Tip from the Geek – Top 5 Trading Signals 08/25-09/01/2014
Bull Stampede
The bulls are ready to stampede and proved it Monday morning. The week of trading began with a brisk march to new highs for US indices. This is after European and Asian markets also ended largely higher. The cause, long term trends as evidenced by economic data. What happened this weekend to spur the rally on; nothing. By nothing I mean there were no major news events, geopolitical or otherwise, to derail the market. The ISIL crisis continues to wear on and there was a ripple of event in the Ukraine but neither developed into any form of escalation. Without the impediment of either of these current sources of near term fear the market was able to focus on the underlying state of the global recovery, current economic data and expectations for the rest of the year.
Fundamental developments last week that affected trading this week include of course economic data but also the Jackson Hole conference and earnings. Earnings for the S&P 500 are still above trend and expectations for this quarter with positive expectations for next. Economic data included housing starts and building permits which were both better than expected. It also included jobless claims which continue to fall. Jackson Hole provided a lot of fed speak, or should I say central bank speak, from Kuroda (BOJ), Draghi (ECB) and Yellen (FOMC). Kuroda did not add much to his narrative but the tone of both Yellen and Draghi changed a bit. A small bit but important none the less. Yellen now seems to be a hair less dovish while Draghi has indicated a willingness to increase ECB QE in the next meeting or so.
1. S&P 500 Charges Out
SPX
Call/Put = Call
Entry = Below 1990
Expiration = End of the Week
My Trading Advice
The SPX marched right out of the gate this week. The futures trade was indicated higher from the start and only gained strength throughout the early morning. This action led me to trade right at the open, scoring an entry very close to last week’s closing prices. There is still a chance to get into this trade though as there may be resistance when the index crosses 2000. 2000 is primarily a psychological level for the market but may still provide some substantial resistance simply because traders both long and short term may use it as a target to take profits.
The technical picture looks pretty bullish to me even without mega volume. The index has been trending up all year. Is in the midst of a long term trend following bounce. Has bullish indicators in line with further highs and plenty of room to run. The only real factors of resistance now are potential economic data and geopolitical risk. Since we cant predict the future I’ll have to stick to the trends. I am trading a call this week with a target entry below 1990 and one week until expiry.
2. Gold Moving Lower
Gold
Call/Put = Put
Entry = Above $1280
Expiry = One Week
My Trading Advice
Gold made a sharp drop last week as economic data out weighed diminishing market risk. Gold prices fell below several key support levels and is now trending lower. Momentum may pick up in the near to short term as bullish traders get out and new bears get in. I am still bearish on gold and expect it to move lower as the economic picture continues to develop. I am trading a put on gold with one week until expiry.
3. Yen Moves Lower
USD/JPY
Call/Put = Call
Entry = Below 104
Expiry = One Week
My Trading Advice
I ended my hiatus from currency trading last week with a put on the EUR based on the trending dollar. That trade paid off and fundamental factors supporting that trade are still in place. I decided this week to expand the trade to the yen which is also trending against the dollar. The dollar is gaining strength, the yen losing it, on improving US data and still stagnating Japanese data. I am trading a call on the USD/JPY with a target entry below 104 and one week until expiry. My target for the current trade is to meet resistance around 105.
4. Euro Losing Steam
EUR/USD
Call/Put = Put
Entry = Below 1.3910
Expiration = One Week
My Trading Advice
The EUR has been losing value to the dollar for many weeks now as data points to stalling EU economy and strengthening US economy. Now, ECB president Mario Draghi says he is in support of further QE measures as needed, adding weakness to an already devaluing EURO. I am getting back into the down trend with a put this week. My target entry is above 1.3910 with one week of expiry.
5. Oil And The Economy
USO
Call/Put = Call
Entry = Below $35
Expiry = One Week
My Trading Advice
Oil prices fell hard in the last two weeks as market risk left the market and rising supply entered. Now the price of crude both WTI and Brent are trading near a long term support level. The rising tide of economic data will help oil find support as demand growth stabilizes. I am trading a call on the USO with a target entry below $35 and one week until expiry.
More Tips by the Geek – 08/25-09/01/2014 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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