Usually, if the monthly jobs report is better or worse than expected, the day after its release is a busy day in the stock market. The report that was released on April 3rd was worse than expected, and stocks responded in kind the following Monday by dropping. 126,000 jobs were added to the economy, which seems good, but only until you consider the fact that it was expected that there would be 245,000 jobs added within the U.S. in total. It was the worst month seen on the job front in over a year, but it wasn’t felt right away in the S&P 500. This index actually went up almost 14 points on Monday, April 6th, indicating that poor job reports wasn’t going to slow down the growth in the U.S. economy.
Short term traders might have lost out on this because a lot of what was predicted to happen didn’t come to fruition. What this doesn’t take into account, though, is the fact that there can be a long term impact upon bad news like this. And it can go well beyond the stock market and into other marketplaces. For example, it’s predicted by some that the poor jobs report will actually be good for the price of oil. It’s a cause and effect type of reasoning. The poor jobs report will likely stall the Fed’s decision to raise rates, and this means that the strong dollar is starting to have an impact on how quickly jobs can be added to the economy. The strong dollar reduces the amount of exports out of the United States as buying them becomes more expensive for other countries, and this means that imports can be increased more easily. The U.S. does create oil domestically, but the bulk of oil is imported, and it creates a way for more oil to be brought in and less oil to go out with less fighting back from U.S. producers because this is the cheapest way to do things for them. In short, it creates a scenario where oil can be brought into the U.S. at a faster rate.
It’s a long term approach to a short term trading strategy. In fact, all short term trading should be that way. You need to have an eye for what could happen a few weeks or months from now, so that when you are trading quickly, you are well prepared for what’s about to happen in the heat of the moment, without ever wasting time contemplating the right decision. This goes for all types of traders, from day traders to binary options traders. Having a knowledge base on which your quick decisions are being based upon will help you to improve the accuracy of your trades, especially if you are able to predict outcomes based upon events like the Fed’s job report.
Of course, the above theory only works if the rate is delayed in being raised. There are other reasons why this might be delayed, such as slower than average inflation, but in the end, this is a decision that the Fed has been contemplating for a long time, and a small bump in the road might not be enough to change any plans that have been made. The best choice for you is to watch any developments that might occur, and make a plan for any possibility that could be proposed. When you have a plan in place for any occurence, making speedy decisions becomes a lot easier and more accurate, thus improving the profitability of your trading.