In most cases, the market tends to have a strong positive correlation with the news. This means that when positive news is released, we see gains and when negative news is released, we see declines. However, in some cases, the correlation becomes negative. This means that negative news will cause gains. Recently, the US jobs report was released for the month of May. While the data was overwhelmingly negative, it could send the values of US stocks higher. Today, we'll talk about the data, why it could send US stocks upward, and how binary options traders can take advantage of the trends.
US Jobs Data Proves To Be Overwhelmingly Concerning
Late in the week, the US jobs data for the month of May was released, and the data was concerning to say the least. In the month of May, the United States economy only added 38,000 jobs. While this may seem like a decent number from the outside looking in, it's actually overwhelmingly concerning. After all, when economies are doing well, businesses are selling more products and services. This requires these companies to hire help in order to fulfill on sales.
In the United States strong economic conditions are signaled when the economy adds at least 200,000 jobs consistently on a monthly basis. This month, economists were expecting for the number to miss this mark. However, the 38,000 jobs that were added fell well short of expectations, which were 162,000 job additions. All in all, the report was overwhelmingly negative. To make matters worse, the negative jobs growth is becoming a trend in the United States. In a statement, Dan North, chief economist at Euler Homes North America had the following to offer…
“There's one word for it, which is just shocking… Unfortunately, it does look like a trend. It's not great news.”
How This Could Be A Good Thing For The Market
As mentioned above, in most cases, negative economic news is negative news for the market. However, at the moment, negative economic news may actually be good news for the market. You see, the US market has run into quite a bit of resistance as of late as investors have expected for the Federal Reserve to increase its interest rate. If this happens, a stronger USD will likely cause exports to decline. Not to mention the issues that will come along with regard to consumer spending, home sales, growth in jobs, and more. However, in order for the Federal Reserve to increase its interest rate, economic conditions in the United States will have to prove to be positive. That's simply not the case. As such, investors are now expecting another delay in the Fed's rate hike, which will help to support growth in the market.
How Binary Options Traders Can Take Advantage Of The Trends
As binary options traders, it's our job to find trends and make trades in order to take advantage of those trends. In this particular case, this job becomes relatively simple. Because of the weak economic data, it's incredibly likely that stocks in the US will start to recover over the next few trading sessions. So, binary options traders should be watching for strong call option opportunities in the Dow, S&P 500, and NASDAQ. This will allow you to follow the trends up to the top.
What Do You Think?
Where do you think US stocks are headed moving forward and why? Let us know your opinion in the comments below!
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