The NFP holds the key to Trading Syntel

The NFP holds the key to Trading Syntel
August 21, 2015

 
Syntel (NASDAQ:SYNT) is active in a field that few people really understand; they deal with knowledge process outsourcing, and it is a provider of information technology for many of the Global 2000 companies. The company actually has four business segments, but their primary focus is to provide software applications and infrastructure services in the buoyant technology services market.

The latest financial results were cheered by investors, and while the street is still in doubt (one rating agency raised its forecasts on SYNT while another lowered it). I would say the path of least resistance, at least from a fundamental point of view, is for company’s stock to move higher and not lower – so our trading plan should be adjusted accordingly.

One big unknown is represented by the Federal Reserve of the United States. The September meeting will be the key, and the overall consensus is that the Fed is going to hike the rates for the first time since 2008.

It is generally known, as a rule of thumb, that stocks collapse or move lower when the central bank hikes rates, and this is why looking for companies that are active in strong markets (like digital information technology offers a hedge to any portfolio.

From a technical analysis point of view, the market is sitting at the $44/share level after flirting with, and even moving above the magical 50$. Doing that after the price has accumulated energy in a bullish triangle that acted as a continuation pattern.

However, I would say that the rejection from the $50 mark is only normal, and we should see the level being retested in what seems to be a running correction of a bigger degree. If that is the case, then a move higher should be more powerful than the previous move prior to the $50/share mark.

That being said, I am favoring a call option from $44 or lower, but only after the September NFP is going to be released (around two weeks from now).

The logic here is that if the NFP misses, then chances for the Fed to hike rates will becoming smaller and stocks should cheer that move in the end. Of all sectors, Syntel’s looks very promising, so it should rise faster. As for the expiration date, the end of September should do the trick.

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Andrew Wright

Prior to founding tradersasset.com in 2014, Andrew worked as a proprietary trader, then as a market maker. As a market maker, he traded options in over 100 stocks, he then began trading currency pairs in 2013. Andrew still actively trades both, and prides himself on educating and informing traders on the benefits of both Binary Options and Forex.


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