This week is a tricky one for binary options traders and the S&P 500. There is a lot of data and potentially market moving events this week. The index has also been trending up for four weeks, ever since the beginning of the year. It is up nearly 3% YTD, trading right around the 1500 level and has been making new 5 year highs.
I don’t think that 1500 will provide much technical resistance but it is a round number and no mere coincidence.The earnings season is still in full swing and the economic calendar is loaded. There are more than 3 dozen economic releases and over 300 corporate earnings releases due this week. And an FOMC meeting/interest rate announcement. I don’t expect a rate change this week but I am quite sure that the statement and what they say about QE will be very important. On the data front we get a full run of housing data, an in depth look at the jobs market and the first estimates of 4th quarter GDP.
Jobs have been the focus of the FOMC and the market for quite some time. The unemployment rate is still high and until it comes down the Fed’s target of 6% we can expect continued asset purchases and QE. The labor markets have been showing some improvement lately and that is what I expect to see this week as well. It is the strength of improvement and projected timeline for more improvement that will influence traders. This week we get the regular weekly reports of unemployment claims, Challenger job cuts, ADP Employment figures, US Non Farm Payrolls and the January unemployment rate. Not to mention car sales, sentiment readings, ISM and consumer confidence.
S&P 500 Daily Analysis 1-28-2013
The primary trend and the short term trend are both up with no signs of reversal. Both trends are showing weakening technicals and the short term is overbought. At this level, and with the full week of data ahead, the three C’s come to mind; consolidation, continuation and correction. This is a great place for traders and investors to take some money off the table and a great place for the index to take a breather. This could come in the form of any of those three C’s. Since I am not expecting much upside this week, at least early on, I am switching to charts of hourly closings to look for put trades with end of day and end of week expirations. The best platform I use for this is Anyoption.com.
S&P 500 Analysis For January 28, 2013
The index is encountering near term resistance just over the 1500 level. I think this will be the cap until after the FOMC at the earliest. After the rate decision announcement(which comes Wednesday at 2:15) there could be some volatility going into the end of the week. The technicals on the hourly chart are also showing weakness and help support my idea of playing puts this week. I will look to the 1500 level for confirmations and project downside targets of 1490 and 1480 on an intra-week basis. I am still bullish long term and am looking for a retest of the all time S&P 500 highs.