Tip from the Geek – Top 5 Trading Signals 07/28-08/04/2014
Massive Week At Hand
This is one monster week for the market. Ordinarily I would advocate a trader to wait for a week like this to pass as there are dozens of opportunities for news and data to move the market. However, since this is the Geek Account, an account in which trades are made every Monday, I must be true to the strategy. I am a trend following trader and the trends are up. Economics are improving slowly and steadily; earnings are growing slowly and steadily. Near term concerns have put some pressure on the market recently but support is always there to pick it up. I expect this week to be in line with expectations as a whole and lead to a continuation of the trend.
On the earnings front this is the biggest week for earnings all season. There are over 700 individual earnings reports for traders to watch. This week also wraps up, more or less, earnings for Dow and S&P 500 components and ends the main portion of the earnings cycle. Next week there are sill quite a few names, and important names, but we will be on the downward slope of the curve by then. On the economic front this is a week of weeks. Not only is it time for the next meeting of the FOMC it is also the end of the month which means macro economic data. The jobs data begins on Wednesday with ADP and follows through with Challenger, jobless claims, NFP and unemployment on Thursday and Friday. Also on tap will be the first estimate for 2nd quarter GDP, released Wednesday morning after the ADP but before the FOMC. Last week’s data was good, better than expected, and lead me to think that the jobs picture for the month could be quite robust.
1. S&P 500 Consolidating
SPX
Call/Put = Call
Expiry = One Week
My Trading Advice
The SPX made a touch into all time high territory last week but quickly retreated. Now the index is back within a short term consolidation range and safely in comfortable territory. I say comfortable because the market is neither oversold or overbought and momentum is weak to indecisive. This is a sign of a market waiting…. and in the case of this week waiting on a lot. There are a lot of factors in play so a big move may not come until later in the week. It is possible, as in past trend line bounces over the last year, that the market could begin to move even before the NFP on Friday but this will remain as the big mover for the week in my opinion, with the appropriate attention paid to the GDP and the FOMC.
The SPX has been consolidating for several weeks now and looks very stable at the current levels. The index has plenty of room to move lower in the near to short term without breaking the range or the trend. In fact, a gentle drift lower over the first few days of the week would put the index at the long term trend line. The data may spark a test of the trend but I am still bullish on the market so trading calls is the way to go. I am trading a call on the SPX with a target entry below 1975 and one week until expiry.
2. The DAX Hindered By Russia/Ukraine Issues
The DAX
Call/Put = Call
Entry = Below 9600
Expiration = One Week
My Trading Advice
The DAX is being hit hard by the continuing violence in the Ukraine and Russia’s insistence on fanning the fires, even though Putin still denies it. The German index broke a support line this week as trading began and new sanctions against Russia took effect. The index is now at a multi month low and looking good relative to other global indices. Germany can’t buck the global trend forever, sooner or later fear will leave the market and the DAX will spring back to life. US economic data will likely help lift the DAX later this week so I am trading a call with a one week expiry and target entry below 9600.
3. Oil Tug Of War
USO
Call/Put = Call
Entry = Below $37.75
Expiration = One Week
My Trading Advice
Oil prices are showing a tug of war battle between bulls and bears. Geopolitical issues in Gaza, Ukraine, Irag and Libya are all supporting on prices while economics add a bit of uncertainty to global demand outlook. On the other hand increasing supply from Libya, a lack of impact on Iraq production and rising stockpiles all weigh prices down. On the charts it appears as if oil is stabilizing above $100 but they may change if this week unfolds not as I expect. If data and earnings combine to provide positive view of the future then oil demand outlook and prices will rise. I am trading a call on the USO, oil tracking ETF, with a target entry below $37.75 and one week until expiry.
4. Gold Schmold
Gold
Call/Put = Put
Entry = Above $1305
Expiry = One Week
My Trading Advice
Gold prices are above $1300 for only one reason, flight to safety on geopolitical tension. The move is as overblown now as it was before and in danger of a real let down. Politics have not entered the market yet, tensions will ease again soon, and in the meantime there is a whole lot of data and earnings that can put a hurting on the outlook for gold as a good place to invest. I am trading a put on gold with a target entry above $1305 and one week until expiry.
5. Exxon Mobil Still Looking Good.
XOM
Call/Put = Call
Entry = Below $103.75
Expiration = One Week
My Trading Advice
I am trading another call on XOM This week. The oil giant is reporting earnings at the end of the week and the expectations are good. The stock itself is moving higher along the short term moving average and now at support in preparation for a bounce. The trend is up and the indicators support higher prices. My target entry is below $103.75 with one week until expiry.
More Tips by the Geek – 07/28-08/04/2014 Trading Tips On Forum.
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That’s it for this week; Michael will be here next week with fresh trading tips. Meanwhile, we will be testing Michael’s tips to see what kind of an “expert” he really is. All trading assets and expiry times featured in Michael’s trading tips are based on CommuniTraders Binary Options Trading Platform.
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