Weekly Binary Options Trading Briefing 11/26-12/4/2012 – Dow Trades Back above 13,000 on Greek Optimism, Obama Comments
Binary Options Trading Recommendations for the upcoming week – Market Information and Trading Tips
Stock markets closed in positive territory last week as investors were encouraged by the latest Fiscal Cliff comments from US President Obama, expectations of loan disbursements for Greece next week and the improvements in economic data that came out of China and Germany. Stock markets in the US had one of their best weekly performances in nearly 6 months with the S&P 500 seeing gains of 3.6% and the Dow Industrials seeing gains of 3.4% (and breaking above the closely watched 13,000 level).
The rallies were spread out amongst most industry groups and the positive moves were relatively large, given the fact that trading volumes were lighter than normal due to the Thanksgiving holiday in the US. Some of the biggest gainers could be seen in Bank of America (which rose nearly 9% on announcements of increased dividends and share buybacks), and Apple which put an end to 8 straight weeks of losses and closed Friday higher by 8.3% for the week.
True Market Rally, or Simple Position Squaring?
Looking ahead to next week, traders can expect some of the positive hangover to continue in the early sessions, with momentum traders likely to add some fresh buy positions in stock indices and in high yielding currencies. But a good deal of the sentiment next week will hinge on the outcome of the next loan disbursement for Greece, as markets will need to see a smooth allocation of bailout funds in order to make a case for continued optimism.
If we do see signs of stalling, they are likely to come from disagreements in Greece’s hopes of reducing the interest rates associated with these loans. Any reductions, however, would put these rates below the cost of funding for some of the Eurozone countries, so disagreements are still a possibility. And while macro data around the world was also positive (Chinese PMI and German IFO), the next question will be whether or not this week’s moves are indicative of a true change in market direction, or just an example of position squaring into last week’s holiday themed sessions.
Looking further ahead, medium term sentiment will be influenced by the progress (or lack thereof) that is seen in retail sales numbers as the holiday shopping season progresses, as this will be a key indicator of consumer confidence at a critical time of year for companies in these sectors.
My Trading Recommendations in 50 words
1. Assuming the next loan tranche is given to Greece without a hitch, the DAX will likely see a pop into the upper 7300s before stalling. I will be looking for hourly PUTS if prices can rally into 7390. I would avoid longer term positions here, given the positive momentum that was seen in stocks last week. Longer term target is a break back below 7000.
2. Upward momentum in the AUD/USD could send prices into the upper 1.04s but if we see 1.0480 trade, I will be looking to enter into weekly PUTS in anticipation of weakness in the higher yielding currencies. Downside target is 1.0340, medium term.
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