From the desk of Joe Rios
The financial markets ended the week with a strong US October jobs report. The unemployment rate fell to 5.8% and wages moved up slightly. The US bond market reacted with the US 10 Year Note breaking out from the recent downtrend pushing interest rate yield lower. In the currency market the US dollar reacted to lower interest rate yields as expected by retracing from recent highs. However in the stock market the S&P 500 tested the recent upward trend support line but failed to break instead prices consolidated near recent highs. The RQ Dynamic Market Sentiment indicator went from Risk-ON to Conflict to Mixed to Risk-OFF before finishing the week’s session in Mixed sentiment. What’s the market’s message? What are the correlations telling us from Friday’s price action to the employment data? Is the bad news is good news theme over? Are we shifting to good news is good news?
In the week ahead I will focus on the markets message and try to gain clarity to the direction of the benchmarks. Exercise in patience may be prudent until the markets give us a clear message. Should we see Conflict sentiment I will look to the currency market for trading opportunities. Should we see Risk-ON or Risk-OFF then I will look to the risk assets for trading opportunities. The economic calendar is winding down however there is plenty of Fedspeak throughout the week. Therefore I will pay close attention to the market’s technical activities and trade accordingly.
Joe Rios
Rios Quantitative LLC – Chief Strategist
Correlation between the S&P 500 and the US 10 Yr Note futures pre and post Friday’s US employment data.
S&P 500 and the US 10 Yr Note futures trend lines with the RQ Dynamic Market Sentiment indicator pre and post Friday’s US employment data.
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Educational Workshops – Covering the RiosQuant Trading Methods and Indicators:
Sunday
8:30 PM CNY CPI
Monday
7:30 PM AUD NAB Business Confidence
Tuesday
All Day USD Bank Holiday – Veterans Day
3:00 PM NZD RBNZ Financial Stability Report
Wednesday
4:30 AM GBP Claimant Count Change
5:30 AM GBP BOE Gov. Carney speaks and BOE Inflation Report
12:00 PM USD FOMC Member Kocherlakota Speaks
1:01 PM USD 10 Year Bond Auction
8:30 PM AUD RBA Assistant Gov. Kent Speaks
Thursday
12:30 AM CNY Industrial Production
8:30 AM USD Unemployment Claims
11:00 AM Crude Oil Inventories
Friday
1:30 AM EUR French Preliminary GDP
2:00 AM EUR German Preliminary GDP
8:30 AM USD Core Retail Sales
8:30 AM CAD Manufacturing Sales
9:55 AM USD Preliminary UoM Consumer Sentiment
10:30 AM Natural Gas Storage
