Binary Options Trading Recommendation for this week – Market Information and Trading Briefing
Stock markets traded on lower volumes for a large portion of last week and the Independence Day holiday in the US kept many traders on the sidelines. Adding to this willingness to keep positions neutral were the key event risks that were scheduled for the close of the week. On Thursday, markets prepared for the monetary policy decision from the European Central Bank (ECB), and stock investors were not disappointed when the result was a reduction in the benchmark interest rate to 0.75%.
This 25 basis point reduction created a new all time low for the cash rate in the Eurozone, and sent a clear signal that the Bank is concerned about the future effects of the region’s continual debt problems. The Euro itself met selling pressure, however, as later comments suggested that the rate cut itself might not have much of an effect on official growth forecasts for the remainder of the year. For the week, the EUR/USD hit new yearly lows just above 1.2250.
The negative news continued into the close of the week as the US Non Farm Payrolls report came in very weak, indicating that 80,000 new jobs were added during the month. This lack of significant progress in new jobs is keeping the Unemployment Rate elevated, and there was no change to the 8.2% figure that was seen in the previous month. The S&P 500 finished below the 1360 level and this downside pressure looks set to continue into Asian trade on Monday.
Stock Market Focus to Center on Corporate Earnings
Going forward, markets are most likely to center their attention on corporate earnings results, rather than on national macro data. The first major company in the Dow Jones that is scheduled to report will be Alcoa (stock symbol AA) and this is likely to set the tone for near term trading in equities. Overall, market analysts are not expecting a strong earnings season, with the S&P companies as a whole expected profit declines of 1.8% for the quarter (April to June).
In terms of stock prices, the S&P was down 3.3% in the second quarter, so these earnings releases are going to be the main indication of whether or not this downtrend is going to continue. On the whole, markets are still in positive territory for the year, so it is looking like we are a major long term inflection point to see if these gains can hold.
My Trading Recommendation in 50 Words
With markets showing a sharp reversal into the end of the week, I am expecting the momentum to continue as markets open on Monday and will enter into 1 hour PUT options in the S&P 500 at current price levels. A break above 1380 negates this bias.