- Labor Day marks the end of summer
- Nonfarm payroll comes Friday
Monday is Labor Day in the United States of America, which is traditionally the end of summer. It’s a huge holiday for traders all over the country, and therefore it’s very unlikely that we will see any type of volume coming to futures markets. As far as stock markets are concerned, they are closed. There will be some electronic trading of commodities and the like in various hours, but traders are generally better served to stay out of the market.
Keep in mind that nonfarm payroll comes out on Friday, so this entire week could be a waste in terms of the markets. Volume will be light, and traders will be waiting for the first bit of economic news to come out for the quarter, which of course is the jobs figure. With the Federal Reserve unclear as far as what they are going to do, and the economic picture looking uncertain, it’s going to be a very difficult trading environment.
Light volume causes major issues
Light volume means major issues to market movements, and this could be the theme going forward. There are far too many concerns out there right now to have conviction in any particular direction when it comes to certain markets, obviously with the stock markets kicking most of the money around right now. Bond markets have been on fire, so it’s likely we’ll keep seeing that the market continues to cause issues too.
Second-worst week of the year
The week leading into Labor Day and a few days after it are known as being one of the worst weeks of the year, second only to the week between Christmas and New Year’s Day. As such, it’s very likely that you are going to be better served to take longer-term positions and in small increments. Your discipline is going to be paramount at this point. You will need to be very diligent with your stop losses, and you should expect them to get hit quite often. Eventually, the markets will pick a direction, but until then it’s going to be very difficult to stomach the volatility.
This year seems to be especially bad, as a simple tweet can throw the markets around the world into disarray. Algorithm trading is now the norm and not the exception, and these computer programs tend to simply react to keywords, regardless of what they may actually mean.
With that in mind, several traders will probably be sitting out until the following Monday as there simply isn’t much in the way of conviction right now as seen on the charts. Eventually, though, the volume will come back and traders will start to express their opinion in a more substantive way.