Tip from the Geek – Top 5 Trading Signals 07/21-28/2014
Market Watching Ukraine Situation
The global market took a nose dive last week when pro-Russian separatists, allegedly backed by the Kremlin, accidentally shot down a passenger jet. US markets, the SPX in particular, had their largest down day in nearly 3 months, providing more relief for over bought markets. The details of the crash are still murky, and there is a growing issue surrounding the treatment of the crash site so there is a real possibility for this problem to impact markets again this week. My heart goes out to the families of the victims and I hope that this comes to a satisfactory end very soon.
This week the focus will be on earnings. There are only a few economic reports but there are hundreds of earnings announcements. This week and next week accounts for the lions share of S&P 500 and Dow companies, making it the make or break period of the earnings season. To date, about 2/3’s of S&P companies have met or beaten estimates, good but not as good as in the past. On average, about 70-75% of companies meet expectations so we will need to see some improvements to the numbers this week.
The data that we will get this week is important. Existing and new home sales are released in two bits with the former on Tuesday and the latter on Thursday. Tuesday we will also get important inflation data in the form of the Consumer Price Index and then on Thursday the Durable Goods report will give us an idea of the state of manufacturing long term items. In between will be he usual weekly mortgage index, energy supplies and unemployment claims.
1. S&P 500 Consolidates
SPX
Call/Put = Call
Entry= Below 1970
Expiry = One Month
My Trading Advice
The US market led the global rebound on the news of the Malay plane crash. Reports are still unclear as to what really happened and who is really responsible. The important thing for us now though is how the news affected the markets. The knee jerk reaction was to sell off, and then later in the day the fighting in Israel helped to drive them even lower. The next day however the US equity markets rebounded to reclaim the losses. The S&P 500 created a long white candle moving up from the short term moving average and appears to be stuck in a consolidation band. The index has been in this band for about 4 weeks and it has a hint of triangle to is as well.
At this time the indicators are bearish and pointing lower but they are very weak. With the underlying bull trend in place this is nothing to worry about so long as support holds. If there is a break of the consolidation the long term trend line the index would find the long term trend line not far below. The long term charts are still bullish and so am I. This week earnings should help to boost us and if they are not quite enough then data over the next month will do the rest. I am trading a call on the S&P 500 with a one month expiry and a target entry below 1970.
2. Gold, Gold, Gold
Gold
Call/Put = Call
Entry = Above $1315
Expiration = One month
My Trading Advice
I’ll be straight with you, there are a lot of near term fears that could give gold a boost but they are near term. The metal has not been able to successfully break $1325-$1330 and in my opinion, near term fears will go away pretty quickly. I am still bearish on gold, how can you not be with the long term economic trends and the current outlook that US interest rates will rise “sooner rather than later”, so I am trading a put. Because I am not a genie and can’t see the future I am giving the trade a month until expiry with a target entry above $1315.
3. Germany In The Wings
DAX
Call/Put = Call
Entry = Below 9630
Expiration = One month
My Trading Advice
Germany is in the dumps along with the rest of the world as the Ukraine plane crash unfolds. Earnings and data are also adding to the down ward bias but in the end are providing entry points along a long term support line. I am bullish on the DAX as Germany is the pillar of the EU, the EU is improving and will benefit from global improvements in Asia and the US. I am trading a long term one month position on the DAX with a target entry below 9630.
4. Oil On Technical Bounce
USO
Call/Put = Call
Entry = Below $38
Expiration = One week
My Trading Advice
Oil prices fell last week as Libyan production began to come on line and Iraq fears subsided. Then, when stockpiles fell unexpectedly WTI hit support and began to bounce higher. Now oil prices are in a technical bounce that is indicated higher with increasing momentum. I am trading a call on the USO with a target entry below $38 and may enter another position once it breaks the short term moving average. Expiry on both trades will be one week due to the lack of fundamental drivers.
5. Time To Play The Oil Field
Exxon
Call/Put = Call
Entry = Below $102.50
Expiry = One Week
My Trading Advice
The oil sector is gearing up for earnings. Most of the big oil companies report at or near the end of the month but until then speculation of earnings will be driven by high high oil prices. The Oil Index is trading along support and showing an early signal, echoed by Exxon’s performance. I am trading a call on the oil giant with a target entry below $102.50 and one week until expiration. There is no telling how earnings will pare out so I want to be out of the trade before then.
More Tips by the Geek – 07/21-28/2014 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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