October 11 – Binary Option Market Update

The aluminium giant Alcoa heralded an unofficial start to the Q3 earning season yesterday by moving past its estimates for the season. The investors however were disappointed when the company cut down on its stance based on global aluminium demand. Chevron on the other hand announced doubts about its third quarter profits not meeting expectations. The Asian stock market also experienced a slump as Spain was hit with a credit downgrade and the European Stoxx 600 index beat its 5 year earning estimates.

The U.S. stock market

Alcoa shares fell 4.5% after they predicted that the global demand for aluminium will be weakened owing to the sluggard growth of Chinese economy. On the other hand Chevron shares also experienced a fall of 4.4% after it hinted that its future profits could be lower compared to previous quarter’s numbers.

Later in the day, the NYSE and DJIA experienced a slump of 0.79%, S&P 500 dropped to 0.55% and NASDAQ declined to 0.48%. The chief investment officer at Haverford Trust, Pennsylvania Hank Smith expressed concerns about the season turning out to be a very bad one while hoping for the Standard & Poor’s 500 earnings to be better than the expectations.

The investors on the other hand are nervous about the equity rallies observed recently. There is a huge amount of interest in selling equities among the investors. Also the Fed’s Beige Book has confirmed that the American economy has observed a modest expansion, in contrast to the previous report. However, the employment conditions are hardly better than the same published in the previous report.

Overall it is a declining trend in the market with little optimism of improvement in the days to come. The declining trend has opened a door for the wonderful use of knock on effect. You might just want to bank your binary options in favour of the declining trend for the day.

The Stoxx 600 is doing better than ever. It is currently trading at 11.9 times the earning estimates of its companies, beating a 5 year average of 1.5. The Stoxx 600 reached a benchmark of 12.3 in price multiple in the last month which is its highest after 2010.

Spain, the fourth largest European economy, received a major blow with a credit downgrade. The American S&P 500 dipped Spain’s debt to the lowest level in the investment grade. The action was in view of the nation’s recession, social unrest and high unemployment.

The ECB offered to purchase unlimited amounts of government bonds from sweating European economies such as Spain in the last month. The governments were required to apply for the bailouts. But Spain has not yet applied for one. In lieu, the Spanish government is trying to bring down its budget deficit by introducing a sequence of labour measures and austerity. These measures were aimed at proving to its investors that Spain can manage on its own, without any external aid. The downgrade from S&P 500 might just push the Spanish government to approach the ECB. It is a mixed trend in Europe with the Stoxx 600 holding fort and a reluctant Spain being downgraded.

The Asian Stock Market

In view of Spain getting downgraded and a whimpering start to the earnings season in the U.S., the Asian stock market experienced a fall yesterday. As a sign of global economic slowdown, South Korean central bank slacked its interest rate which led to sunken projections of growth for present and the year to come.

The global turmoil has had a bearish effect on the Asian stocks. The South Korean Kospi lost, Australian S&P/ASX 200 and the Japanese Nikkei 225 index all experienced a fall of 0.2%. On the brighter side, Hong Kong’s Hang Seng climbed to 0.3%.

The general performance of the Asian stock market, with the exception of Hang Seng, is lacklustre You will probably be able to remain safe with your binary options in favour of a declining trend as far as the Asian market is concerned, again with an exception of Hang Seng.

Strategy for the Day

Any market can only move in 2 directions, you either have a bullish market or a bearish market. When trading with binary options even a bearish market can earn you ample amounts of money. All you need to do is observe and identify an asset with a consistent declining trend and choose your options in favour of the declining trend. If your observation is accurate, you are very much likely to gain.

Another strategy that can come handy in almost any situation is the market pull or the knock on effect strategy. This strategy requires a little more observational skills compared to a simple bearish strategy. You will need to identify a group of assets in such a way that they either have an identical or a reverse relationship with a primary asset. Then base your options in favour of these relationships. Once you have determined the relationships between the assets, you will be clear about choosing Call or Put based on how the primary asset moves. For more strategy info click here.