SPX closed at another new high yesterday; will the Non Farms Payroll report add fuel to the rally?
Yesterday's ECB decision to cut interest rates and comments from hedge fund manager David Tepper can be credited for yesterday's new highs. Mr. Tepper says he sees market concerns alleviating and that he is not as worried about market conditions today as he was just a month ago. SPX closed yesterday at 1940.46, +.63% from the previous day, both new closing highs.
SPX 6 month chart:
The potentially market moving Non Farms Payroll report will be released at 8:30 est. this morning. It's really anyone's guess as to how the market will react to the news, a "bad" number could also be perceived as "good". Many say that the report may already be factored into the mix, regardless of the release later this morning.
As of this writing, futures are up slightly in advance of the news. If the rally continues today and SPX is within the guidelines, I will be very cautiously entering a new weekly put credit spread trade for the June 2 weekly cycle. The option code for this cycle is SPXW140613, expiring June 13. If the market reaction to the jobs report is negative and SPX is trading down, the trade will not be opened.
I will wait until the afternoon before entering to avoid the potential late-day volatility we have seen so frequently. I am also recommending that those who feel comfortable entering a weekly trade later today consider a smaller size position than usual. While I feel bullish for the short term, at these record highs it would not take much to turn the market. So I urge extra caution to readers who enter this position.
It is a trader's choice as to exact entry time depending on your market view and trading schedule. I will look to sell a put spread with a short put delta of -.15 or less, for .75 minimum credit.
I will also be entering the weekly SPX Iron Condor "Test" position later today; this is another alternative to consider as a weekly position of a more non-directional nature. However, this will not be traded with live capital yet until a few more weeks test results can be summarized and analyzed.
Trade entry details will be posted after entry.
As always, stay keen on your risk management and trade carefully.