Positive employment report sparks massive selling on Friday.
Analysts are saying that the selling was "orderly" on Wall Street yesterday. I beg to differ. While a pullback was expected after such a long runup, I personally do not see a one-day drop of over 2% orderly. It was an ugly day all-around.
The massive selloff has been attributed to a better-than-expected jobs report released Friday. The US added 200,000 new jobs in January, and this instilled fear in investors about inflation which could lead to tighter monetary policy by the Federal Reserve.
The benchmark index closed down -59.85 points, 2.1%, at 2762.13. This represented the biggest one-day drop since September 2016. SPX posted a loss of -3.9% for the week after closing at an all-time high just one week ago. The weekly drop was the worst since January 2016.
SPX 6 month chart
The "fear index", VIX, spiked yesterday 29% to a high of 17.39, the highest since November 2016.
VIX 6 month chart
We do not have any open positions on this weekend; we were knocked out of two trades yesterday so will reload at an appropriate time.
Next week's economic news is summarized below:
Monday, February 5
No significant news releases
8:30 am International Trade
8:50 am Fed's James Bullard speaks
8:30 am Fed's William Dudley speaks
10:30 am EIA Petroleum Status Report
11:15 am Fed's Charles Evans speaks
8:30 am Jobless Claims
9:00 am Fed's Neel Kashkari speaks
For those unfamiliar with the strategies we trade, the trade management guidelines for all the Couch Potato Trader plays can be found here:
Link to Articles
Trade updates will be posted as appropriate.
As always, stay keen on your risk management and trade carefully,