Gaming the Jobs Report

There are some tendencies ahead of the job report that can give the trader an edge on predicting the market's reaction to the jobs report.  In general, if the market are very negative ahead of a jobs report, the jobs report can often serve as the flush out point (see SPX chart for early July 09, October 09, June 10, July 10).  If the market is complacent and positive ahead of a jobs report, the jobs report can often be a top (see SPX chart for early June 09, Aug 09, Jan 10).

The trading template that I usually use for the jobs report is the same that I use for other event days like the FOMC, big awaited announcements like the stress test, etc.

 There was something that I heard on CNBC that was actually true and useful information.  Scott Nations mentioned that a market that is strong the week of the jobs report usually reacts positively on the jobs number, especially if there is nervous sentiment ahead of the number like this one. 

For Friday, I see a small possibility of a top, but perhaps a continuation into next week as the FOMC meeting is on Tuesday.   I definitely do not think we will drop big on the number, there are too many looking to buy on a weak jobs number that I doubt the market will oblige.

I will be looking to cover my short this morning.