Stocks Rip After Dovish Fed Decision and Bullish Non-Farm Payroll Report | RJO Futures

February 3, 2017 8:53AM CST

What is Non-Farm Payroll?

The nonfarm payrolls released by the US Department of Labor presents the number of new jobs created during the previous month, in all non-agricultural business. The monthly changes in payrolls can be extremely volatile, due to its high relation with economic policy decisions made by the Central Bank. The number is also subject to strong reviews in the upcoming months, and those reviews also tend to trigger volatility across the forex board. Generally speaking, a high reading is seen as positive (or bullish) for stocks, while a low reading is seen as negative (or bearish), although previous months reviews ​and the unemployment rate are as relevant as the headline figure, and therefore market's reaction depends on how the market assets them all.

This past week, Wall Street was expecting a 175k Non-farm Payrolls consensus. The actual number of new jobs created for the month of January came out to be 227k, sending a much needed bullish injection into the stocks. This, coupled with a dovish Fed announcement on Wednesday, poises the market for further rallies into the coming months ahead. I expect to see a gradual increase in stocks and would look to get long on short term corrections or pull backs in the NASDAQ, E-Mini S&P, and the E-Mini Dow.

January Non-farm Payrolls Effect on Stocks:

S&P 500:

Kicking off the start of February, equity markets were boosted by news from Apple when they managed to beat earnings and sales projections. Furthermore, it seems as if the market is garnering some lift today from Snapchat IPO optimism and favorable chart set up. I believe that this morning’s better than expected Non-farm Payroll number is exactly what the bull camp needed to return toward January highs, and a favorable technical setup leaves the E-Mini S&P with a positive track to start the month. 

Emini 60 min Chart


Other US Indexes:

While the mini Dow today might offer the least amount of volatility, it appears to start the trading session in the tightest range and the closest to potentially crucial support. The index remains above its 50-day moving average at 19662 with uptrend channel support seen at 19746. This past week the NASDAQ mini has revealed the most upside momentum and a series of lows around the 5119.50 level, it could be an all or nothing condition going forward this morning. Uptrend channel support is seen at 5109.75 today.

Overall, January Non-farm Payrolls number came out better than expected at 227k, and we can expect stocks to continue trading with higher highs and higher lows for the coming weeks ahead. 

RJO Futures | 222 South Riverside Plaza, Suite 1200 | Chicago, Illinois 60606 | United States
800.441.1616 | 312.373.5478

This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.