Binary Options Trading Briefing 4.6 – 8.6 – Weak Economic Data Sends Stocks to New Lows

Binary Options Briefing for this week 4.6 – 8.6 – Trading Tips and Market Info

By Richard Cox

          Equity markets saw a massive sell-off the week on Friday, due, in large part to disappointing economic data that showed weakness in the US labor market.  This was added to by the poor manufacturing data out of the three main global economic centers (Europe, China and the US), and this is now suggesting that the global recovery that had been expected for most of this year is showing severe evidence of stalling that is likely to continue for the remainder of 2012. 

          The main driver of all the negativity came from the US Non Farm Payrolls Report for the month of May, which showed that the US economy added only 69,000 jobs during the month, while market analysts were expecting an increase of 150,000 jobs.  The Unemployment Rate also ticked higher, coming in at 8.2 percent (analysts were expecting this number to remain unchanged at 8.1 percent).  The effect was widespread, affecting all major asset classes with the Dow now seen erasing all of its gains made so far in 2012.  This index is now showing a yearly performance of -0.4 percent.  Other significant moves were seen in crude oil, which dropped on lower demand expectations and is now seen trading at an 8 month low to trade just above $83 per barrel. 

Manufacturing Weakness to Keep Growth Under Pressure

            Looking longer term, the most significant economic releases could be the manufacturing numbers that were released in Europe, China and the US last week.  Many analysts have forecast that this year’s global economic recovery would be driven by the manufacturing and by emerging markets growth, but these latest reports are beginning to suggest otherwise.  For most of the last three years, manufacturing productivity has been one of the bright points in the US economy and we are now seeing indications that this trend has reached completion. 

          To start next week, expect some overhang from all the weak economic data to continue, as Asian markets will have their first opportunity to react to the negative figures released on Friday.  Market attention is likely to turn back to debt developments out of the Eurozone, and we will have some key data releases to watch toward the middle of the week.  These reports will include Eurozone Producer Price Inflation (PPI), Purchasing Manager’s Index (PMI), Retail Sales, and quarterly GDP figures.  We will also have an ECB meeting on Wednesday, so remain watchful of the accompanying policy statement at the meeting’s conclusion. 

My Trading Recommendation in 50 Words: 

The latest economic events are seen as supportive for very few asset classes, so this week we will be looking to see some short term bounces in Gold.  Given the latest bounce, I will enter into a one week call option at current levels, looking for a rise back to 1670 at some stage next week