• Daily Game Plan – Dip Buyers

    by  • October 9, 2013 1:33 pm • Broad Market Analysis, Bryan Sapp’s Daily Game Plan, Charts to Watch • 0 Comments

    MARKET CHECK

    This morning looked eerily similar to yesterday, as many momentum names were hit very hard on the open and major indexes stepped lower until lunch time.  However, buyers stepped in today and have pushed stocks back to the highs of the day ahead of the 2:00 FOMC minutes.   There are still pockets of weakness underneath the surface, but today’s bounce near the 1650 level on the S&P 500 has to be a comforting sign for bulls.  Markets are being led today by the Dow, which is higher by about 0.3% amid strength in high-yielding names.  The laggard for the session is again technology, as the Nasdaq is trading about 0.2% lower for the session.  Bonds are lower by about 0.6%, while gold is well off the lows, but still lower by about a percent.

     

    CHART OF THE DAY

    Valero Energy Corp (VLO) – Shares of the refiner have been sliding as of late, but there are signs that a tradable bottom may be in place.  VLO recently pulled back to the 34 level, which was the highs seen in 2012.  Additionally, this level coincides with VLO’s year-to-date brekeven level.  This could add an additional layer of support.  Lastly, the 34-strike is site of massive put open interest in the October options’ series.  Heading into next Friday’s expiration, this level could hold firmly, as those short the bearish options have an incentive to keep the stock propped up through then.

    I like a long entry here with a stop on a close below 33.  I would initially target a move to 36, with 40 as a stretch target.

    courtesy of stockcharts.com

     

    WHAT I’M EXPECTING

    1650 appears to be support for the time being, so I would look for a short-term bounce on indexes.  Overhead, the 1680 level, site of the now descending 50-day moving average, is the hurdle for bulls to overtake.

     

    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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