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S&P TRADING WITH BINARY OPTIONS

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S&P with binary options 3-12-2013Markets take a slide as they return from the long holiday weekend in the US and there could be more in store today. The fact is, the US market is having a hard time finding reason to keep the upside pressure on a high as it has been for the majority of the last months. However, this light selloff is primarily due to the release of holiday shopping results that fell below expectations. Despite a record number of shoppers in retail outlets, the amount spent was lower than last year. This pushed retail stocks lower and caused the end of day red results seen on the big boards as the S&P fell to 1800 after losing 0.27%.

The S&P, the most traded stock index with binary options is still above the critical support level; 1800. The fact that this support was unbroken is testament to its strength. However, binary options traders will be wise to keep close tabs on this index today and act if the index’s supports are tested.

The primary support, being at 1800 will likely be tested and according to the momentum indicators, might even be broken. But don’t be too rash. Wait for a clear break before jumping aboard this one. Despite the S&P being the most well behaved index on the planet and possibly compared to all assets (in technical analysis terms) it still a danger to head to the downside during an uptrend even with a break. Yes, the index has hopped over resistances and supports with nary a retest to the opposite direction on the day of the break in over a year. In fact of every daily chart based break since September of last year, over 64 breaks have been recorded and of them only 3 were false breaks and 1 was neutral. That means the binary options traders should have had 60 winning trades out of 64, minimum. That doesn’t include the multi break days where more than 1 trade could have been taken for an end-of-day winning trade.

The point is, the S&P might break lower today with history and statistics pointing to yet another easy win. But today we err to the side of caution. As such, make sure that momentum is firm to the downside before take an end-of-day down option.

No major news for the day will keep binary options traders’ focus strictly on the charts and this is a good thing. Keep those eyes on glass and wait for breaks. Of course, if the S&P is not of much interest to you, keep tabs on the EUR/USD today as it looks to keep traders on their toes with loads of tests, breaks, and general mischievousness.

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Adam Stone
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Adam Stone

As COO of GOptions, my first and foremost goal is to provide traders with the most up to date info from the markets. I have been trading the markets since 2004 and have been involved with stocks, binary options, and forex trading since then. I have had no formal market education and pride myself on a self taught approach to everything related to trading. I try to focus though on both the technical and fundamental aspects related to each trading day and bring forward the most important aspects of risk/reward in the market.
Adam Stone
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