This is an Important Week for the Market – Tip from the Geek
Top 5 Trading Signals 10/27 – 11/03/2014 by the Geek
This is an important week for the market. First off it is another huge week for earnings. So far the earnings trends are beating projections with signs of the next quarter and next year beginning to perk up. Next it is the October meeting of the FOMC. They are largely expected to end the taper and QE and put us on track for an eventual interest rate hike. The guidance, or lack of guidance, they give will have a tremendous impact on the markets ranging from gold to the dollar and equities. After that there is some pretty important data. The week started off with lack luster growth in pending home sales but will end off on what I expect to be a more positive note. Thursday is the first estimate for 3rd quarter GDP. The estimates vary from source to source but are firmly in the 3% range.
The market, the US market, has been bouncing strongly since hitting the 10% correction mark two weeks ago. The fears that built up to topple the rally have slowly evaporated from the market attention. I’m not saying they are not still present, the market is just more focused on picking up good deals on cheap stocks. There are still signs of weakness in the global economy, maybe more than just signs, but the world economy is still growing on a whole. As ever, it is a stock pickers market so caution is due with whatever trading you do.
1. A Strong Bounce
S&P 500
Call/Put = Call
Entry = Below 1955
Expiry = One Week
My Trading Advice
The bounce is a strong one. The near vertical nature, along with the extent of the Fibonacci Retracement and current support levels attest to that. In fact, based on what I am seeing the long term trend has not yet been broken. Yes, there was a dip, a pretty big dip, that moved below the trend line but the market response is highly suggestive the dip was a buying point for many investors. Adding to this are bullish indicators that are pointing higher into the near term.
This week will be huge for this index. Earnings, the Fed and economic data will be the focus. Ebola is still around and could be a problem into the short term but is being shrugged off for now. I anticipate weaker trading on Monday and Tuesday, up until the Fed statement but after that I only see upside. There is a risk that the Fed will disappoint us but I don’t think so. This week I am trading a call on the SPX with a one week expiry and a target entry below 1955.
2. Gold At A Bottom
Gold
Call/Put = Call
Entry = Below $1230
Expiration = One Week
My Trading Advice
Gold may not be at THE bottom but I think it is at a bottom. Prices are near long term lows based on the expectation of no inflation, less QE and stronger dollar. However, with the Fed at the juncture leading to higher interest rates that means inflation is at hand. On top of that rates hikes are no longer expected by June, they could be much later. These are both reasons to think that gold will rise in the near to short term. I am trading a call on gold with a target entry below $1230 and one week until expiry.
3. Dark Times For The DAX
DAX
Call/Put = Call
Entry = Below 8,900
Expiration= One Month
My Trading Advice
The DAX is experiencing some dark times. Russian sanctions, weak EU economic data, deflation in some areas and now new lows of sentiment. I know it looks bad but it’s not that bad. Germany is still a strong nation and one that works. The index is near a long term support level confirmed by indicator so I remain a bull on this market. I am trading a call, but with a one month expiry, with a target entry below 8,900.
4. Yearning For Yen
USD/JPY
Call/Put = Call
Entry = Below 108
Expiration = One Week
My Trading Advice
The USD/JPY is moving back up to retest 110. The pair tested support early in the week but with the Fed, and an end to QE, the dollar will strengthen into the end of the week. Not only that, the BOJ is still printing money, adding additional upward pressure for this pair. I am trading a call with a one week expiry and a target entry below 108.
5. Slick Oil Trade
Oil/USO
Call/Put = Call
Entry = Below $30.50
Expiration = One Week
My Trading Advice
Oil prices broke $80 again today and are expected to go lower. I, however, think this is not the right call. Oil is near the long term low, testing support from last week’s bounce, and heading back up. I can’t help but be contrarian on this one based on my longer term bullish outlook. If the US and the world is going to grow people need oil. We’re growing now and oil is super cheap so I just don’t see why it isn’t going to be bought up. There could be a firm test of $80 but I am bullish on oil. I am trading a call with a one week expiry and target entry below $30.50 (for the USO, Oil tracking ETF).
More Tips by the Geek – 10/27 – 11/03/2014 Trading Tips On Forum.
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That’s it for this week; Michael will be here next week with fresh trading tips. Meanwhile, we will be testing Michael’s tips to see what kind of an “expert” he really is. All trading assets and expiry times featured in Michael’s trading tips are based on CommuniTraders Binary Options Trading Platform.
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