The financial sector is on fire in the U.S. economy right now, and understanding the reasons why could help your binary options trading go a long way. Between what is occurring in the U.S. politically, the worldwide economy, and monetary policy, financial stocks are poised to ride this growth for an indefinite amount of time. It will be interesting to watch, but rather than just being a passive spectator here, securing some of that profit as your own can be far more beneficial to you.
On Monday, November 14th, the financial sector within the U.S. rose as a whole by 1.21 percent. This in itself is a huge deal, especially considering the fact that the Dow Jones Industrial Average only rose by 0.11 percent, and the S&P 500 fell by 0.01 percent. By all accounts, this day should have been an uneventful one.
There are many case studies that could easily stem from this observation, but the most notable (other than Wells Fargo, which is notable for other reasons) is Bank of America. Bank of America was one of the companies most negatively impacted by the financial crisis of 2008. They saw their company stock drop from over $50 per share down to about $7 per share over the span of a few years. It’s only been within the last three years that the company has seen any sort of stability of price, and then after the Federal Reserve raised interest rates last year, a whole new turmoil erupted within BAC. However, the company’s stock has recently closed above $20 per share, and it looks like this is just the start of further gains within the company.
BAC rose by over a dollar on November 14th, a gain of over 5.5 percent. The fact that the financial sector has a lot to gain by policies that President Elect Donald Trump plans on implementing is no secret, but because Bank of America has suffered for so long, it is in a place where it stands to gain quite a bit.
It’s also in a place to lose quite a bit. BAC has a high beta number at 1.54. Right now, this benefits the company because it is diverging from its supporting indices in a good way, but that volatility works both ways. Bank of America has also been known to outpace the major indices when it comes to losses. Volatility can be a good thing, but it is very dangerous if not tightly managed. Many traders forget this fact when they see a company outpacing the field, so be careful not to fall into this trap.
BAC is one of the more popular financial stocks, both for day traders and for binary options traders. Its upward momentum lately has driven some binary brokers to lower its rate of return, but this is something that is easily overcome thanks to the greater chances of a correct trade. If you are going to trade BAC in any way, timing your entry points well will be your biggest help. While much of the movement we are seeing here is based upon psychological reactions to economic and political factors, there are real gains that the company can make if it broadens its lending program like it is planning on. Keep an eye on the fundamentals driving the company, pay attention to market psychology, but be very aware of the technical indicators telling you precisely when to get in and out of a trade with this company. As we’ve seen constantly within the financial sector, it only takes a little bit of bad news to drive prices into a long-lasting downward spiral.