Tip from the Geek – Top 5 Binary Options Trading Tips 12/16-23/2013
Easy to understand Binary Options Trading Advices. Try Trading on CommuniTraders!
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My Opinion? Taper Expectations Are Overblown
Anyone who reads my tips each week should know that I do not have much expectations for the FOMC to taper this week. The fear of the taper is overblown and I just can’t figure out why. Yes the data has been stronger than expected but this is a good thing. Strong data equals strong economy equals good earnings and a higher stock market. Of course the strong data is leading us toward the taper but we are still not there. Why am I so confident in this? It’s because the FOMC told me. Two of their pillars over the past 12 months to two years and longer are transparency and data thresh holds. The FOMC, and by that I mean Ben Bernanke, has repeatedly told us that transparency is important to the recovery, that tapering was data dependent and we have not yet met those data thresh holds for which the FOMC is waiting.
The Fed is waiting for 6.5% unemployment and the last I heard were even considering lowering that target. At the current rate of decline this target may be met in the spring, coincident with estimated targets I trust more than others. Longer term the taper may be affected by Obamacare. The impact on the consumer from the Affordable Care Act is going to hamper economic growth and may push back tapering even further. For now, the data is supportive of a strengthening economy and the trends are up. Taper fear has presented a reason for profit taking and a subsequent entry along the long term trend. Monday’s price action is evidence that the retail investor is not too afraid of tapering over the long term.
1. U.S. Data Continues To Impress
S&P 500
Call/Put = Call
Entry = below 1780
Expiration = One Week
My Trading Advice
The rising tide of economic data also raised the level of speculation over whether the FOMC will taper or not. Monday’s data was more of the same but yet the markets surged more than 1% at the open. U.S. industrial production climbed nearly double the expectation to reach a 12 month high at the same time that PMI data from around the world is showing growth. This data should have fueled the expectation that the Fed would taper this week but it did not. What is shows is that the retail investor is not afraid of the taper, as they shouldn’t be. Tapering means the U.S. economy is on stable footing and that is good for the markets.
The last two weeks have brought the S&P 500 down to a one month low. The market is now sitting on the support of the short term 30 day EMA and a potential area of support. There is some evidence that the bearish moves over the past month have been gaining strength but the fact they have not been able to break through support yet is a sign of future bullishness. The only thing standing in the way at this time is the FOMC. Even though I don’t think they will taper we just won’t know until Wednesday afternoon. Until then there may be some volatility around the 30 day EMA. I am trading a no-taper stance. I am bullish, trading calls on the SPX with a target entry below 1780 and one week until expiration.
2. German Expansion Leads EU
DAX
Call/Put = Put
Entry = Below 9160
Expiration = One Week
My Trading Advice
The German economy is still expanding. Flash PMI data from this nation was a little light but still above the expansionary 50 level. The better news is that despite a drop in French PMI the greater EU region was still able to expand and faster than the estimates. This is a good sign for the EU and other world markets. I am bullish on the DAX at this level and expect it to rise following the FOMC meeting, unless they scare the market with something unexpected. I am trading calls on the DAX with a target entry below 9160 and one week until expiration.
3. Be Wary Of Gold
Gold
Call/Put = Call
Entry = Above $1235
Expiration = One Week
My Trading Advice
Gold trading remains volatile. The metal has been testing the upper resistance of $1250 and the lower support near the $1225 level for over two weeks. Today the metal is once again approaching the $1250 level but looks very weak going into the FOMC meeting. I have little faith the Fed will give traders a reason to buy gold at this time and am still bearish on this asset. I am trading a put with one week until expiry and a target entry above $1235.
4. BOJ On Tap This Week
USD/JPY
Call/Put = Call
Entry = Below 103
Expiration = One Week
My Trading Advice
The USD/JPY is trading just under resistance and forming a rising wedge pattern. The pair has been driven higher on the combined expectation of less QE from the FOMC and more QE from the BOJ. Weak Japanese economic data, weak in terms of their recovery targets that is, has led to speculation the BOJ will act at this meeting. This sentiment has been echoed by Kuroda himself. I am trading calls on the USD/JPY with a target entry below 103 and one week until expiry. If the pairs fails to break resistance after the meeting I may have to reevaluate my short to long term outlook on the pair.
5. Euro Near Highs
EUR/USD
Call/Put = Put
Entry = Above 1.3775
Expiration = One Week
My Trading Advice
The euro has been driven higher versus the dollar on the taper fears. The pair is now trading beneath long term resistance and is not showing signs of being able to break through. The FOMC will be the catalyst that moves this pair. I am bearish on the pair and trading puts. My target entry is above 1.3775 with one week until expiry.
More Tips by the Geek – 12/16-23/2013 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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