Tip from the Geek – Top 5 Binary Options Trading Tips List 2/18-25/2013
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U.S. Market Brush Against Resistance and Mull the Future
Last week the S&P 500 traded above the previous consolidation range and closed with a small gain on the week. It also traded under a long term resistance line I had discounted before. This resistance area is the line connecting the intra-day high of December 11th, 2011 with today. That intra-day high is the top of the right shoulder of the H&S reversal preceding the 2008 market crash. The decision I made to discount the line up until this point is based on several factors. First, there have been at least 7 periods of selling since hitting bottom in 2008, plenty of opportunity for long term investors to get out. Three of those periods occurred within 100 points of the aforementioned high. Second, the market has already broken through several other more significant areas of resistance. Third, the economy is showing signs of improvement. As long as this improvement persists the market should continue moving up. Fourth, accommodating policy and fiscal stimulus, the main drivers of the current recovery, are unchanged for the time. There is risk of this in the future but for now things remain the same.
In the near term there may be some selling in the S&P 500 but I do not think it will be too bad. Traders are waiting for the release of FOMC minutes later this week and they are expecting some indication of a change to policy. This is highly unlikely at this point in the game since targets set by the FOMC have not yet been met. Any mention of a change will only be that, a mention, and should not, in my opinion, have a lasting effect on stock prices. In fact, based on the posture taken by the G-7 and G-20 on the currency war speculation some pundits are actually eying the possibility of even more stimulus. The thought is that Japan may not be out of line with its policy and that other may continue in that direction.
1. S&P 500 A Stones Throw From All Time Highs
SPX
Call/Put = Call
Entry = below 1520
Expiration = end of the month
My Trading Advice
The S&P 500 traded in a tight range last week on very light volume. The move up and out of the previous consolidation range is being tempered by the resistance I described before but also by the impending spending sequester. The sequester is Pandora’s box for politicians with resolution echoing throughout the system. Cut spending and send the economy back into recession or keep spending and grow the national debt to new high levels. No matter what they do the markets will react. In the short term it is all just speculation, the facts that we have show an economy in stabilization and recovery.
Long term indicators on the charts of weekly closing bars are bullish. The sideways action of the last two weeks has done nothing to turn me bearish and a lot to help the S&P relieve overbought conditions. Adding to this bullishness is positive comments from the Bundesbank about Germany and statements from Japan’s minister of finance. I am trading calls on the S&P 500 with an entry below 1520 and end of the month expiration.
2. Germany Will Lead Growth In EU
DAX
Call/Put = Call
Entry = below 7650
Expiration = end of the month
My Trading Advice
Statements from the Bundesbank concerning Germany’s return to growth underscore other reports from last week. Germany surprised us all with a larger than an unexpectedly larger drop in GDP but the statements were the big takeaways. German ministers, and now the Bundesbank, sees Germany returning to growth in the first quarter, possibly by as much as 0.6%. Recent weakness in the DAX has presented a good opportunity in this market. I am trading calls on the DAX with an end of the month expiration and an entry below 7650.
3. Euro Still Declining Against The Dollar
Eur/USD
Call/Put = Put
Entry = above 1.3350
Expiration = end of the week
My Trading Advice
The Euro began a correction versus the dollar last week and looks good to continue it. The pair retreated from a 12 month high on the back of negative comments from Mario Draghi concerning risks to the EU economy. Even though Germany is expected to improve growth this quarter the EU as a whole is not. There are still some risks ahead and impending elections in Italy are only one of them. I am trading puts with an end of the week expiration and a target entry above 1.3350.
4. Nikkei Targeted By Japans Minister Of Finance
Nikkei 225
Call/Put = Call
Entry = below 11,500
Expiration = end of the month
My Trading Advice
Japans finance minister stated over the weekend that Japan was targeting stock prices as well as yen value in its approach to fiscal stimulus. The target for the Nikkei is 13,000, fully 1500 points higher than it is now. With the BOJ’s currency devaluation unfettered by the G-7 I see this target being reached in short order. I am trading calls on the Nikkei with an entry below 11,500 and end of the month expiration.
5. Yen Will Slide Again
USD/JPY
Call/Put = Call
Entry = below 94.25
Expiration = end of the month
My Trading Advice
The Japanese efforts to devalue their currency have been working well so far. Now, with the apparent lack of action from the G-7 this is likely to continue, especially with the new Nikkei target now in play. I am trading calls on the USD/Yen with an entry below 94.25 and an end of the month expiration.
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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 AnyOption Binary Options Trading Platform.
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