Tip from the Geek – Top 5 Binary Options Trading Tips List 1/28-2/4/2013
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A Full Week Ahead Brings Caution To Traders
If you thought last week was full of earnings reports you haven’t taken a look at this weeks roster. There are at least as many reports coming out this week as last and it started this morning with Caterpillar. The international industrial equipment supplier disappointed its investors with a huge earnings miss. On an adjusted basis the company did not do too bad but the China deal fell through and the company took a huge loss.
Earnings are not all that is on tap today. This week is just about the fullest week of U.S. economic data I have ever seen. This week we have a near complete run of housing data, unemployment, the Jobs Complex (Challenger Job Cuts, ADP Employment, Non-Farm Payrolls, Unemployment Rates and 4th Quarter GDP). Not to mention the usual weekly unemployment claims, auto/truck sales and others. And I haven’t even mentioned the FOMC meeting and rate decision due on Wednesday.
There is not much expectation for a rate change this week. If we get one it will be a true surprise. This time around the statement will trump the rate for importance. The markets will be looking for more signs of an end to QE and asset purchases by the Fed. Earlier statements, which were given too much weight by market participants in my opinion, led to speculation of the end of QE this year. As of yet there is no sign of an end. There has been recent improvements in the labor and housing markets that could lead to that end but we are still a long way from it.
1. S&P 500 On A Pause?
S&P 500
Call/Put=Call
Entry = Under 1500
Expiration = End of the week
My Trading Recommendation
This is a tricky week for trading the S&P. The index is definitely trending up, but it is definitely doing it on diminishing momentum in the long and short terms. There is also earnings to consider, the FOMC AND the massive amount of economic data coming out this week. I am wondering if this is not a good time for the S&P to take a pause. With the market trending and extended it is time to look out for the 3 C’s; correction, consolidation and continuation patterns.
I don’t view the 1500 level as having much significance as resistance except as a round number. It is a five year high which is important. The market is extended, momentum is weakening and it is overbought; all reasons to suspect if not anticipate a correction. After all, the S&P 500 is up nearly 3% for the year. I’m sure there are plenty of folks who would love to log some profits in the first month of 2013. However, the market is still trending and indicators could continue to weaken and remain overbought for some time. We could get a consolidation here; I am still looking for a retest of the all time highs. If we get a consolidation we will need to watch it carefully and look for a continuation signal.
It is also the end of the month this week. This means that a monthly call expires in 3 days. In order to trade the S&P this week I dropped down to my charts of hourly closings and saw what looks like a pretty good bear signal for the week. I am playing a half size call position on the S&P 500 if I can get in under 1500.
2. Euro Strength Helps Euro Citizens
EUR/USD
Call/Put= Put
Entry = above 1.345
Expiration = end of week
My Trading Recommendation
The Euro moved up nicely to my near term target of 1.3500. Now the currency pair is trading below resistance with weak technicals and overbought conditions. With all the data out this week I expect the trade to remain below this resistance. There is also the chance of profit taking. The currency pair has move up around 30% over the last two weeks, offering a nice little return for bullish traders. It’s the FOMC I am worried about; changing U.S. fiscal policy will help or hurt this trade. I am trading a half size put position on this trade with a weekly expiration. A break above 1.3500 negates this view and will reverse my position.
3. DAX Breaking Out
DAX
Call/Put= Call
Entry = below 7900
Expiration = end of the week
My Trading Recommendation
The DAX is breaking out to new highs. The inherent strength of Germany, plus the improved conditions in Europe and strengthening Euro are helping this index move higher. I am playing a call on the DAX with an entry below 7900 with an end of the week expiration.
4. Swiss Franc Losing Favor
USD/CHF
Call/Put = Call
Entry = below 0.930
Expiration = end of week
My Trading Recommendation
The changing world fundamentals have reversed market sentiment and sparked an outflow of funds from Swiss Francs. Traders seeking the safety of francs during the world economic crisis need their money for other investments. The CHF made a nice break above 0.9250 a few weeks ago and is now sitting on that very support. Technicals are bullish and fundamentals point to a continuation of a weakening Swiss Franc. I am playing a call with and entry point below 0.930 with an end of the week expiration.
5. Japanese Yen And A Shooting Star
USD/YEN
Call/Put
Entry = above 90.75
Expiration = end of the week
My Trading Recommendation
I made a similar prediction last week that didn’t move in my favor. I think the analysis is still sound, it was my time frame that was off. As I look at the daily chart now I am seeing more definitive sign of correction, not to mention what looks like a shooting star formation. I am trading puts here again with a half size position and an end of the week expiration.
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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 AnyOption Binary Options Trading Platform.
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