• Daily Game Plan – Bank Rally, Apple Swoon

    by  • December 5, 2012 1:53 pm • Broad Market Analysis, Bryan Sapp’s Daily Game Plan, Charts to Watch • 0 Comments

    MARKET CHECK

    After another day of whippy price action, markets remain situated near their highs of the day, led by large-cap financials and Dow Jones Industrials.  Currently, the Dow is leading other indexes, up 0.9% on the day, while the S&P 500 is up just 0.4%.  Bonds are flat on the day while commodities are slumping on the heels of Goldman Sachs’ lowered price targets on gold.  Commodities have decoupled their typical inverse correlations with the U.S. Dollar over the past few weeks, and this relationship should be monitored going forward.

    Apple Computer (AAPL) is having an awful day, down over 4% amid news that margin requirements of owning the stock will increase.  While this is concerning, you would anticipate a big broad-market selloff given the tech giant’s weakness.  The resilience seen in other sectors is a positive sign for markets going forward.

     

    CHART OF THE DAY

    Under Armour (UA) – The sports apparel maker is poised nicely above its 200-day moving average here.  UA recently filled the gap up on 7/24 and bounced to retake the 50 level and 200-day moving average.  While the equity is up an impressive 45% year-to-date, sentiment remains skeptical.  Currently, nearly 16% of the stock’s float is sold short.  Additionally, only 7 of the 20 analysts covering UA have the company rated a “buy.”  Given the skepticism amid strong price action, there is the potential for these bears to capitulate and drive the shares higher.  A move back to the 60 level seems like a good possibility.

    courtesy of stockcharts.com

     

    WHAT I’M EXPECTING

    A move to the top of the 1385-1425 range, and a potential breakout on Friday’s employment report.  While financials have been stagnant for a few months, it appears that the group could emerge as leaders for the next market move.  Keep a close eye on the 16 level on XLF to signal another leg higher for equities.

     

    About

    Bryan Sapp is a Senior Trading Analyst at Schaeffer’s Investment Research, where he has specialized in volatility-based options trading since early 2010. With Bryan at the helm, Schaeffer’s Volatility Trader generated a 2012 portfolio return of 70% for subscribers. This real-time option recommendation service exclusively trades short-term straddles. Prior to joining the research team at Schaeffer’s, Bryan honed his skills as a speculator by trading his own account, and playing poker professionally to pay his way through college. Bryan attended the University of Louisville, where he received his Bachelors in Economics and an MBA with an Entrepreneurship focus.

    http://www.schaeffersresearch.com/

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