Weekly Binary Options Trading Briefing 4/8-15/2013 – Stocks Reverse Lower after Weak Non Farm Payrolls Data

Binary Options Trading Recommendations for the upcoming week –  Markets Information and Trading Tips

Non Farm Payrolls rise by a weak 88,000 jobs.  Unemployment Rate ticks down to 7.6%.  Economic calendar is limited next week.  Watch for Monday Bernanke comments as an early driver of sentiment.

Stocks Reverse Lower after Weak Non Farm Payrolls Data

Stock markets reversed sharply into the end of the week, as US employment data came in much lower than markets were expecting.   March Non Farm Payrolls showed an increase of 88,000 new jobs for the month, which is less than half of the original market expectation.  The Unemployment Rate saw a one tick decrease to 7.6% but traders were focused on the headline figure and the majority decision was to sell stocks at their already elevated levels.  The result of 88,000 jobs was the lowest number in 9 months so the main question investors should be asking at this stage is whether or not this is a one-off anomaly or the beginning is a larger and more disconcerting trend. 

        The other central question comes with the possibility that the Federal Reserve will be forced to start again with its suggestions of an extended stimulus program with no clear end date.  The Fed has changed its tone in recent months but if we do start to see continued weakness in the labor market, the central bank will have no choice but to offer fiscal support for the economy in order to prevent unmanageable volatility in money markets.  For these reasons, the next report will be even more important than usual, so traders should pay special attention to the early indicators to get a sense of where stocks are headed next. 

Next Week’s Activity

        Next week, we have a much lighter data calendar, so trading will likely be guided by any new sentiment driven headlines out of Europe (if there are any).   One potential driver will be seen early in the week, as Fed Chairman Bernanke is scheduled to speak on Monday.  We could see some response related to the weaker employment data and the general tone of any comments like this could be a short term driver of sentiment.  Other than this, trading will likely be based mostly on technical analysis, as next week’s fundamental drivers are limited.

Trade Ideas: 

1. Last week’s CALL in the EUR/CHF barely finished in the money even though 1.2130 did turn out to be the dead bottom for the week.  I will once again look to “draw from the well” at these levels as markets are giving another opportunity to get bullish.  Upside potential continues to be massive for this pair and any signs of weakness should be viewed as a buying opportunity.  We could see some downside momentum early in the week (hangover from Friday’s economic data), as the Euro is considered to be a risk currency and the CHF has some safe haven status.  Because of this, I will be looking to buy weekly CALLS in the EUR/CHF on a spike down to 1.2110.

2. For stock trades, I will be looking for weakness in non-defensive stocks and the situation in Oracle is starting to show potential for PUTS.  The company’s last round of earnings data missed market estimates and led to stock downgrades.  From a technical perspective, prices are finding Fib resistance at current levels, so I will be looking for weekly PUTS in ORCL at 32.10, expecting general weakness in stocks next week.

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