Tip from the Geek – Top 5 Binary Options Trading Tips 10/14-21/2013
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Debt Ceiling Still Hanging Over The Markets
The U.S. debt ceiling issue is still hanging over the markets. The apparent progress made on Thursday and Friday that drove the indexes 3% higher did not materialize over the weekend, driving U.S. markets lower in early Monday trading. The reason the markets shot up so much Thursday is that the risk of a U.S. credit default have been taken off the table. I for one never seriously believed that the politicians would let the country default but some did and still do. I don’t know why, allowing the U.S. to default would be one of the most harmful things the world economy could suffer. While we still don’t have a solution (as of this writing) I think it is fairly certain that one will come before the deadline on Thursday.
We still haven’t seen any major economic data since the shut down took effect. In the U.S. at least. Globally things are still looking up except for the fact that the U.S. shut down is looming over international indexes as well. There is still no jobs data, no unemployment data and no new spin on how economic recovery is developing or the taper. Once the shut down ceases there will be a lot to catch up on. So long as the data is in line with the underlying trend of steady economic growth the markets should be fine. Since the shut down the only data of note has bee the weekly jobless claims figures. These numbers are still trending lower but have suffered some volatility due to computer glitches in California and Nevada.
There is also the factor of earnings season to consider, although even this is being overshadowed by debt ceiling and shut down concerns. Last week Alcoa blew away its earnings estimates and Friday the first of the big banks did the same. Wells Fargo and JP Morgan both reported earnings above the general consensus. This week the rest of the big banks and most of the regional operators will be reporting as well. The Banking Index is looking bullish and so are many of the banking stocks, this could be a great sector for short term trades this week. I am still bullish on the markets in general and will be trading accordingly this week.
1. U.S. Markets Surge On Debt Ceiling
S&P 500
Call/Put = Call
Entry = Below 1690
Expiry = One Week
The S&P 500 surged nearly 3% last week along with the rest of the major U.S. indices. The relief caused by an apparent thawing of partisan politics and a move forward in the debt ceiling was the catalyst. The biggest risk to the markets now is a potential default of U.S. credit, with that off the table traders can look to the longer term trend and earnings. So far earnings season has been pretty good and should continue that way. So long as the debt ceiling gets raised and the U.S. can continue to function the markets should keep moving higher.
At this time the S&P 500 is bouncing up off the long term trend line. Last week’s move took the index back up above long term support and the short term moving average, where it is now. On the daily charts MACD and stochastic are both firing a buy signal and the historical analysis suggests that support is growing along the trend line. Longer term indications are still mixed but there is no sign of reversal. I am trading a call on the S&P 500 with a target entry below 1690 and one week until expiry.
2. DAX Moving Higher
DAX
Call/Put = Call
Entry = Below 8700
Expiry = One Week
The DAX has been moving higher, supported by improving economic conditions in the EU, Asia and the U.S. The current U.S. political situation has put pressure on the index but the longer term trend is still up. The DAX is sitting on a short support and trading near record highs. The current bearishness is alleviating overbought conditions in the near term and providing a good entry point. This index will snap back along with the S&P once the debt ceiling issues are laid to rest. I am trading a call on the DAX with a target entry below 8700 and one until expiry.
3. Euro Trading Near Top Of Range
EUR/USD
Call/Put = Put
Entry = Above 1.3575
Expiry = One Week
The EUR/USD has been trading near the top of a long term range for nearly a month now. The debt ceiling problem put some pressure on the dollar but I think that is a short term problem. On the daily charts this pair is showing some significant divergences that I think will result in some serious downside, once the debt ceiling is averted, again. I am trading a put on this pair with one week until expiry and a target entry above 1.3575.
4. Yen In A Range
USD/JPY
Call/Put = Call
Entry = Below 98.50
Expiry = One Week
The USD/JPY is caught between several warring factions. Abenomics and the BOJ on the one hand, QE and tapering on the other with both issues impacted by the current U.S. shut down, credit default scenario. Last week the pair made a strong move up from support, moving up past resistance at 98. The pair is indicated up by MACD and stochastic so I think the pair is going to move up to the top of the recent range at 100. I am trading a call on this pair with a target entry below 98.50 and one week until expiry.
5. Gold, Wow, It Moved Down Again
Gold
Call/Put = Put
Entry = Above $1285
Expiration = Month
Gold really tanked last week. A single sell order was blamed by at least one source I saw. This single order revealed the inherent weakness in the gold market and reaffirmed my bearish stance. I am trading a put on gold once again with a target entry above $1,285 and one month until expiration.
More Tips by the Geek – 10/14-21/2013 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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