Tip from the Geek 03/09 – 16/2015: Strong Jobs Leading To Correction
Top 5 Weekly Binary Options Trading Signals by the Geek
The much stronger than expected jobs reported last Friday has a sparked a correction. This is counter intuitive and not at all what I was expecting but in retrospect something I should have seen coming. I think the market was geared to correct regardless of what the data said. The fact that US jobs creation is strong, unemployment is coming down and expectations for the next two quarters are good may have cushioned the drop. A bad jobs report and poor expectations could have led us into a bear market and even possibly a full reversal. What we have instead is a natural readjustment of valuation. Prices have been rising steadily and have extended themselves above historical average P/E ratios. A little correction is nothing to be feared as it will bring valuation back into a range attractive to the bulls.
This is going to be a light week for data. There are no global central banks meeting this week, very little global data and only a handful of US releases. The most important in my view will be the JOLTs report on Tuesday which shows the number of job openings available. Later in the week there will be some important inventory data for January. This is important as it is the first look at inventory levels on a macro level for the first quarter and will be an important indicator of GDP. Earnings are still rolling in as well and may help pressure the indices lower. Earnings as a whole are OK, forward guidance is crap. If this persists then stocks will indeed move lower, up to an until the outlook for earnings begins to change.
1. Don’t Buy The Monday Bounce
S&P 500
Call/Put = Put
Entry = Above 2070
Expiry = 3 Days
My Trading Advice
I’m not buying the Monday bounce. I’m still a bull, we are still in a bull market, but I think we are on the verge of correction. Correction, we are in a correction. The indices fell dramatically on Friday, counter to economic trends but completely in line with valuation. Over the past month, while the indices moved up to make new highs, forward P/E fell off and is now at a multi-month low. This is why stocks sold off and why they will continue to, at least until this index touches the long term trend line.
The S&P 500 could be on the verge of falling off of a cliff, but I don’t think its going to get that bad. Starting with the weekly charts there is wicked divergence between price and indicators that could open up a sink hole beneath prices. At the same time, on the daily charts, the index is already moving lower and has at least 30 points between it and long term support. I am bearish in the near term, looking for another major long term trend following bounce, and trading a put this week. My target entry is above 2070 with 3 days until expiry.
2. Gold Sinking To Bottom
Gold
Call/Put = Put
Entry = Above $1170
Expiration = One Week
My Trading Advice
Gold is sinking back to its long term low and possibly will fall as far $1150. The price of the metal is being influenced by near term reaction to dollar value and interest rate expectations, both of which are helping it to move lower at this time. The thing is, prices are moving back to where long term buyers were strong, and long term expectations for interest rates and inflation are gold positive. I am a bull on gold still, but trading a put this week, and will remain a near term bear, until support is revealed. My target entry is above $1170 with one week until expiry.
3. Dollar Peaking
USD/JPY
Call/Put = Put
Entry = Above 120.90
Expiry = One Week
My Trading Advice
The dollar is peaking, in my humble opinion. It has been rocketing skyward for some time, driven by central bank expectations and economic data, and now is at the end of its run. There is little expectation of central bank action in the next few weeks and with the USD/JPY pair at long term resistance I can’t do anything but play a put. I mean, to get bullish the pair would have to break above resistance and there just isn’t anything on the horizon that is going to do it, this week at least. My target entry is above 120.90 with one week until expiry.
4. Parity? Yeah, Maybe….
EUR/USD
Call/Put = Call
Entry = Below 1.0850
Expiry = One Week
My Trading Advice
The euro is in similar position to that of the yen. The currency is trading at a new low, with divergenet indicators, and the dollar at a peak. Again, there is no expectation for a change to fundamentals this week and the indicators are in line with a snap back. The pair may go to parity, but I am trading a call this week. My target entry is below 1.0850 with one week until expiry.
5. Double Bubble Oil Trouble
USO
Call/Put = Put
Entry = Above $18
Expiry = One Week
My Trading Advice
Oil prices have done their best to hold support around $50, $18 on the USO. This is a good sign for the bulls but not supported by fundamentals. I agree that the supply/demand picture is still out of whack but it is also without question that global supply is still on the rise. The USO is still trading along the down trend line, with indicators supporting another leg lower, so I am trading a put. My target entry is above $18 with one week until expiry.
More Tips by the Geek – 03/09 – 16/2015 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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