Tip from the Geek – The Week After The Fed
Top 5 Trading Signals 09/22-29/2014 by the Geek
It is the week after the fed and time for the market to start looking forward into the the fourth quarter and beyond. While US data continues to improve global data remains weak and has led some growing concern for the future. China is hard to judge, it’s China and behind a Great Wall regardless of what the “official” sources are telling us. In any event there will be another flash PMI reading from them on Tuesday. In Europe consumer confidence fell again as the effects of Russian sanctions, lingering weakness and lack of true reform weigh on the region. As far as this week goes, there isn’t a whole lot save for flash PMI readings and some housing data from the US. Oh, and the 3rd and final revision to 2nd quarter GDP. The expectations is for it be revised up, sharply I might add, by 0.4% to 4.6%.
The global picture is hard to judge because of China and its affect on Europe. Not to mention that Europe is a hard place to judge due to the nature of the EU and the myriad nations that it encompasses. The US I can judge and it is improving. Economic trends are up, earnings trends are up, jobless rates are down and that is not likely to stop. I would not be surprise one bit for GDP to be revised higher and by extension 3rd quarter GDP expectations and full year expectations. Things did not slow down in the 3rd quarter. They did not heat up notably but they did not slow down and since there was such a solid base of growth in the 2nd quarter I can only see that improving in the 3rd.
1. Weak Open Provides Entry
S&P 500
Call/Put = Call
Entry = Below 2005
Expiration = One Week
My Trading Advice
The S&P 500 opened the week kind of weak. The price action on Friday last, based on triple witching options expiration, provided enough reason for weekend traders to get out, or at least wait out, the market. The long term trend is up and the market is moving out to new highs so I don’t think it will be much of a pullback but a pullback it is. Trading could be hampered by housing data tomorrow and Wednesday when New Homes sales are released but Friday I am expecting to be hot once the GDP is released.
The market moved lower on the open of trading this week and offered up a nice entry point. Although there may be a little more near term selling the market is still above support and moving higher. Not to mention that the indicators are setting for a nice trend following signal. I am trading a call with a weekly expiration but if you are a little less sure then a monthly position would work here too. My target entry is below 2005 but I think it may be possible to get in below 2,000. Oh, and its a call, I’m bullish.
2. Gold Is Heavy
Gold
Call/Put = Put
Entry = Above $1215
Expiration = One Week
My Trading Advice
Gold is still moving lower as momentum traders add their weight to the fundamentals. Gold is fast approaching long term lows but is not there yet and until it reaches those levels I will remain on the upper side of the trade. This week I am trading a put with one week of expiry with a target entry above $1215. Trading may be flat during the week, even move higher some, but Friday’s GDP will send it lower.
3. Oil Cools Off
USO/Oil ETF
Call/Put = Put
Entry = Above $34.50
Expiration = One Week
My Trading Advice
Oil prices got a little boost last week as the fear of OPEC curbing supply entered the market. The good news, for oil bears, is that if they do it won’t be till next year and the market realized this. Additionally rising supply levels, availability and a lack of threat to infrastructure has oil prices down near long term lows. I am trading a put on Oil this week with a target entry above $34.50 (on the USO) with one week until expiry.
4. Watch Out For Yen Rally
USD/JPY
Call/Put = Put
Entry = Above 109
Expiration = One Week
My Trading Advice
The USD/JPY is moving higher and likely to hit 110 in the near to short term. The thing is, I’m a technical trader and the techs are telling me there is a big chance for the pair to correct before then. The pair is extended on the current rally and shift of valuations as US QE ends and Japanese QE rages on. There is a significant divergence in the indicators that leads me to believe the pair will likely consolidate at this level. For this reason I am trading a put on the pair with one week of expiration and a target entry above 109.
5. Euro Still Moving
EUR/USD
Call/Put = Put
Entry = Above 1.2840
Expiration = One Week
My Trading Advice
The Euro has been moving lower against the dollar for months, as weak EU data and strong US data drove a wedge between them. Last week the pair got a little bounce but has since broken back through support with no indication of a bottom. I think the pair could go as low as 1.2500 but that may be a while. For now though I am trading a put on the pair with a target entry above 1.2840 and one week until expiry.
More Tips by the Geek – 09/22-29/2014 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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