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Cliff Wachtel
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Cliff Wachtel, CPA, is currently the Chief Analyst of anyoption.com, a leading binary options broker, and Director of Market Research, New Media and Training for Caesartrade.com, a fast growing forex and CFD broker. He is also the author of The Sensible Guide To Forex, and publisher of... More
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anyoption.com
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Global Markets
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The Sensible Guide To Forex: Safer, Smarter Ways To Survive & Prosper From The Start
  • APRIL 11-15 TRADING STRATEGY REVIEW PREVIEW STOCKS COMMODITIES FOREX PART 1 0 comments
    Apr 9, 2011 11:22 PM | about stocks: FXE, ERO, UUP, UDN, URR, ULE, EUO, DRR, FXA, FXB, FXC, FXD, FXF, FXEN, FXY, JYF, AUNZ, CYB, GLD, CNY, USO, DUG, USL, NBO, DBV, ICI, CEW, SLV, OIL, SPY, SDS, RSW, BXDC, SPXU, SH, DIA, EWC, EWA, TLT, XHB, ITM, IGOV, VGK, TBT, GSG, DBC, CORN, ICN, SZR, BZF, GRU, DAX-OLD, FRC, DB, SAN, BNO, ENIA

     Big Picture Strategy & Trading Implications For Both Spot Market And Binary Options TradersKey Market Drivers

    For the full details on last week’s market movers and their lessons for this week, and the likely coming week’s key market drivers to watch, see: APRIL 11-15 KEY MARKET MOVERS: GREAT JAPANIC II, US EARNINGS, GLOBAL INFLATION DATA.

    PRIOR WEEK APRIL 4-8

    Inflation concerns were the common denominator that explains the unusual lack of correlation between financial markets we saw this past week:

    • Weakness in stocks, yet…
    • Strength in higher yielding risk currencies
    • Strength in commodities

    Typically, global stock indexes move in the same direction as other risk assets. Indeed, they often lead these other asset markets higher or lower simply because stocks are considered THE primary indicator of risk appetite.

    But not this past week of April 11-14. Why? Inflation fears.

    • Stocks Were Flat-To- Negative
    • Yet Commodities Were Strong
    • Commodity Currencies And Those With Rising Rate Prospects Were Strong

    Inflation fears where the only thing that tied all of the above together.

    COMING WEEK APRIL 11-15
    1. Great Japanic II: Aftershocks, Geological & Economic, Threaten Global Markets
      1. A Threatened Drop In Demand For US, EU, UK Sovereign Bonds & Ramifications
      2. Production Cuts, Work Stoppages Ripple Through Global Economy
    1. US Earnings Q1 Season
    2. Continued Drama On Us Budget, Prelude To Us Debt Ceiling Battle In May
    3. Other Key Economic Calendar Events

    Calendar Key Events: Most Deal With Inflation & Thus Prospects For Coming Rate Hikes In the US, UK, and also growth prospects in China

     

     

    STOCKS

    The price movements of major stock indexes usually correlate well to those of other risk assets, making indexes like the S&P 500 usually reliable indicators of how other risk assets faired over the course of the week. This past week, those correlations broke down. The S&P and most global indexes were flat to lower, however there was a different story for other risk assets.

    On the one hand, stocks were flat to lower.

    ScreenHunter 04 Apr 10 01 55  APRIL 11-15 TRADING STRATEGY REVIEW PREVIEW STOCKS COMMODITIES FOREX PART 1

    WEEKLY US STOCKS SUMMARY COURTESY OF BRIEFING.COM, ANYOPTION.COM 04apr10 0155

    This week marks the start of US earnings season for Q1 of 2011, starting with the first rally major name reporting Monday April 11, Alcoa (NYSE:AA).

    Other top financial names expected to report next week, include names from the critical banking sector JPMorgan Chase & Co (JPM.N) and Bank of America Corp (BAC.N). Remember that the banking sector has lead markets both in and out of the longer term trends since the Great Financial Crisis began in 2007. They are very important for gauging overall trends.

    Internet/tech leader Google Inc (GOOG.O) is also due to report.

    For full details consult any decent financial website for a full earnings schedule. For example tryYahoo finance for a full week in advance. Seekingalpha.com appears to provide them on for the current day and before, but does not offer a calendar of the week ahead’s earnings.

    Technically, the on the weekly S&P 500 weekly chart, our momentum indicators all point higher. Note the S&P 500 weekly chart, which provides a longer term perspective.

    ScreenHunter 08 Apr 10 02 32 1024x667  APRIL 11-15 TRADING STRATEGY REVIEW PREVIEW STOCKS COMMODITIES FOREX PART 1

    S&P 500 WEEKLY CHART COURTESY OF ANYOPTION.COM    08apr10 0232 d

    • Price remains firmly within the upper Double Bollinger Band buy zone (upper orange and green bands), still closing the week above it despite being lower on the week. [ for more on understanding Double Bollinger Bands see: 4 RULES FOR USING THE MOST USEFUL TECHNICAL INDICATOR, DOUBLE BOLLINGER BANDS
    • Shorter term (and thus more sensitive) rising SMA’s continue to cross over their slower, also rising SMAs. The rising 10 week SMA (blue) has crossed over the 20 (yellow), 50 (red), and 200 (pink) SMAs, and the same can be said for the other, longer ones: rising and crossing above slower but also rising SMAs
    Trading Strategy Implications & How To Profit

    The above keeps our bias firmly to the bullish side for the coming week for all risk assets. For example:

    Stock Index Traders: long stocks and indexes like: SPY, QQQ, and DIA. Those seeking to play currencies via etfs should see the below section on currencies.

    Forex Traders: Long risk and high yielding or commodity currencies like the AUD, NZD, CAD, EUR and GBP vs. their safe haven counterparts the JPY, USD, and CHF. See the below section on currencies for specifics.

    Binary Option Traders: For those trading expiries longer than a single day, the odds remain with being long stocks and stock indexes via buying call options on the major indexes like

    • US: The S&P 500, Nasdaq, Dow Jones Industrials
    • Asia: Nikkei, Kospi, Bombay 30, Hang Seng, SSE 180 (Shanghai), Straits Times (Singapore)
    • Europe: DAX, CAD, FTSE 100, FTSE MIB, IBEX 35 (Spain)

    Note:

    I know there are binary options available for all of the above indexes and many others at anyoption.com, which, last I checked, has the widest selection of stock indexes and sector leading international stocks.

    Different binary option brokers have different strengths, in different assets, so it pays to check them out depending on what your favorite market is. Also, Many brokers are constantly popping up or adding new assets to trade via binary options, as the field itself is attracting more investor interest.

    Stay tuned for an article I hope to have out in the coming week on the pros and cons of binary options, as far as I know, the first of its kind that aims to provide an objective view of when binary options are and are not appropriate (vs. the usual superficial marcom pieces. It’s taking time because there’s nothing really like this already out there that I know of. Visit http://globalmarkets.anyoption.com , as I hope to have it out by mid-week.

    COMMODITIES

    On the other hand, most commodities were up strongly this past week.

    ScreenHunter 05 Apr 10 01 57  APRIL 11-15 TRADING STRATEGY REVIEW PREVIEW STOCKS COMMODITIES FOREX PART 1

    SUMMARY OF MAJOR COMMODITIES COURTESY OF OILNGOLD.COM, ANYOPTION.COM 05apr10 0157

    Trading Strategy Implications & How To Profit

    Commodity Traders: continue to be long these assets, entering new longs on dips to support within your chosen time frame

    ETF Traders: The same goes for you, just access the above commodities via you preferred etfs, for example:

    • GOLD: PHY, CEF, PHYS
    • SILVER: SLW, SLV
    • OIL: BNO (for Brent crude, a more accurate benchmark than WTI)

    End Part 1. See APRIL 11-15 TRADING STRATEGY REVIEW PREVIEW STOCKS COMMODITIES FOREX PART 2 AT http://globalmarkets.anyoption.com

    DISCLOSURE/DISCLAIMER: THE ABOVE IS FOR INFORMATIONAL PURPOSES ONLY; BOTH THE AUTHOR AND ANYOPTION.COM DISCLAIM ALL RESPONSIBILITY FOR READER’S OWN TRADING DECSIONS. AUTHOR MAINTAINS SHOR EUR POSITION OF PERSONAL PORTFOLIO

     
     
    Stocks: FXE, ERO, UUP, UDN, URR, ULE, EUO, DRR, FXA, FXB, FXC, FXD, FXF, FXEN, FXY, JYF, AUNZ, CYB, GLD, CNY, USO, DUG, USL, NBO, DBV, ICI, CEW, SLV, OIL, SPY, SDS, RSW, BXDC, SPXU, SH, DIA, EWC, EWA, TLT, XHB, ITM, IGOV, VGK, TBT, GSG, DBC, CORN, ICN, SZR, BZF, GRU, DAX-OLD, FRC, DB, SAN, BNO, ENIA
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