Originally posted by R.Cox. For the full trading briefing click here
Looking ahead, next week will be action-packed, with a large number of economic indicators and earnings reports scheduled for release. Currency traders should be preparing for the monthly US Non Farm Payrolls, Durable Goods Orders, and 4th Quarter GDP. We will also have Unemployment figures for the Eurozone and an FOMC rate decision to guide traders. NFPs are expected to show a gain of 168,000 jobs (a modest improvement from the 155,000 jobs added last month). The rate decision is not expected to show any major changes but if we see the Fed discuss potential ending points for its stimulus programs, expect a negative effect to filter over into stock markets.
For stock traders, the earnings reports scheduled are numerous. Topping the list will be Boeing, Amazon, Caterpillar, Pfizer, Exxon Mobil, and Facebook. Traders watching the broader indices will probably see two-way movements given the sheer number of majors releases on scheduled. These types of environments actually favor short term trades as there is simply too much information to commit to weekly positions.
My Trading Recommendations in 50 Words
Recent earnings strength is likely to support stock prices longer term, and here we will look to avoid next week’s volatility by using monthly options. First selection is a monthly CALL in McDonald’s (MCD) at $93
. MCD is trading nearly 10% below its intrinsic value and its dividend yield of 3.5% should remain a supportive factor.
. Second selection is a Monthly CALL in CSX Corp. at $22.
Last week’s earnings report passed analyst expectations and technical formations remain constructive, suggesting a bull run above $25. The company is a transportation supplier and likely to benefit from last monthly improved holiday shipping conditions.