Hi gj0201, I’m trading NFP indirectly, and I guess due to a one-of set of technical conditions that I like, not something I normally do ahead of this type of news.
I went long Macquarie Bank MQG out-of-the money September call Options, just before close today. 20 days to expiry.
My thinking is firstly, that the stock wants to bounce. I posted an argument on the XMD thread on Monday re three waves down for the XJO in a zig-zag, i.e. expecting a bounce the next few weeks then fall away again.
MQG follows the overall market moves quite closely. It fell in the recent correction to exactly 25% of the previous rise, which is the normal first drop. We then got a Harami pattern on the weekly chart this week. In fact most major charts I review are similar. A few other technical things going on I like.
So I have a view the market wants very much to bounce here. That’s where the NFP comes in. In the next three weeks we have major news events in NFP and then Fed Reserve meeting on potential first interest rate rise. I have no idea what’s good or bad in these numbers/events, but I just need to be confident there will be volatility, that the market won’t go sideways and consolidate. That is, I’m using the NFP as a catalyst.
Whatever the number is tonight, if the market wants to go up, it tends to argue whatever happens in these catalyst events as “good” news. Even if it’s “Bad”, after the recent falls I’m not sure our market or MQG will fall much. It needs a retracement back up first.
Anyway that’s something of my thinking. Its a little bit more risqué than I’d normally trade. I also don’t normally trade a counter-trend if the bigger picture is still down, so I did reduce my position size a bit. Not much room for error in the trade, but when the market wants to go up, these sorts of numbers just somehow seem to come out to suit.
Risk/reward is good with 3-4 bagger if right and should still be less than 100% loss if wrong, I'll recover something of the position.
I’m hearing markets are down ahead of the number. Will be interesting!
(20min delay)