• Daily Game Plan – Continued Rally

    by  • July 1, 2013 2:04 pm • Broad Market Analysis, Bryan Sapp’s Daily Game Plan, Charts to Watch • 0 Comments

    MARKET CHECK

    After Friday’s sharp selloff into the end of the fiscal second quarter, markets are regaining their upward momentum from last week.  Markets opened slightly higher today, but were met with aggressive buying from the bell.  The S&P 500 rallied above last week’s highs and peaked near midday, but have given up a little of the rally since then.  At present levels, the Russell 2000 is leading markets higher, up by about 1.6% for the day, while the S&P 500, Nasdaq, and Dow are all up about 0.9% each.  The sharp bounce in metals and miners continues, as gold is nearly 2% higher for the day.  Bonds are weakening slightly today, off about 0.2%, as the 10-year yield continues to hover around the 2.5% level.

     

    CHART OF THE DAY

    Citrix Systems (CTXS) – The networking concern has been weak this year, shedding about 8% of the company’s value since January.  the shares recently bottomed near 57.50, site of former lows made in 2012 and 2011, and have since bounced slightly.  However, this rally has come amid light volume and has taken CTXS back to its 20-day moving average.  This trendline has acted as resistance since late May, and could continue to do so.  Despite its relative weakness, sentiment toward CTXS remains very bullish, as 18 of the 26 analysts covering the equity have it rated a “buy” or better.  This could lead to future downgrades, which would act as a headwind toward the shares.

    I like a bearish entry here, with a stop on a close above 62.50.  I would initially target a move back to 57.50, with 55 as a stretch target.

     

    courtesy of stockcharts.com

     

     

    WHAT I’M EXPECTING

    The S&P 500 again failed to retake and hold its 20-day moving average near 1625, so I’m looking for a push back down to 1600 before it decides its next course.  My bias will remain on the short side until it can retake and hold the 50-day moving average, which is currently at 1632.

    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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