Tip from the Geek 05/11– 05/18/2015: Climbing The Wall Of Worry
Top 5 Weekly Binary Options Trading Signals by the Geek
Bull markets are often described as “climbing the wall of worry”, the trends are up but constantly evolving areas of concern impact trading from day to day. These “worries” span the range of possibilities but in the end are nothing more than near term affects that tend to disappear as quickly as they arise. From time to time the fears will build up into a correction, offering fantastic entries for longer term traders, and more infrequently they result in enough negative sentiment to reverse the entire market. We are now scaling the wall of worry and heading higher. Recent worries have included weak economic data, slow earnings growth and international geo-political events. These are all important to watch but none are capable of reversing the market. Why you may ask? Because the long term trends remain up and earnings expectations for the rest of the year and next year are robust.
Last weeks non-farm payrolls report can attest to that. The number came in as expected, nothing to be that impressed with, but also reaffirms the increase in economic activity expected in the US this spring and summer. It also reaffirms the growing strength among consumers. This is not to say that consumer spending is on the rise, it is but only slowly, but the stronger the people are the stronger the economy will be regardless of how much consumerism is present. I am a trend follower and the trends are up with positive outlook so I remain bullish on equities.
1. Still Trying To Break Out
S&P 500
Call/Put = Call
Entry = Below 2,015
Expiry = One Week
My Trading Advice
The broad market S&P 500 index has been winding up within a flat-topped triangle for over three months. The long term trends are supporting prices while at the same time a wide variety of fear inducing events have kept them in check. The top of the triangle is the all-time high, the bottom is the steadily rising long term trend line. The combination of the two lines is resulting in a gradually building squeeze that I am confident will result in a break out to the upside. My indicators, MACD and stochastic, are both weak right now but rolling over and setting up for a strong trend following entry signal.
When it comes to analyzing the long term trend it is very important to keep a long term outlook. The near term events may cause a sell-off and that sell-off may make the market look as if it will reverse. When you take the long term outlook into account it can help you make the decision; is this a reversal, a correction or a whopping good entry point. At this time the long term outlook is for economic expansion and an increase in corporate profitability. This is keeping me bullish so I am trading a call this week. My target entry is below 2,015 with a one week expiry.
2. Ranging Gold
Gold
Call/Put = Call
Entry = Below 1,190
Expiry = One Week
My Trading Advice
Gold is one of many assets that are being affected, directly, by global central bank policy and dollar valuation. The worlds major currencies are in flux due to the extreme amount of QE that has been going on and the expectation of an impending and upcoming FOMC rate hike. Because there is little expectation for a central bank move from the US, the EU or Japan the dollar has been ranging, which means that gold has been ranging. Gold has support just below $1,180 with a topside target near or just above $1,200. At the moment gold is moving up from support so I am trading a call with a target entry below $1,190 and a one week expiry.
3. Oil Bubble Bursting
USO/Oil ETF
Call/Put = Put
Entry = Above $20.50
Expiry = One Week
My Trading Advice
Oil prices are elevated to a point in which sellers are bound to come into the market. Prices are rising on elevated fears of geopolitical risk, the recent drop in the dollar and an unsubstantiated belief that demand will pick up, or that production is declining. There has been some decline in US rig counts, but equal sign that the shale producers are about to go back online (because of higher prices). At the same time OPEC output has been rising and US stockpiles are at/near all-time highs. On a technical basis the USO is retreating from a peak with a major divergence in the indicators leading me to trade a put this week. My target entry is above $20.50 with one week until expiry.
4. Euro Slips
EUR/USD
Call/Put = Put
Entry = Above 1.1150
Expiry = 3 Days
My Trading Advice
The euro experienced a nice rebound versus the dollar over the past few weeks as economic data has pushed out the FOMC rate hike time-line. At the same time the Greece issue rages on and now the NFP data is indicating that maybe a later rate hike is not as likely as an earlier one. The technicals indicate that a retest of the recent high is likely, but also that, at least for now, momentum has shifted to the downside. The pair hit a peak last week and has now fallen below support levels near 1.1200. I am trading a put on this pair with an eye on this week’s economic data load and keeping my expiry short. Target entry is above 1.1150 with 3 days of expiry.
5. Range Bound Currency
USD/JPY
Call/Put = Call
Entry = Below 119.90
Expiry = 3 Days
My Trading Advice
The yen is in a long term range versus the dollar just like many other currencies and even gold. The USD/JPY pair has been equalizing near the 120 level and is now on the way up from lower, near term, support. I am trading a call on the pair as the NFP is pointing to a strengthening of the US economy but keeping expiry short because I don’t think we’ll set a new high. My target entry is below 119.90 with 3 days until expiry.
More Tips by the Geek – 05/11–18/2015 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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