Stocks Backtrack After Strong NFP

During the pre-Wall Street open, the much-anticipated U.S. Non-Farm Payrolls report for June hit newswires. NFP came in exceedingly strong at 224,000, beating both expectations (160K) and May’s numbers (72K). Although a good sign for the American economy, the robust NFP figure has not led to gains for U.S. stocks. Through the first half-hour of trade, the DJIA DOW, S&P 500 SPX, and NASDAQ have lagged.

In addition to NFP, several other reports were released to the public this morning. Here is a quick look at the highlights:

Event                                                        Actual       Projected     Previous

Unemployment Rate (June)                      3.7%            3.6%               3.6%

Average Hourly Earnings (YoY, June)      3.1%             3.2%               3.1%

In short, the U.S. labor market remained stable in June, with sub-4% unemployment and relatively static wages. The next key economic event is due up at 11:00 AM EST, with the FED’s semi-annual Monetary Policy Report.

U.S. Stocks Pull Back Following Solid NFP Report

Thus far, stocks are on the bear following the stronger-than-expected jobs report. The price action is being credited to new doubts surrounding a potential FED rate cut in July. Given the strong employment situation, traders are considering that the FED may hold rates firm in light of the new information.

September E-mini S&P 500 futures are in the process of retracing from this week’s fresh all-time highs. Here are the levels to watch for the remainder of the session:

• Resistance(1): All-Time High, 3006.00
• Support(1): 38% Current Wave Retracement, 2971.00
• Support(2): Bollinger MP, 2929.25

Bottom Line: Buying dips has been a profitable strategy throughout 2019. If we see continued weakness in stocks following today’s NFP report, going long from the 38% Current Wave Retracement (2971.00) isn’t a bad way to play the action.

Until elected, I will have buy orders in queue from 2972.75 in the September E-mini S&P 500. With an initial stop at 2967.75, this trade produces 20 ticks on a 1:1 risk vs reward management plan.

ABOUT THE AUTHOR See More

Shain Vernier

US Analyst

Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.

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