Happy Friday everyone! I am sorry to have missed you yesterday. The big data release that the market has been waiting for is finally here. The NFP number is scheduled to be released at 8:30 AM ET today, and heightened volatility is expected, in contrast to what we have seen so far this week.

The big data releases can be challenging to trade as a futures trader, as price movements can be volatile and whipsaw longs and shorts alike. Since the data is released before the US cash markets open, there is little action to take immediately upon the data release unless a trader is involved with futures trading.

S&P futures have been quiet in overnight and early morning trading so far, with the June S&P 500 down 1.25 (-0.03%); essentially flat. Traders are waiting on this number.

The market is expecting a consensus gain off this data of 645K - 665K jobs, and with the recent rather quiet ranges, I do expect movement in prices to be in a wider range; it could be up or down.

This is why it is crucial to have a plan in place.

Since nobody knows what the data release will be, I like to sit tight and let the data pass. Then, I will take the opportunity to reanalyze in-depth, once we have a clearer picture.

Let’s review the markets we are currently monitoring:

To sum up the current viewpoint and opinion:

I have BUY opinions for:

• iShares Trust Russell 2000 ETF (IWM) for an index reconstitution trade. At this time, I would be looking to be long and then exiting upon the actual reconstituted index going into place on June 28, 2021. Buy the rumor, sell the fact type of trade. Buy Pullbacks. For equity-bearish folks, see the IWM/SPY spread idea in the May 27th publication. Always use a stop loss level that caters to your individual risk tolerance.
• Update: 06/04: The IWM settled at $226.42 yesterday, and early morning pre-market trades show $226.71 as of the time of writing.
• Defiance Quantum ETF (QTUM) between $44.00 - $47.25. Update 05/27: I will now raise my buy idea zone upwards to $47.60. Look for pullbacks for entries. Update 06/04: QTUM closed at $48.33 in yesterday’s session. Always use a stop loss level that caters to your individual risk tolerance.
• Amplify Transformational Data Sharing ETF (BLOK) between $37.68 - $37.91. BLOK has a history of high volatility, so proceed with caution. Always use a stop loss level that caters to your individual risk tolerance. Update 06/04: It will take quite a pullback to see the 200-day moving average of $38.75 get touched. However, I will keep monitoring this one.
• Invesco MSCI Sustainable Future ETF (ERTH) between $67.76 - $70.82. Always use a stop loss level that caters to your individual risk tolerance. Update 05/27: ERTH closed at $73.50 yesterday and is continuing to look good. Update 06/01: ERTH closed at $74.12 on Friday. Update 06/02 ERTH closed at $74.89 yesterday. Update 06/04 ERTH closed at $73.73 yesterday. Since we are not overbought on the daily technicals, let’s see how this continues to play out. I like the theme of ERTH in the current landscape.

I have SELL opinions for:

• 10-Year Notes Always use a stop loss level that caters to your individual risk tolerance. Update 05/27: Yesterday, I mentioned a daily close above 133’01’5 (June) would have me looking elsewhere. It closed on 05/26 at 132’29, so this idea is still in play. Update 06/01: September 10-year notes are now the most liquid contract due to the contract roll. Always stay aware of the Contract Specifications. 10-Year Notes have been trading sideways, perhaps in anticipation of the upcoming data releases this week. If you are involved in a June 10-Year note trade, now is the time to roll to the September contract. Update 06/02: 132-00 - 132-05’5 could be interesting levels. Update 06/04: September Ten-Year Notes traded lower yesterday are trading near 131’19 - 131’20 in early morning trading. Expect heightened volatility upon the NFP data release and always use a stop loss level that caters to your individual risk tolerance.
• Invesco DB Commodity Index Tracking Fund (DBC) $18.50 - $18.75. Target 17.50 (old highs) to $17.75. Always use a stop loss level that caters to your individual risk tolerance. Use caution if you are trying this trade, knowing that the DXY could capitulate. See the May 19th publication for more details. Update 06/02 DBC closed yesterday at $18.91. Tight stop suggested. Update 06/04 DBC closed yesterday at $18.87. Let’s see how the NFP data affects DBC today. Always use a stop loss level that caters to your individual risk tolerance.

I have a HOLD opinion for:

• First Trust NASDAQ Clean Edge Smart Grid Infrastructure Index Fund (GRID). GRID has traded through our idea range of between $86.91 and $88.17. I do not encourage chasing it, if not already long, in my opinion. Update 05/27: GRID closed at $89.72 yesterday and is chugging along. I now have it listed as a Hold because there were better entry prices a week ago. Don’t chase. Update 06/01: GRID closed at $90.70 on Friday and traded just $0.04 off its 52-week high of $90.96. Short-term traders can use these levels as take-profit idea levels. Update 06/02 GRID closed at $91.20 yesterday and has reached the initial take profit levels. Short-term traders can take advantage of selling at or near the 52-week high, while longer-term traders could look for higher $90.00s - $100.00 levels to potentially continue benefiting from the infrastructure theme. Update 06/04: Grid closed at 90.55 yesterday, settling very close to its previous 52-week high. I like the theme of GRID, just like ERTH.
• Short-term traders can look at the 52-week high of $90.96 and high $90.00’s to the psychological $100.00 level as take profit level ideas. Always use a stop loss level that caters to your individual risk tolerance.

Expect some more movement today compared to the trading action earlier in the week. Plan your trade and trade your plan. Wishing you and yours a great weekend!

Thank you,

Rafael Zorabedian
Stock Trading Strategist