The markets these days seem to be taking direction from the most fickle and capricious aspects of fear management. News ? What's considered news these days for binary options traders and other investors? The facts haven't changed over the last 2-3 months, yet looking at the behavior of the markets it would be difficult for the best analysts to come up with a means of explaining why on earth the markets can't decide whether to head higher or lower. Of course, consolidation periods exist in every market. And these periods are even considered the most important momentum builders as compared to any other period. However, when news hits the markets, markets are expected to react. When no news is present, well that's a different matter. It could be that we have simply reached some sort of meta-equilibrium point whereby the balance of bad news and fear and being counter weighted by optimism and hope. Surely, this is far from a rational explanation of what's happening. Or is it?
Europe is simply old news regurgitated nearly each day in a different spin. One day's it Ireland, next it's Greece, then next it's Spain ad nauseum. Where does this leave traders though? it's all the same situation wrapped in a different headline meant to sell newspapers. The European debt crisis is 3 years old now. It's not a new news story and frankly, most of the time it's not even new worthy. It's no baby any more. It's not fresh and defining how traders should react to the market movements. So long as the economics of the debt crisis aren't solved, and they don't look to be getting solved by any means, why should traders care? So what if there's a European debt crisis summit going on right now? Have the Europeans any ability to come to a unified decision on anything? To their credit, they did come up with the Eurozone and the euro itself. But every other issue is meant by disparate results.
Traders worldwide can't wait for Europe to get its act together. There are simply too many other pressing and news worthy issues to tackle on a daily basis. Traders need to focus on where the balance will be broken and on what grounds. The fact is, Europe isn't going to solve itself in the coming days, weeks, or even months. So technically, they are balanced. No ups and now downs. Even the Greek elections had no weight on the markets even with a market positive result. So what does matter for binary options traders and other investors? There are 3 major issues from an economic perspective that bear serious weight:
1. The state of the US economy and its ability to pull everyone else out of the mud
2. China and it's industrial strength; is China falling? Many are concerned that the fall in industry in China will lead to a collapse as most of the growth in China is already being deemed fake (building buildings just to tear them down and then rinse repeat).
So what are traders to do? Keep focused on the real news. The economic news. Not the fluff. Not the headline makers.
The preceding article was authored by David Fielder (www.whyoptions.com).