Tip from the Geek – I’m Waiting For The Fed….
Top 5 Trading Signals 09/15-21/2014 by the Geek
In my mind that title goes along with the music for The Velvet Undergrounds “I’m Waiting For The Man”. If you don’t know it I recommend it, great music. The song is about a junkie waiting for his connection and has a lot of parallels with current market conditions ie the Fed, QE, Tapering and the market rally. The rally, on a US and global basis, has been largely Fed driven and now the market is waiting on the Man. The Man being the Fed and ironically, Janet Yellen. The post summer season has been very quiet and a little soft as traders get back into the swing of things and wait to see what old many FOMC has to say. The expectations are broadly in agreement; the taper will continue with a targeted October end, the verbiage may be changed minutely to exclude “considerable time” and there would be nod to the upcoming and expected interest rate hikes. I my opinion, based on what I see and hear in the news, is that even an expected hike is going to be very small, extremely incremental and not that big of a deal.
This week is going to be big in more ways than one. Not only is the FOMC meeting on Wednesday there is quite a bit of economic data to contend with as well. Weekly jobless claims, Empire Manufacturing (which came in quite bullishly), housing data and a few others. Additionally it is options expiration week which adds volatility, there is a change in the S&P 500 on Friday, the Scottish referendum on independence is this week and of course there is still some lingering threat from the Russian incursion of Crimea and the Ukraine. Needless to say there is a lot to take note of this week and quite a few potential market movers. When things are like this I do my best to stick to the underlying fundamentals and what the technical analysis tell me to do.
1. S&P 500 Hovers At Support
S&P 500
Call/Put = Call
Entry = Below $1985
Expiration = One Week
My Trading Advice
The economic data will be important this week but the Fed will be extra important. The economic trends are up no matter what the individual data points may tell you. There is still spots of weakness from sector to sector and month to month but overall things are getting better. Near term fears will of course weigh the market down from time to time but from a long term view point the markets are on the rise.
The S&P 500 is sitting on a support zone that appears to be holding on a short term basis. The index has been trading above previous all time highs ever since setting new ones early this month. In that tie the index has been consolidating, waiting, preparing for the FOMC meeting this week. So long as the support holds I am bullish this week and trading a call. I expect the data to come in steady and for the Fed to perform as expected with any chance of surprise a positive one. My target entry this week is below $1985 with one week of expiry, a month may have been better but I see the market moving on the Fed.
2. EU Waiting Too
DAX
Call/Put = Call
Entry = Below 9665
Expiration = One Week
My Trading Advice
The EU is holding its breath too. Not only do they have economic data, the impact of Russia sanctions and the Fed to worry about they also have the Scottish referendum to content with. I can see how Scotland would want to be independent but I can also see negatives on many levels. In any event the DAX is holding up OK in the face of this and bouncing off of support at 9665. I am trading a call on this index as well with one week of expiration and a target entry below 9665.
3. Gold Has Nowhere To Go
Gold
Call/Put = Put
Entry = Above $1235
Expiration = One Week
My Trading Advice
I think that gold has nowhere to go but down. The metal has been losing ground for YEARS on rising economics and a recovering US economy. Now strong dollars, the onset of rising interest rates and no reason to get long of gold it can only go down. However, I think the bottom may be near. Gold is approaching the long term low and a likely area to find support. In any event, its not there yet so I am trading a put with one week of expiration and a target entry above $1235.
4. Oil Falling On Rising Supply
USO Oil ETF
Call/Put = Put
Entry = Above $34.25
Expiration = One Week
My Trading Advice
Oil prices are falling sharply on rising supply and low demand expectations. Even with a recovering US the rest of the world is not picking up as fast and at the same time usage is getting more efficient and supply is on the rise. I am trading a put on the USO this week while it trading near resistance beneath $35. My target entry is above $34.50 with one week of expiration.
5. Buy High And Sell Higher
USD/JPY
Call/Put = Call
Entry = Below $107.60
Expiration = One Week
My Trading Advice
The yen is one trade that is for sure being impacted by the fed. The USD/JPY is moving higher on combined reduction of US QE and continued Japanese QE and is skyrocketing. The pair is now consolidating with a target of 110 a real possibility. I am trading a call ahead of the Fed with a target entry below 107.60 and one week until expiry.
More Tips by the Geek – 09/15-22/2014 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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