Weekly Binary Options Briefing 7/08-15/2013: Positive Non Farm Payrolls Lift Sentiment

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

Non Farm Payrolls bring strong close to the week.  195,000 jobs added in June, with April and May revised higher.  Markets still focused on Fed intentions.  Alcoa starts off earnings season after the bell on Monday.

Weekly Binary Options Briefing:  Positive Non Farm Payrolls Lift Sentiment

 The S&P 500 closed on its highs for the week (just below 1630), propelled in large part by the stronger-than-expected Non Farm Payrolls for June, which came in at 195,000 additions for the month.  The inner details were perhaps even more encouraging, as the 

monthly numbers for both April and May were also revised higher (to 195,000 and 199,000, respectively).  This puts the average survey results at 182,000 for the last year and came with an increase in average hourly earnings of 10 cents.  The positive results were not entirely surprising, given the improving ADP employment report, which is often looked at as a precursor for the all-important NFP data.

On the other hand, the unemployment rate held steady at 7.6%, which is well above the Federal Reserve’s target rate of 6.5%.  When we look at the commentaries voting members of the FOMC have submitted recently, is will be vital for this number to show improvement before there can be any meaningful reductions in quantitative easing stimulus.  Since this is a major peg supporting stock markets around the globe, it will continue to be important to watch Fed commentaries in order to understand how they are interpreting the progress being made in labor markets.  Either way, stock markets should start the week with a bid tone, as investors continue to price-in the increased monthly averages in the NFP jobs report.

The Week Ahead    

 In the week ahead, we should see some bullish sentiment to start the week.  Without much in the way of macro data, market attention will start to turn back to corporate earnings, as Alcoa (AA) kicks off the season after the closing bell on Monday.  The report will likely spark some Tuesday, given its importance, as Alcoa’s credit was cut to “junk” in May (by Moody’s).  Overall, companies listed in the S&P 500 are expected to post earnings increases of 1.8%, a sharp decrease from the 8.7% that was expected just six months ago. 

My Trade Ideas (Trade on CommuniTraders):

1. Last week’s AUD/JPY trade closed in the money but not by as much as expected, and I will be looking to “draw from the well” once again in this pair.  With prices in the USD/JPY now firmly above 100, the oversold Aussie has some prospect for recovery.  High yielding currencies should also benefit from the bullish sentiment created by last week’s jobs numbers.  Look to buy weekly CALL options in AUD/JPY at the open, which should be in the 91.80 area.

2. For stock trades, I will be looking at manufacturing and technology company Honeywell (HON).  The stock has seen year-to-date gains of nearly 30% despite growth weakness when looking at the company’s performance from a historical earnings perspective.  Looking at Honeywell from an industry perspective, its price-to-book value of 4.5 is high enough above its peers to suggest further weakness.  Key resistance is seen nearby (just below 81).  Support to the downside is not seen until 76, so there is scope for good sized bear moves near term.  Buy one month PUT options in Honeywell at 80.90.