Weekly Binary Options Trading Briefing 4/15-22/2013 – Stocks Reach New Highs as Investors Look Past Economic Data

Binary Options Trading Recommendations for this week – Markets Information and Trading Tips

S&P back to all-time highs despite weak economic data.  Bernanke signals QE to continue through 2013.  Next week focus turns back to earnings, with financial sector in the spotlight.

Stocks Reach New Highs as Investors Look Past Economic Data

The US Dollar was lower and stock markets were higher for most of the trading week, as investors are generally positive and looking past economic data that is relatively weak to push benchmark indices like the S&P 500 to new record highs.  When looking for any real rationale for why stock markets could be posting record highs in the current environment, one supportive factor can be found in central bank policy, which is still broadly accommodative in most of the world’s largest economies.  Last week’s comments from Federal Reserve Chairman Ben Bernanke was dovish overall and essentially suggest that the program of monetary easing that is in place now will continue through the remainder of 2013.

These latest comments were something of a surprise, given the contents of the minutes from the April FOMC meeting.  At the meeting it was clear that the voting members at the FOMC were looking to start defining an end-date for the current quantitative easing program.  But with macro data failing to show significant progress, the Fed will likely need to adopt more of a “wait and see” attitude before committing to any substantive changes. 

The Week Ahead 

In the week ahead, we will not see much in the way of macro data (similar to next week) but we will see a large number of corporate earnings reports to help guide the next direction in stocks.  A major focus will be on the financial sector, with several key names reporting their results.  This will be a continuation of the Friday report seen from JP Morgan-Chase (the largest bank in the US), which beat fourth quarter estimates with profits of $6.5 billion on improved performances in both mortgage lending and investment banking.  Next, investors will be watching CitiGroup and Charles Schwab on Monday, US Bancorp and Goldman Sachs on Tuesday, American Express Bank of America, and Bank of New York-Mellon on Wednesday, e-Trade, Capital One, and Morgan Stanley on Thursday.

Outside the Financial Sector, we will see results from Yahoo, Intel, and Johnson and Johnson on Tuesday, eBay on Wednesday, Google, Verizon, Microsoft and IBM on Thursday, and McDonald’s and General Electric on Friday.

CommuniTraders Trading Tips 

1. With the central bank outlook supportive of carry trades in the currency markets, I am waiting for an area to get back into the USD/JPY after the massive rallies seen recently.  I am not a breakout trader when looking at the longer term time horizons, so I will need to see a drift back to support turned resistance at 96.60 and then enter into weekly CALL options for the USD/JPY.

2. The long term picture in Oil has turned negative, with historical and Fib support at 89.90 giving way last week.  This area marks the 61.8% Fib retracement of the rally from 85.20, so now the target changes to expect a full retracement back toward that level in the medium term.  89.90 is now viewed as support turned resistance and I will use this area to enter into weekly PUT options in Oil.  If we see some positive earnings this week, we should get a spike into this area and trigger the trade.

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