Tip from the Geek 12/15–22/2014: Correction?
Top 5 Weekly Binary Options Trading Signals by the Geek
The market went ducking for cover last week with oil as an excuse. The near free fall drop in energy prices has many traders on edge and speculating about spill-over into other markets. The fear is unfounded and the selling last week, while compounded by oil woes, was most likely driven by profit taking and end of year tax preparation. The market has made some impressive gains this year, over 12%, and it is time for profitable, and unprofitable, traders to position their cash accounts for maximum tax safety. Will the selling continue? That is hard to say but I think it likely to soon end. The indices are approaching long term supports and we have a hurricane of central bank activity on the schedule this week.
It is the end of the year and the time when all three of the major central banks meet on or about the same date. This year the FOMC meeting, which is always on Wednesday, is slated for a December 17th decision with the ECB and the BOJ scheduled for the very next day. The FOMC is largely expected to do nothing, except change some verbiage in their statement. Rising economic trends have speculators expecting the change to indicate that an interest rate hike could come sooner than expected. This statement would be supportive of strengthening economic trends in the US and thereby dollar positive and gold negative. The ECB will also likely do nothing, but could also hint at some future stimulus as they have been doing all along. The BOJ however is where the action may take center stage. Prime Minister Abe has received the support neccesary to remain firmly in place so expect renewed efforts to support the Japanese economy and perhaps the first shots of Abenomics 2.0.
1. Always Waiting For The Fed
S&P 500
Call/Put = Call
Entry = Below 2010
Expiry = One Week
My Trading Advice
The US market is awaiting the FOMC, like it has been doing for the last few years. The market is being led by the Fed, by policy in the past and now by economic outlook. We know what is going on the economy, it is improving and slowly gaining momentum. This slow improvement has been supporting the market and the rally; for some reason we need the Fed to give us the go ahead to keep the rally going. It all comes down to outlook. We know what is going on now so we can predict what the policy decision will be with a high amount of accuracy. What we aren’t sure of is how things are going to be in the future. There are some indications, through surveys and data, that the future will be positive but we need the Fed to put their stamp of approval on it.
On a technical basis the index is setting up for a trend following bounce. The index is approaching the long term trend line and currently sitting on a potential level of support. The indicator are not yet confirming the signal but could easily roll over in the next day or two, which would put the signal in line with the FOMC meeting and not a coincidence, in my opinion. I am still a long term bull, based on the technicals and the fundamentals, so am playing a call this week in line with that position. My target entry is below 2010 with one week until expiry.
2. Gold And The Fed
Gold
Call/Put = Call
Entry = Below $1205
Expiration = 3 Days
My Trading Advice
Gold prices are likely to be volatile this week. The metal has to deal with not one, but three central banks and how three independent policies affect the dollar. And then add to that inflation and interest rate speculation and you get a real mess when trying to predict where gold will go next. At this time the metal has pulled back to near $1200 and looks set to test recent highs, probably before the FOMC meeting. I am playing a call with a target entry below $1205 and three days until expiry.
3. Oil Volatility Not Ending Soon
USO/Oil ETF
Call/Put = Call
Entry = Below $22.50
Expiry = 3 days
My Trading Advice
Oil prices have been very volatile the last 2 months, driven by rising supply, lowered outlook, OPEC speculation, price wars and a myriad of factors both subtle and gross. Regardless of where oil prices are meant to be, they are extended at current levels and in position for a relief rally or at least a consolidation. It is possible that oil will slide further but if so will driven solely on momentum and speculation, extending the index further and making the set up even better. With the Fed ahead I am playing a call this week with a target entry below $22.50 and three days until expiry.
4. Yen Rising Rising Rising
USD/JPY
Call/Put = Call
Entry = Below 118.75
Expiration = One Week
My Trading Advice
The yen is going to keep sliding. That has been Shinzo Abe’s plan from the start and now that he has gotten his referendum he is sure to get back to work. There are already plans for renewed stimulus, announcement due out later this month, and the BOJ will surely do its part as well. The BOJ meets this week to and there is just no telling what it may do. I am a bull on this pair and trading a call this week. My target entry is below 118.75 with one week until expiry.
5. Calling On Apple
AAPL
Call/Put = Call
Entry = Below 110.50
Expiration = One week
My Trading Advice
Apple is once again set up in a nice place for bullish entry. The rally which began last summer, and stalled in the recent month, is finding support with the holidays right around the corner and next earnings just over a month away. I am trading a call on Apple with a target entry below $110.50 and one week until expiry.
More Tips by the Geek – 12/15-22/2014 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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