US equities market sells off as labor market continues to tighten

US markets sold off across the board. While I have not actively tracked the major indices, I was pretty active in trading the US30 contract for difference. This mimics the Dow Jones Industrial Average and tends to be more volatile due to its price weighted nature.

There are multiple “theories” or explanations to this sell off over the past few days. High valuations, surge in yields, and stretched technical indicators extended deep into the overbought zone  are just some of them (source). The Dow Jones Industrial Average returned about 3 months worth of gains in the course of 3 days.

US30Daily
US30  1-Day

I did manage to scalp fairly well trading the US30 CFD by buying short term retracements on extended intra-day sell-offs. Since noticing that this index is typically more active in the mornings, I would look to scalp during just as the market opens.

Not to be too caught up in the sell-off, let’s take a look at the longer term fundamentals in the US. Labor markets continue to tighten. The non-farm payrolls in February added 200K more jobs beating the 181K estimate. The unemployment rate continues to hold strong at 4.1%.

As of the moment, I’m really surprised to see gold has sold off too along with the equities. From a technical standpoint, it’s currently testing a major daily level and the doji formed is a good sign that it is holding up.

XAUUSDDaily
XAUUSD 1-Day

I admit my timing was a bit off as I scaled into this entry. Fundamentally speaking, the sell off in equities could encourage investors to flock into bonds and commodities. Treasury yields have soared over the past few days, but I do believe gold will continue to perform. Typically, I noticed it has an inverse performance to the broader indices especially back in November as these indices continuously posted higher highs.

NZDCADDaily
NZDCAD 1-Day

This pair continues to be in my spotlight as I have scaled in and out of this pair several times. I managed to buy at the support level and sell at a relative high the past few times. The New Zealand dollar followed suit in the broader market selloff and I have entered long once again on the daily resistance turned support.

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