U.S. Employment Numbers:Shorting E-mini S&P 500 Futures From 2482.00

September is poised to bring high levels of activity to the U.S. markets. With the greenback and equities showing strength as of late, we are all set for a great month of trade. The U.S. Unemployment metrics are out, so let’s get to them.

Raw Data

All streaks must come to an end. August was full of positive economic news facing the U.S. economy. Today is a bit different. Take a look at the numbers:

Event                                                               Previous          Projected         Actual

Average Hourly Earnings (MoM, Aug)                 0.3%               0.2%              0.1%

Average Hourly Earnings (YoY, Aug)                   2.5%               2.6%              2.5%

Nonfarm Payrolls (Aug)                                        189k                180k              156k

Unemployment Rate (Aug)                                   4.3%                4.3%              4.4%

The big takeaways here is the decrease in Average Hourly Earnings and the increase in the Unemployment Rate. In my opinion, we are seeing the impact of a slowing of the U.S. real estate industry. Housing starts are down, as are pending sales. This slowdown accounts for a considerable portion of the U.S. workforce hitting the unemployment line.

Trading The News

Earlier this week I posted a long play on the S&P 500. It turned out to be a good entry. Today’s employment release gave us a similar intraday setup, but it happened too quickly to grab. Rest assured there is another trade upcoming for today’s U.S. session.

E-mini S&P 500 Daily Chart

September E-mini S&P 500 futures are trading above yesterday’s high with considerable volume. The cash open at 9:30 AM EST will determine where it trades for the rest of the day.

The Trade: On the first day of September we are looking to challenge August’s high of 2488.50. I look for considerable resistance going into this level. Current trade is at 2475.00, rotating to the bull.

A sell from the upper Bollinger Band of 2482.00 with the stop at 2488.75 gives a nice 1:1 reward/risk scenario.

As a general guideline, I am not a big fan of trading Bollinger Bands directly. However, the presence of August’s high gives us a concrete out and will draw participation. Election of the trade on the U.S. cash open is the optimal scenario.