, ponder the report and how it may affect their buying/selling for the last quarter of the year. This could cause the market to break out of this tight trading range either way.
Because of the additional risk of a long weekend following the employment report, I am not planning to enter a SPX Weekly Iron Condor for the September 9 cycle. This is one of those weeks that we will hold cash as our position, enjoy the weekend without a weekly trade on, and let the market play itself out after the holiday.
As always, stay keen on your risk management and trade carefully,