Weekly Binary Options Briefing 5/13-20/2013 – Stocks Close Higher as Central Banks

Binary Options Trading Recommendations for this week – Markets Information and Trading Tips

S&P 500 closes near 1630 on positive earnings results, and consistent central bank stimulus around the world. Macro driven volatility to slow into next week.  Earnings numbers expected from Cisco, Macy’s JCPenney.

Stocks Close Higher as Central Banks, Earnings Remain Supportive 

Stock markets closed higher for the third week in a row, with the S&P 500 extending to new record highs in the 1630 region.  Corporate earnings continue to be one of the main market drivers and some of the more positive examples this week came from Whole Foods, Electronic Arts, Disney and DirectTV, all of which released profit reports that were above analyst estimates.  Whole Foods and Electronic Arts saw gains of nearly 10% after their quarterly results were posted, which Disney and DirectTV saw more modest gains (in the neighborhood of 4%) during the week.  Bank of America was another positive story, rising by 6.5% after reaching a settlement on mortgage debt with MBIA Inc.  On the negative side, McDonald’s dropped 2.6% after reports showed that sales dropped in April on weakening demand in emerging markets.

        Some of the more volatile moves last week were seen in the currency markets, with major technical levels breached in some key Dollar-denominated pairs.  Specifically, the USD/JPY finally overcame the closely watched 100 level, while the USD/CHF rose to new highs for the year above 0.96.  This activity in the Dollar appears to be indicative of a growing trend that should continue into the summer.  This is largely supported by central bank expectations, with the US Federal Reserve expected to emerge from its stimulus programs ahead of most other regions. 

The Week Ahead    

In the week ahead, we will see some reduced attention in corporate earnings as the season starts to slow down.   We will see some key releases from Cisco as well as a few major retailers (Macy’s JCPenny).  Macro data will take a backseat as we will only have inflation data (CPI, PPI), retail sales and jobless claims out of the US.  Japanese GDP will be released on Wednesday. 

My Trade Ideas (Test on CommuniTraders):

1. The EUR/USD is having a hard time finding support after posting daily and weekly closes below the psychological level at 1.30.  We are now seeing a head and shoulders pattern emerge on the daily charts along with a spike low below the neckline at 1.2960.  Without a weekly close below this level, there is a chance this is a false break, but I will be looking to enter into weekly PUTS in the sub-1.30 area as the technical picture supports further Dollar strength.

2. For stock trades, I will look to play off one of last week’s better earnings stories, which was seen with Whole Foods (WFM).  Whole Foods Market posted a 21% increase in quarterly profits to $142 million (against the $118 million seen at this time last year).  Revenues rose 13% (to $3 billion from $2.7 billion previously).  The company raised its full-year earnings forecast to $2.89 per share, up from its previous forecast of $2.87 per share.  The bullish scenario here has helped push the stock above $100, and more upside is expected on a momentum basis.  Enter into monthly CALLS in WFM, looking for a rise into the $105 area.