Binary Options Weekly Briefing 15-20/10/12 – Stocks Head Lower on Weak Earnings Outlook

 Binary Options Trading Recommendations for the upcoming week –  Market Information and Trading Tips

Stock markets in the US posted their worst weekly performance since the beginning of last Summer due in part to the reduced forecasts for global growth that were released by the IMF.   Each of the 10 industry groups in the S&P 500 closed in the red for the week, with financials and shares of companies with heavy European exposure seeing some of the biggest losses.  Markets were already trading heavy to start the week and credit rating reductions in Spain and these latest forecasts from the IMF only added fuel to the fire.

 

The main story, however, continues to be the market expectations for third quarter corporate earnings as this will be the main directional driver in stocks as we head into the holiday season.  The latest examples of representational companies in these categories came with Alcoa (AA) and Advanced Micro Devices (AMD), which both showed profit projections that were lower than the market’s already weak expectations.  The AMD story made things particularly difficult for tech stocks, and additional headlines were made by APPLE (AAPL) which also met selling pressure, completing its longest stretch of weekly declines since July.

 

The carnage was not exclusive to tech stocks, however, as Alcoa (which tends to be viewed as a gauge of future manufacturing productivity) dropped nearly 4.5% on the week, roughly doubling the weekly losses seen in the S&P 500 during the same period.  Bringing an overriding pall to the trading environment was the reduced IMF growth forecast for 2012, (which was lowered to 3.3% from the original 3.5%). The new forecasts show the lowest growth levels since the recession of 2009, signalling that the economic recovery is showing signs of stalling. 

 

Looking Ahead to Corporate Earnings

Moving forward, binary options traders should remain focused on the next round of corporate earnings releases, which have not yet been seen in full force.  Some analyst commentaries have suggested that the companies with the most negative news to report are trying to release the information as quickly as possible, which could mean that we see more losses early in the reporting process before things stabilize later.

 

My Trading Recommendations in 50 Words 

1. This week, the Swiss National Bank reaffirmed its commitment to maintaining the 1.20 price floor in the value of the Swiss Franc relative to the Euro, and while I am bullish on the Euro, I expect EUR/CHF declines to be limited.  Use drops into 1.2080 as a solid entry for 1 week CALL options.

 

2. Silver is coming into some important technical levels and any bounce from 33.40 is encouraging.  Use current levels as a base for 1 day CALL options, but the bias will reverse on a 4-hour close below 33.40, opening the way for PUT options later.

 

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