• Daily Game Plan – Big Day Tomorrow

    by  • March 7, 2013 2:09 pm • Broad Market Analysis, Bryan Sapp’s Daily Game Plan, Charts to Watch • 0 Comments

    MARKET CHECK

    While many were expecting some volatility on today’s ECB rate decision, markets are very unaffected by their lack of change in monetary policy.  The S&P 500 has traded in an extremely narrow four-point range today, ahead of what looks to be a very eventful day in the market tomorrow.  After the close today, results of recent multi-national bank stress tests will be released.  Additionally, tomorrow marks the release of the February Nonfarm Payrolls number.  After a better-than-expected ADP Payrolls number yesterday, expectations for positive data have been heightened.

    At present levels, markets are stagnant.  The Dow is leading yet again, with the index up about 0.25%.  All other major indexes are up between 0.1% and 0.2% on the day.  Despite a lack of significant equity upside, bonds are selling off sharply again today, down about 0.7%.  Metals are slightly lower on the day, along with miners.

     

    CHART OF THE DAY

    DeVry (DV) – The education company recently reported blowout earnings, and the stock gapped significantly higher on the report.  Since then, it has consolidated nicely around the 30 level, which looks to act as support going forward.  Despite its strength, sentiment toward DV remains very skeptical.  Currently, 11% of the stock’s float is sold short.  Additionally, the front three months’ option open interest sports nearly 4.5 times as many puts, a level that is near a bearish extreme.  Should these bears begin to capitulate amid more strong price action, that could act as a tailwind toward DV.

    I like an entry here with a stop on a close below 29.  I would initially target a move to 35, with 40 being a stretch target.

     

    courtesy of stockcharts.com

     

    WHAT I’M EXPECTING

    Given the release of the bank stress tests tonight and tomorrow’s jobs report, I’m expecting tomorrow to be a very eventful day in the markets.  I continue to think that we’re getting close to a near-term top, so any spike higher and ultimate reversal could be signal to start leaning toward a bearish bias.  Until then, stick with what’s working and trail stops on all positions.

     

    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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