Friday 27 July 2012

Trading Strategy for Next Week

Dear Friends,

Today US Market got a lift from Europe as European Central Bank President Mario Draghi vowed to preserve the euro. U.S. jobless claims also dropped and durable-goods orders rose. Dow opened at 200 points up, currently it is up by 170 points at midday.

As the month is coming to an end, we are already focusing on next week agenda. Number 1 would be the FOMC meeting on 31st July and 1st August. On 1st August, there will be the ISM report and the mega jobs report, Non farm payroll on the 3rd August Friday.

Our jobs number prediction is that there is a good chance that this time the jobs number will be better than expectations. After 4 months of struggle with the jobs number, we might have thrown away the summer holidays jobs' slump behind us.

But do remember that this is a prediction.

Btw, next week there might be QE3 expectation again before Ben Bernanke speaks.

Our Trading Strategy next week:

1) Market may go up because of QE3 expectation, if so, remember to sell into the expectation before Big Ben speaks on 31st July if you are a short term player. As a trader, we probably do not want to take the risk of no QE announcement again.

2) If market goes down after Big Ben Speech, you may want to take the opportunity to pick up some stocks going into the Jobs report on Friday. The best timing would be to wait for a Good ISM report on Wednesday to go in.

If you do not want to take the risk, get your weapons ready to go in only after the jobs report confirmed to be good on Friday.

3) If Big Ben really has a stimulus package or QE3 coming up that is rejoiced by the market on 31st July, just buy straight away.

Starting from August, our opinion would be to accumulate stocks at any opportunity whenever the market falls. US election is just 3 months away and we expect stock market to be bullish. An opportunity would be like what happened when the US market dropped for 3 consecutive days early this week.


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