Soft economic data released this week could signal a short-term winning trade during Friday's job report.
There was another miss in the ADP National Employment Report on Wednesday, and to be frank, the recent data has been brutal…
ADP came in short at 169K versus expectations and Tuesday's GDP revision took this closely watched data point negative. Without a doubt, all traders in Chicago will be laser focused on the jobs number this Friday to see if this soft data pattern is real.
Although this data has induced some selling in stocks, we have not seen panic yet. So when does the panic set in? In my mind, you need to watch the S&P 500's 200-day moving average. Once this significant level is breached, mass selling should ensue as this is an area that many money managers collectively use as a "stop" out for existing long positions in their portfolios.
As traders, we always look for these inflection points, and more importantly, how to capitalize on these moments. This week is shaping up to be critically important from a technical perspective.