Markets Are Awaiting Key Jobs Data By Larry Benedict, editor, The Opportunistic Trader Earlier this week, we opened a new gold trade. Gold has been in an uptrend since last October. And the Federal Reserve’s surprise 0.5% cut on September 18 helped propel it even higher. That has pushed the SPDR Gold Shares ETF (GLD) into overbought territory. So we’re setting up for a mean reversion trade to the downside. Note that we’re not betting against a longer-term uptrend in gold. Instead, GLD looks overstretched, and we’re aiming to profit when it snaps back the other way… SPDR Gold Shares ETF (GLD) 
Source: eSignal (Click here to expand image) The Relative Strength Index (RSI) is tracking above the upper gray dashed line. That shows that GLD has become overbought (orange circle). We’ve seen previous countermoves lower during GLD’s near 12-month rally. Now we’re looking for the RSI (and other momentum indicators) to reverse lower. That would send our put option trade into good profit. It’s a similar story with the put option trade we opened on the United States Oil Fund (USO). We captured a 41.2% gain when USO rebounded from key levels earlier this month. Now we’re aiming to capture another reversal – this time to the downside. A key component of the current trade is the RSI reversing lower from resistance (green line): United States Oil Fund (USO) 
Source: eSignal (Click here to expand image) After entering the position, USO initially resumed its rally. The RSI continued to zig-zag on resistance. But that momentum recently swung lower (brown circle). USO reversed sharply off its recent short-term peak. That has put our position back into profit. I’ll continue to monitor these trades closely and reach out if you need to take any action. I’m also keeping a close eye on the SPDR S&P Homebuilders ETF (XHB), ProShares Bitcoin Strategy ETF (BITO), Invesco QQQ Trust Series 1 (QQQ), and Nvidia (NVDA) positions we’re holding. Important Jobs Data The Fed’s 0.5% cut caught the market by surprise. The decision for the bigger cut wasn’t unanimous (with one dissenting governor). But the majority of the Fed is now convinced inflation is under control. So their focus will now intensify on jobs… The strength of the jobs market will help determine the details of future cuts. And we’ll see how that jobs data feeds into the health of the overall economy. Last month, we saw a slight recovery against the overall downtrend. Nonfarm payrolls (NFPs) bounced from 89,000 the previous month to 142,000 in August. That was still lower than the 160,000 forecast, though. Unemployment had steadily risen to 4.3% since the start of the year. Yet August’s unemployment slid slightly back to 4.2%. So the next round of jobs data will be crucial. That’s all coming next week… On Tuesday, we’ll see the latest Job Openings and Labor Turnover Survey (JOLTS). Openings have been trending lower since peaking back in March 2022. The next round of NFP and unemployment data follows on Friday. This data will be key for where interest rates head from here… As always, I’ll be watching how the news unfolds and will send out your next trade as soon as the right setup appears. If you have any questions, suggestions, or other comments, reach out to me at feedback@opportunistictrader.com. Happy Trading, Larry Benedict
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