Tip from the Geek 04/06 – 04/13/2015: Don’t Bet On A Weak US Economy

Top 5 Weekly Binary Options Trading Signals by the Geek

The labor data last week was a little surprising. The ADP and NFP numbers were both much weaker than expected and raise the possibility the labor market is not in so good of shape. However, other data points such as the weekly jobless claims and Challenger report on planned lay-offs suggest that the labor market is still healthy. What I say is that one month of data such as the NFP do not make or change a trend and that the labor market remains healthy. This has however caused a knee-jerk reaction throughout the market that has offered up several nice possibilities.

This week the market still has some major headwinds to face. There is more data, as if we ever get enough, in the form of the JOLTs report on job openings and several others. It is also the first week of earnings season and the start of what could be a month or two of increased volatility. Current expectations are for net earnings declines in the range of -4-5% largely driven by the decline in oil prices. If this holds up, or gets worse, the market could be in trouble. In the meantime all of this data is causing a major shift in FOMC expectations that has sent a ripple through the currency market that is also impacting equities as well as commodities. Looking forward into the coming weeks I see time in which support and resistance levels are going to be more important then ever.

 

 

 

1. The SPX Bounces Back

S&P 500

Call/Put = Call

Entry = Below 2,070

Expiration = One Week

 

My Trading Advice

The market looked like it was in for big trouble early on Monday morning. The weak NFP had futures down by over a percent and indicated an open that would be testing support in the least. The reality is that the market, once the bell sounded, shot upward the way a beach ball held underwater shoots upwad when released. The bears tried to drown the bulls in a sea of weak data but it turned out to be only a puddle and the bulls too strong to be held down. This doesn’t mean that we have nothing to worry about but it is a good sign that support is still there and that the bull’s are eyeing the longer term.

The charts look good. The index is winding up into a tightly coiled spring that is set to bounce higher. Economics and earnings worries have put the index at support and in this position, setting us up for the second half of the year. The second half is expected to be strong and I am in agreement so look to the forward guidance and not so much on current earnings. If guidance is good the market will rise. I am bullish so trading a call with a target entry below 2,070 and one week until expiry.

 

 

 

2. Gold Rising On Weak Dollar

Gold

Call/Put = Put

Entry = Above $1215

Expiry = 3 Days

 

My Trading Advice

Gold has risen to a near term peak on a weaker dollar. The dollar is weaker due to the NFP, a poor data point but one not indicative of the underlying market. Dollar weakness is a knew jerk reaction and not one that will last, particularly in the face of longer term economic trends and BOJ/ECB QE’ing. I am fading the pop in gold with a three day and target entry above $1215 but remain bullish in the longer term.

 

 

 

3. Who Blinked First…

USO/Oil ETF

Call/Put = Call

Entry = Below $17.50

Expiry = One Week

 

My Trading Advice

Well, it looks like the Saudis blinked first doesn’t it? They couldn’t get OPEC to support prices by curbing production, or stood in the way or whatever, but they could get a better price by raising prices, at least to Asian customers. In any event their support of a floor to prices in any form is bullish for oil prices and helping to support both WTI and Brent. On a technical basis the ETF has broken the down trend, is showing support and confirmed by bullish indicators. I am trading a call on the USO oil ETF with a target entry below $17.50 and one week until expiry.

 

 

 

4. Do Not Bet On Dollar Weakness

EUR/USD

Call/Put = Put

Entry = Above 1.1025

Expiry = One Week

 

My Trading Advice

Weaker data and weak expectations for earnings have helped to weaken the dollar. The NFP has helped to send the dollar to its low however and setting us up for another rally. The dollar is likely range bound in the longer term but in the nearer term is set to gain strength versus the euro and other currencies. The EUR/USD pair is trading at resistance just above 1.1030 with indicators in support of resistance and the top of the range. Look to data trends and central bank policy to determine next direction. The ECB is till supporting the EU, the FOMC is in process of raising rates. I am trading a put on the pair with a target entry above 1.1025 and one week until expiry.

 

 

 

5. Do Not Bet On Dollar Weakness… Part Deux

USD/JPY

Call/Put = Call

Entry = Below 119.050

Expiry = One Week

 

My Trading Advice

The same situation which put the EUR/USD at resistance has the USD/JPY at support. This correlation is being driven entirely on near term factors impacting the dollar that will soon be eclipsed by the longer term outlook. The BOJ is still printing money, the FOMC is still on track to raise rates this year. This combination may not break the pair above resistance but it will lift if off of support and up to that resistance. The indicators confirm support near the middle of the 5 month range so I am trading a call with a target entry below 119.50 and one week until expiry.

 

 

More Tips by the Geek – 04/06 – 13/2015 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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