Tip from the Geek – Hefty Week Ahead For The Market
Top 5 Trading Signals 09/29-10/06/2014 by the Geek
This week is a hefty one for the market. There is a lot of US economic data to contend with but on top of that is rising global fears driven by geopolitics. In Asia protesting in Hong Kong for democracy has turned violent as the number of protestors increase and government forces are called in to contend with the situation. Asian indices were mostly flat except the Hang Seng, which fell by close to 2%. The negative tensions carried over into the EU where the Ukrainian/Russian standoff carries on. This weekend violence along that front began to heat up again, helping to keep the international markets in the red. Along with that weaker than expected data added to speculation that Asia and Europe are both slowing.
The US economic calendar is pretty full. Monday started with a mixed bag. Personal income and spending both rose while pending home sales fell. It is good that the consumer is strengthening but worrisome that home sales are not picking up quite as much as analysts had projected and the market hoped for. Later in the week the data only gets deeper. It is the end of the month so there will be a load of macroeconomic events including truck/auto sales, PMI, Case Shiller 20 city index, construction spending, ISM and the all important monthly deluge of jobs data. Wednesday starts with ADP and that carries into Challenger, jobless claims, NFP and unemployment on Friday. Look for job creation to remain steady between 150K-225K with a decline in layoffs, claims and overall employment.
1. Global Weakness Hurting The Market
S&P 500
Call/Put = Put
Entry = Above 1975
Expiry = Three Days
My Trading Advice
The S&P 500 is under pressure from global weakness. Weak data in China, weak data in the EU and rising geopolitical concerns have traders on the sidelines and waiting to see what happens. This week is going to be a tough one for the bulls but one that I think will end well, provided the jobs data is not a game changer. The caveats are the rising geopolitical concerns in the market. Hong Kong Protesting, ISIS in Iraq and the Levant and Russia in the Ukraine are all going to be in the eyes of the market this week.
On a technical basis the trend is still is up. The index is well above the trend line with plenty of near, short and long term support between the current levels and the trendline. However, in the near term I do expect to see the index test support and test it again. The indicators are weak and moving lower with targets in the 1925-1950 region. Because of this I am going to trade a put this week with a short expiry as I think a bounce could happen later in the week. My target entry is above 1975 with three days until expiry. If you get into this trade Wednesday or Thursday you may want to shorten expiry to one day.
2. Germany Suffering
DAX
Call/Put = Put
Entry = Above 9400
Expiry = Three Days
My Trading Advice
The DAX is suffering from weak growth across the EU but also from Russian sanction and fall out from weak data and protesting in Hong Kong. The index fell about 1% on the open of this weeks trading and will likely remain weak in the near term. Longer term I still see the DAX leading the EU but for now I am trading a put. Like with the SPX I think there could be a bounce or snap back at the end of the week so I am keeping expiry short. This week I am trading a put on the DAX with a target entry above 9400 and three days until expiry.
3. Dollar Climbing
USD/JPY
Call/Put = Call
Entry = Below 109.25
Expiry = One Week
My Trading Advice
The yen has been falling hard against the dollar, which has been gaining strength against the basket of world currencies. Abenomics is working, but very slowly, and the BOJ continues to increase the monetary base of the country while at the same time US data remains steady and the end of tapering is at hand. The pair is indicated higher with a target of 110 in the near to short term so I am trading a call this week. There is a divergence in the indicators that is pointing to a correction or consolidation but while price action is still advancing I will am playing the bull side. When bearish confirmations occur then I will switch. This week I am trading a call with a target entry below 109.25 and one week until expiry.
4. Gold Bounce?
Gold
Call/Put = Call
Entry = Below $1220
Expiration = One Week
My Trading Advice
Gold prices are being underpinned by geopolitics and showing signs of support below $1220. The new addition of Hong Kong protesting is only helping that trade. With this in mind, and with the extended nature of the recent drop in gold, I suspect there could be a snap back rally in the metal so I am trading a call this week. My target entry is below $1220 with one week until expiry.
5. Oil At A Near Term Peak
Oil/USO Oil ETF
Call/Put = Put
Entry = Above $35
Expiration = One Week
My Trading Advice
Oil prices peaked out last week above $93 and are now at near term resistance. Global fear are why the prices rose, rising supply is why they will go back down. There are no real threats to infrastructure at this time and without that fear based moves are knee jerk reactions. I am trading a put on oil using the USO oil etf as a proxy with one week until expiry. My target entry is above $35 with an expected drop down to $34 in the next week or so.
More Tips by the Geek – 09/29-10/06/2014 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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