Weekly Binary Options Trading Briefing 2/4-11/2013 – Stocks and Currencies Supported on Limited Negative Macro Surprises
Binary Options Trading Recommendations for the upcoming week – Market Information and Trading Tips
Stock markets and high yielding currencies has a strong close into the end of the week as economic data and corporate earnings produced no significant surprises to the downside. The S&P 500 is now showing one of its best yearly starts since 1997, and this is putting selling pressure on negatively correlated assets like Gold and the US Dollar, as investors are willing to take on additional risks on signs that the global economic recovery is proceeding in a stable fashion. The main event for the week was the US Non Farm payrolls report, which came in slightly below expectations at 157,000 jobs (along with an uptick in the Unemployment Rate, to 7.9%).
The initial reaction to these numbers was negative but when looking at the details of the report, figures for the previous month were revised substantially higher and the general relief that there was no major downside surprise in the data was enough to reverse early losses and bring a positive close on the trade week. Both the EUR/USD and Dow managed to crack long term psychological levels (at 1.37 and 14,000, respectively), and this bodes well for the health of the bull run in both stocks and high yielding currencies. But whether or not this can continue next week is questionable, as there is little in the way of top tier corporate earnings or macro reports to drive sentiment.
Central Bank Meetings in Australia, UK, and Eurozone
The lack of market data next week puts these rallies in a vulnerable position, as it is increasingly likely that investors will look to take some profits at elevated levels and bring a much needed correction to the one-way rally. The major event risks that we will be seeing will come from central banks, with the RBA, ECB, and BoE all scheduled to release interest rate policy decisions. So while none of these meetings is expected to result in a change in rates (outside possibility in the RBA decision), the general tone of the accompanying statements could sway markets depending on how optimistic or pessimistic these statements sound.
Corporate earnings will be less of an issue this week, but we will see numbers from Disney, along with a set of releases from media companies: Linkedin, News Corp. and Time Warner. Expect a generally slow week, with some potential volatility created by the central bank outcomes and a slow drift lower on profit taking.
My Trading Recommendations in 50 Words
1. The massive rally in the EUR/USD is trading on borrowed time but has not been matched in other currency pairs, such as the GBP/USD. This suggests more potential upside in the GBP relative to the EUR, and this means downside in the EUR/GBP. Based mostly on technicals, I will look for long term monthly PUTS in EUR/GBP at 0.8750, looking for a run back into the low 0.80s.
2. I bought Fedex on the way up and now I will look to bet against the latest strength, as holiday optimism comes to an end. I will enter into monthly PUT options in FDX at 103, looking for a bear correction back to the daily moving averages.
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