• Daily Game Plan – Bulls Stymie Market Fears

    by  • March 1, 2013 2:16 pm • Broad Market Analysis, Bryan Sapp’s Daily Game Plan, Charts to Watch • 2 Comments

    MARKET CHECK

    Markets were sharply lower near the open this morning, as the overnight release of weak Chinese economic data, weak European price action, and sequestration fears were all weighing on equities.  After a swift selloff near the open back to the 1500 level on the S&P 500,  buyers stepped in and rallied the markets significantly higher.  Currently, stocks are sitting near their highs of the day, with the Nasdaq leading, up 0.3%. The S&P 500 and Russell 2000 trail slightly, each about 0.2% higher.  Despite strength in equities, the recent strength in the bond market continues, as the TLT is up about 0.3% today.  Metals and miners continue to be major laggards, as they’re all down about a half percent.

     

    CHART OF THE DAY

    Louisana-Pacific Corp. (LPX) – The building products company has been on quite a tear as of late, as the equity has rallied over 10% so far in 2013 and over 150% in the past 52 weeks.  After peaking near 22 a couple weeks ago, LPX has since pulled back to the 50-day moving average, a trendline that has guided it higher since June 2012, and bounced from that level.  This uniform technical bounce leads me to believe that LPX is poised to take out its 52-week highs that it recently made.

    Despite its extreme strength, sentiment toward LPX remains fairly skeptical.  Currently, nearly 8% of the equity’s float is sold short.  Short interest on the equity has been retreating sharply as housing bears are beginning to capitulate, but there are still many aligned in a bearish fashion that will need to unwind their positions.  A continued trend of short covering will produce a tailwind toward the stock.  I like an entry here with a stop on a close below 20.50.  I would initially target a move to the 25 level, with 30 being a stretch target.

    courtesy of stockcharts.com

     

    WHAT I’M EXPECTING

    Continued violent chop with upside bias.  It looks like no matter what fears may linger, the bulls will continue to step in and bolster the markets.  That said, you must buy on weakness and sell on strength.  Given the recent environment, trading in a reactive fashion and not a proactive one is a good way to vaporize an account in a hurry.

    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/

    2 Responses to Daily Game Plan – Bulls Stymie Market Fears

    1. akabeachguy
      March 1, 2013 6:31 pm at 6:31 pm

      My last post for a while. Make that very last post. Good riddance, right. ;-)

      Got the open I expected and the close I expected as posted yesterday. Was definitely off on time of the rescue I have to admit. But since November it has been rinse and repeat, rinse and repeat, rinse and repeat.

      So God bless our Benny B for keeping his string of never a red Friday intact and making me look good!! Better to look good than to feel good as I recall from some way long ago show called “Soap.”

      I find myself at that point where to post more would be to beat a dead horse, and I hate people who beat dead horses so will take my leave.

      I will leave you with one thought… Buy the dip!! Just be sure to sell once you have a buck or two under your belt.

      So adios to you and keep up the good work, Bryan. You are doing a fine job.

      It’s off into the sunset I ride.

      And as he goes, he hears from behind, Ryan D asking, “Who was that masked man???”

      And with that it’s: FADE TO BLACK

      • Brysapp
        March 4, 2013 8:11 am at 8:11 am

        Thanks for the kind words. The madness will eventually end…

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