U.S. Employment Data and Market Reactions: Key Strategies for Trend Investing

Good evening, everyone!

I’m thrilled to be here with all of you at Diamond Ridge Financial Academy as we explore the latest investment strategies together.

Wishing you all a relaxed and enjoyable evening!

Last night, we studied the key investment themes in the market and focused on how to extract clear investment signals using the core principles of technical analysis. Specifically, we explored Professor Hanover's "Price Trend Theory" and discussed how to seize investment opportunities from trends. We also analyzed case studies on the central role of AI and digital assets in the Fourth Industrial Revolution.  

The tech revolution not only drives the progress of human civilization but also provides us with clear investment directions. In our online investment courses, we’ll follow the trends of the times and seize great investment opportunities through real-time analysis of economic and policy changes.  

Tonight, I’ll explain the principles of reading market data and show you how the 21-day moving average can help identify accelerated trend opportunities.  

Before we dive into the session, let’s first review today’s investment markets and get an update on the latest trends.

Today, the UK stock market closed lower, with the FTSE 100 falling to around 8,300 points.  

In the morning, the market was influenced by the Eurozone's Q3 GDP growth data and housebuilding stocks strengthened after the Halifax report showed record-high house prices in Nov. This helped the FTSE 100 perform relatively well.  

However, in the afternoon, falling oil prices triggered a wave of selling in blue-chip stocks, led by Shell (SHEL). This caused a steady decline in the UK stock market. Despite this, tech-related assets remained strong and many AI and digital economy stocks even rose against the trend.

The key factor affecting today’s fluctuations in stocks, forex, crypto and oil prices was the US employment data. At 1:30 PM London time, the US reported a 4.2% unemployment rate for Nov, matching expectations. Meanwhile, the US nonfarm payrolls for Nov came in at 227K, beating the forecast of 200K by 27K. This positive news boosted the US dollar and US stocks market, creating a ripple effect on other markets. The impacts were as follows:  

UK Stocks Market: Before the data release, the FTSE 100 showed lateral consolidation and held relatively strong. After the US data was released, the FTSE 100 dropped by 20 points.  

Oil: Before the data release, oil prices were relatively resilient, but after the data, West Texas Intermediate (WTI) prices plunged by more than $1.

Forex Market: Before the data release, GBP/USD rose from 1.274 to a high of 1.281. After the data was released, GBP/USD quickly dropped from 1.281 to around 1.273. This movement matched our morning strategy analysis perfectly. Students who contacted the assistant for trade instructions made significant profits.  

Crypto Market: BTC, Eth and other major crypto faced bearish pressure before the data release. After the data was announced, the crypto market surged. Eth, in particular, jumped from $3.84K and quickly broke above $4K, gaining over 5%. This trend also aligned with our morning strategy analysis (see chart above). It is expected that Eth may see a technical pullback after challenging its all-time high before resuming its upward channel.  

Today's jobs data was initially bearish for gold, but its performance held relatively steady, supported by BTC, a similar safe-haven asset.

Why does US employment data have such a big impact on global investment markets?  

The main reason is that the US is the world’s largest economy and its economic health plays a critical role in global markets. The US dollar is the world’s primary reserve currency, so its value fluctuations directly affect other currencies. When the US economy is strong and employment data is positive, market confidence in the dollar grows, driving up its value and causing other currencies to weaken.  

US employment data is a key indicator of economic vitality. It reveals the state of the economy and hints at future monetary policy trends.

Non-Farm Payrolls (NFP) is particularly influential on global markets. This data measures the health of the US labor market and serves as a critical reference for investors to gauge economic trends, inflation pressures and the Federal Reserve's monetary policy direction.  

NFP is significant because it provides a clear picture of the overall activity in the US economy. It reflects employment changes across industries like manufacturing, construction and services, excluding the highly seasonal agricultural sector. As the largest economy, the US impacts global markets heavily and NFP, which signals economic activity and consumption potential, naturally becomes a focal point for the market.

NFP directly impacts US economic growth expectations. A strong labor market often means higher consumer incomes, which boosts spending, the main driver of the US economy. Additionally, employment data hints at inflation pressures. If the labor market overheats, wages may rise rapidly, increasing the cost of goods and services and making a Fed rate hike more likely. Conversely, weak job growth may reduce consumer spending and slow economic growth, prompting the Fed to adopt a looser policy stance.

US stocks are highly sensitive to NFP data. Strong jobs data is usually seen as a sign of a healthy economy, supporting major indices like the S&P 500 and Dow Jones. However, the impact isn’t one-sided. If the data is strong enough to spark inflation concerns, the market might interpret it as the Fed sticking to high interest rates, which could weigh on high-valuation stocks. That’s why today, the Dow showed a spike and retracement, this is because jobs data was positive for stocks, but as expectations for rate cuts decreased, the index pulled back.  

On the other hand, weak jobs data may hurt stocks in the short term. However, if the market believes it will lead the Fed to slow down rate hikes or even cut rates, it could benefit stocks, creating the so-called "bad news is good news" reaction.

The UK stock market while less directly linked to the US economy, still feels the indirect effects of NFP data. As part of the global financial system, the UK stock market (like the FTSE 100) is influenced by dollar movements, international capital flows and commodity prices. For instance, strong NFP data pushing the dollar higher can pressure dollar-priced raw materials, impacting energy and mining stocks in the FTSE 100. This was a key reason for today’s drop in the UK stock market. Additionally, the health of the US job market can influence global risk sentiment, affecting UK stocks market.

The GBP/USD exchange rate is one of the most directly impacted forex pairs by NFP data. Strong NFP data usually boosts the dollar because the market expects the Fed to stay firm on rates to counter economic overheating or inflation, which pressures the pound. Conversely, if NFP data misses expectations, the dollar may weaken, giving the pound room to rise. However, GBP movements are also influenced by local economic factors and monetary policies, making NFP-driven volatility typically short-lived. For short-term traders, this volatility presents clear trading opportunities.

The crypto market has also shown a growing reaction to NFP data in recent years. While BTC and other cryptos are often considered independent from traditional financial systems, they have become increasingly linked to macroeconomic trends and monetary policy. Strong NFP data may boost the dollar and pressure risk assets, including BTC, as the crypto market is still driven by liquidity and risk appetite. On the flip side, weak NFP data that fuels expectations of easier Fed policies could benefit BTC and other cryptos through improved liquidity prospects.  

Additionally, concerns over the dollar's purchasing power may push some investors toward BTC as "digital gold" to hedge against currency devaluation risks. That’s why today, before the data release, bullish sentiment in the crypto market was heavily suppressed, but it was unleashed after the data came out.

Overall, the US non-farm payroll data is not only an important tool for observing the US economy but also has a far-reaching impact on all corners of the global financial market. From US stocks to the UK stock market, from forex to crypto, non-farm data drives investor expectations and trading strategies. Understanding and tracking this data can help us better grasp market dynamics and adapt to various changes in the investment environment.

Of course, from a long-term economic development perspective, the impact of the data is relatively small. In other words, in real-world trading, we should focus on long-term bullish investment targets and then use economic data to capture precise buying signals.

Let’s take the continually bullish digital economy and AI-related assets as an example. Following this trend, we’ve recommended cutting-edge tech assets like Rolls-Royce, SMCI, DJT and Eth, helping all participants who followed the trades earn significant profits. Under Professor Hanover's guidance, I also recommended TeraWulf (WULF) to everyone today.

TeraWulf Inc. is a company focused on BTC mining and high-performance computing (HPC) powered by green energy. Its business model aligns perfectly with the pulse of digital economic growth. Against the backdrop of BTC's price recovery and the explosive growth in AI and cloud computing demand, TeraWulf is leveraging its sustainable energy advantages and computing infrastructure to build long-term growth potential.

In Q3 2024, TeraWulf reported $27.1M in revenue, a massive 42.8% year over year increase. Its self-mining capacity doubled to 10 EH/s, reflecting improved mining efficiency, while also benefiting from BTC’s sharp rebound (now over $61K). Additionally, the company is actively expanding in digital infrastructure, planning to increase HPC capacity to capitalize on the growth dividends of AI and the data economy. The latest financial report showcases the company’s improving revenue and operational performance, positioning it for the future expansion of the digital economy.

In recent years, global digital economic growth has accelerated significantly, with the scale expected to reach $16T by 2030, making up over 50% of global GDP. As one of the core infrastructures of the digital economy, HPC and distributed computing power are the pillars of emerging technologies like AI, blockchain, 5G and cloud computing. With its sustainable energy-backed computing power advantage, TeraWulf is becoming a key player in this trend, directly benefiting from the surging demand for data processing and mining power.  

This year, the BTC market has rebounded from last year’s slump, with prices hitting new highs boosting TeraWulf’s mining revenue. At the same time, the continued expansion of the BTC network and the growing global demand for blockchain infrastructure provide the company with long-term growth momentum.

In Technical Analysis, TeraWulf (WULF) perfectly fits our 21-day moving average buy signal.  

As shown in the chart, since Oct, WULF's stock price has started climbing, driven by the dual forces of AI advancements and BTC’s rally. The stock has followed the 21-day moving average, forming an accelerating uptrend. Over the past two weeks, WULF briefly corrected near the 21-day moving average. This week, it broke above the 21-day line again, resuming its upward trend.  

Based on this analysis, we strongly recommend buying WULF. In fact, students who contacted our assistant today for trading  tip have already made over 8% profit! This is the power of the 21-day moving average buy signal, it helps us capture market opportunities precisely and achieve substantial returns!

Additionally, the technological revolution has brought advanced tools for technical analysis and quantitative trading system, making trading less reliant on experience or intuition. Instead, data-driven strategies now capture market trends. In modern trading, AI, machine learning and blockchain technology provide investors with more efficient and accurate decision-making. For example, big data trend-tracking models can monitor market sentiment in real time, identify volatility signals in advance and give us clear guidance.  

Diamond Ridge Asset Management’s AI 5.0 Quantitative Trading System will begin beta testing in Jan 2025. We warmly invite all investors to join in! This system promises an unprecedented investment experience, helping you seize market opportunities more accurately and grow your wealth.

That’s all for tonight’s session!

If you have any questions about stocks, crypto, forex or other investments, feel free to reach out to me.  

I’ll use our quantitative trading tools and live market data to provide you with real-time trading guidance.  

For those who haven’t yet opened investment accounts for stocks, crypto or other mainstream assets, please do so as soon as possible to participate in portfolio investing and achieve more stable profits.  

In the next session, we’ll review recent trades and summarize the patterns behind successful real-world profits. Stay tuned!  

If you have any questions, don’t hesitate to contact me anytime.  

Through tonight's sharing, please think about:

1. What are the impacts of US employment data on the investment market?  

2. Which assets should we focus on to align with economic development trends?