Day Trading and the Unemployment Rate are like siamese twins in a sibling rivlary – they are joined at the hip, whether they like it or not.
The unemployment rate took an unexpected jump as reported on Friday, Nov 6th. Leading Economists expected the rate to increase from 9.8% to 9.9% – but rising job losses and position cut-backs pushed the unemployment rate up by 0.4%.
A 0.4% increase in unemployment rate may not seem like a big deal, but believe me when I say this – it is HUGE. And it opened the Day Trading Floodgates.
And not only that, but it pushed the rate up over the “double digit barrier” – For many people, 10% unemployment compared to 9.9% psychologically seems like a much wider gap than 9.8% to 9.9%.
This will make the unemployment rate (and other employment data) even more politically sensitive than it already is. Knowing that the magnifying glass is keenly focused on them, look for key government figures to try anything in their power to push for more job creation – but at the same time, the record deficit and budget cut-backs will make this a tall order.
What does this mean? High unemployment is here for the long haul (as we discussed in an earlier article). And payrolls, which have declined for 22 consecutive months now, since the economic pain started in December 2007, will likely continue to shrink.
If you are one of the unfortunate few to be among the 10.2% unemployed, this won’t come as very much solace to you. But high and rising unemployment creates some fantastic day trading opportunities.
Consider Friday’s market movement (CLICK HERE TO SEE A PICTURE) – Following the unemployment announcement, the S&P futures market dropped by a ridiculous 12 points!
A Day Trader who knew when this was going to happen, and knew how to take advantage of it, would have been well positioned to pull in HUGE day trading profits in just a few minutes, or even less.
Unemployment rates are a very sensitive subject right now. Even the average citizen is watching them. Employment data moves the markets like no other indicator, creating massive volatility.
So as a Day Trader, investor, or even just a casual observer, its important to pay attention to this rate, and study how the markets react.
Because, after all, the stock market is nothing but a reflection of the mood of the masses in relation to the economy.
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