The first week of each month is usually the most important, as the latest non-farm payrolls data are released during this period. These figures often set the tone for the market throughout the rest of the month. This is particularly true when the market is highly sensitive to interest-rate expectations, as the release can quickly shift investor preferences. For this reason, I usually adopt a relatively cautious stance during the first week of the month.
The non-farm payrolls report released this month significantly exceeded market expectations. While the market had expected an increase of 80,000 jobs, the actual figure showed a decline of 23,000 jobs. This dealt a blow to expectations of a stronger US economy. Meanwhile, the probability of a rate hike in September fell directly from 60% to 40%, triggering a substantial rebound in interest-rate-sensitive assets.
In addition to reducing the probability of a September rate hike, this data may also push the timing of a rate hike into the medium-term election period. If that happens, it will become more difficult to maintain a bearish view on the market. Investors therefore do not need to be overly bearish at this stage.
Where Are the Trading Opportunities?
As the probability of a rate hike declines, assets that had previously been pressured by rate-hike expectations are likely to enter a recovery phase. Gold’s sharp rebound last week confirmed my earlier expectation that gold prices could experience a rapid recovery during July and August, although the move occurred later than I had anticipated. I still expect the rebound to reach around 4,600 before reassessing the market based on the latest developments.
For those who previously sold put options when gold was trading below 4,000, the strategy can still be maintained. However, there is no need to raise the strike price too quickly. Although the probability of a short-term new low has decreased, the market may still experience significant volatility. It is better to earn slightly less option premium than to raise the strike price and suffer losses if the level is subsequently breached.
For traders who prefer more speculative assets such as silver and platinum, the basic approach remains one of trading an oversold rebound. Be careful not to allocate too much capital to these positions.
$Gold - main 2612(GCmain)$ $E-Micro Gold - main 2612(MGCmain)$ $E-Micro Gold - Aug 2026(MGC2608)$ $UBS IQ Research Preferred AU Share(ETF.AU)$ $Silver - main 2609(SImain)$ $E-mini Silver - main 2609(QImain)$
As for US equity indices, they can be considered among the most stable assets in the financial markets at present. Although AI-related stocks may be experiencing a bubble and have undergone some correction, whenever AI stocks pull back, other large-cap stocks tend to support the broader US equity market. As a result, the major US equity indices have consistently struggled to decline sharply.
$Invesco QQQ(QQQ)$ $ProShares UltraPro Short QQQ(SQQQ)$ $NASDAQ(.IXIC)$ $E-mini Nasdaq 100 - main 2609(NQmain)$ $Micro E-Mini Nasdaq 100 - main 2609(MNQmain)$ $SPDR S&P 500 ETF Trust(SPY)$ $S&P 500(.SPX)$ $E-mini S&P 500 - main 2609(ESmain)$ $Micro E-mini S&P 500 - main 2609(MESmain)$ $Dow Jones(.DJI)$ $E-mini Dow Jones - main 2609(YMmain)$ $Micro E-mini Dow Jones - main 2609(MYMmain)$
Technically, the S&P 500 futures contract, or ES, should be used as the primary reference. The recent gap around the 7,500 level is an important point to monitor. As long as this gap is not broken, I would not take a bearish view. From a strategy perspective, investors could use futures positions equivalent to around 10% of their portfolio to track the index, or use ETFs linked to the major indices. Another alternative is to trade the individual-stock futures recently introduced by CME.
For options, the strategy remains selling put options, with a stop-loss triggered if the gap level is decisively breached.
$NVIDIA(NVDA)$ $Microsoft(MSFT)$ $Alphabet(GOOGL)$ $NVIDIA - main 2609(SNVDAmain)$ $Micron Technology(MU)$ $Tesla Motors(TSLA)$ $iShares Russell 2000 ETF(IWM)$
Key Risks to Monitor
The risk of a rate hike has not disappeared; it has merely been postponed. If future non-farm payrolls data continue to fall short of expectations, the rate-hike risk could be delayed until after the midterm elections.
At present, however, the biggest risk is a sharp reversal in the market’s optimistic expectations. Investors can manage this risk by using technical indicators as part of their risk-control framework. For example, they can monitor Bollinger Bands or important price gaps and implement a stop-loss if these key levels are decisively broken.
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