Tip from the Geek 12/08–15/2014: A Quiet Week Ahead Of The Holidays
Top 5 Weekly Binary Options Trading Signals by the Geek
This is going to be a relatively quiet for the markets. There are still earnings, and there is still economic data to be released but on average less of both. On top of that there is a triple threat on the horizon; 3 central bank meetings, at the same time. As usually happens around this time of the year all three of the worlds major central banks will be meeting. Over the three day period between December 16 thru December 18th the FOMC, the ECB and the BOJ will all be meeting. This provides a singular opportunity for changes to fundamentals and perhaps some sharp moves in forex pairs dominated by the EUR, USD and JPY. As of this time the prevailing expectation is for the FOMC to continue supporting dollar strength and for both the ECB and the BOJ to do something to increase QE in their respective countries, effectively sandbagging their currencies against the dollar.
What is on tap for this week? Earnings in the US from a litany of small to medium sized retail operations. These range from teen retailers to big box discounters like Costco. The sector has largely been treading water in terms of 3rd quarter earnings and Costco is expected to do the same with EPS flat from last quarter. Economic data includes official US retail sales , producer price index, business and wholesale inventories and the weekly jobless claims data. All are expected to remain in line with trend and could even show some positive surprises. I am pretty bullish on the US economy because of economic data, and also on Japan and Europe for the combined factors of expected QE and the boost of US economic momentum.
1. US Market Drifting Higher
S&P 500
Call/Put = Call
Entry = Below 2075
Expiry = One Week
My Trading Advice
You can not deny that the US market has been drifting higher. The major indices, including the SPX, have been making new highs in the face of deteriorating indicators, sometimes a bad sign and sometimes a good sign. I am of the opinion that this time around it is the good kind of sign. The indices are drifting higher on positive economic data and positive earnings expectations and have allowed the SPX to relieve overbought and extended conditions. In effect, the index is still making new highs but now the market has caught back up to prices and is set up nicely for another rally.
The indicators are in line with support and rolling over into the early stages of a trend following signal. Stochastic especially looks strong at this level as it is flattening out while above the upper signal line. These signals, along with rising economics, will draw more and more buyers into the market over the next few weeks. My target for serious rally mode will of course be toward the end of next week when the FOMC meets but the market should still trend higher until then. I am trading a call this week with a target entry below 2075 and one week until expiry.
2. Keep Your Eye On The BOJ
USD/JPY
Call/Put = Put
Entry = Above 121.00
Expiry = 3 Days
My Trading Advice
The yen has been sliding and sliding against the dollar, losing ground on a nearly daily basis and reaching multiyear highs. This might not going to stop because the BOJ is expected to increase QE at the next meeting, next week, and this will weaken the yen further. In the immediate term the USD/JPY is falling back after reaching an extreme as indicated by the Bollinger Bands ™. This signal is accompanied by a major divergence in both MACD and stochastic which are leading me to look for a pull back over the next few days or week. I am trading a put on the USD/JPY with a target entry above 121 and only three days until expiry.
3. Light Crude Heavy On Prices
Oil/USO Oil ETF
Call/Put = Put
Entry = Above $25
Expiry = One week
My Trading Advice
There is nothing bullish about the oil market now. Saudi Arabia cut prices again, the EIA issued production data that is flat at best, Morgan Stanley downgraded its oil outlook and supplies remain near record high levels. Together these factors had WTI and Brent both sinking in electronic trading over the weekend and physical prices much lower in early Monday trading. I jumped on the band wagon and got into a put on the USO right at the open and think oil prices will sink further this week. I got into my trade right at $25 with one week of expiry and will be looking to get into additional puts on any relief rallies.
4. Gold, What What ?!?
Gold
Call/Put = Put
Entry = Above $1195
Expiry = One Week
My Trading Advice
Gold prices may be bottoming but that does not mean anyone is bullish on them. Just that they are no longer bearish and that maybe, just maybe, people are starting to increase their holdings. What this means for us is that we shouldn’t be chasing prices because there is a big chance of gold retesting the lows around $1150. In fact, I think we may be on the way there now….dollar is strong with low low levels of inflation. I am trading a put on gold with one week until expiry and a target entry above $1195.
5. Draghi Talking Up The DAX
DAX
Call/Put = Call
Entry = Below 10,025
Expiry = One Week
My Trading Advice
The DAX broke out to new highs last week as Mario Draghi once again talked the market up. Now, there is more expectation than ever for the ECB to enact some more QE and that hope should lift the market higher. Until the ECB does or doesn’t do it. Until then however I am bullish and trading a call on the DAX with a target entry below 10,025 and one week until expiry.
More Tips by the Geek – 12/08-15/2014 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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