• Daily Game Plan – Early Weakness Finds Buyers

    by  • August 8, 2013 1:58 pm • Broad Market Analysis, Bryan Sapp’s Daily Game Plan, Charts to Watch • 0 Comments

    MARKET CHECK

    It appeared that this morning’s weakness could finally lead to some significant downside, but buyers have stepped in and once again pushed stocks back to their highs of the day.  Markets sold off sharply in the first hour of trading, and the S&P 500 broke the 1690 level for the second day in a row.  However, that weakness didn’t last long, as stocks are currently challenging their highs of the day.  Today’s action is being led by technology, as the Nasdaq is trading about 0.5% higher.  All other indexes are lagging slightly, but still all higher by between 0.3 and 0.4%.  Bonds are also green with stocks, as the initial weakness after the 1:00 30-year bond auction was bought.  Presently, they’re trading higher by about 0.3% on the session.  Metals and miners are sharply higher today, with gold up by nearly 2%, silver almost 4%, and miners rallying a staggering 6% for the day.

     

    CHART OF THE DAY

    Oracle Corp (ORCL) – The database software concern has been weak for much of this year, trading slightly negative despite broad-market strength since January.  ORCL recently reported worse-than-expected earnings, and the stock gapped down significantly.  Since then, shares have reverted to the mean and filled that earnings gap, which could act as resistance going forward.  Despite its weakness, sentiment toward the equity remains positive.  Currently, 21 of the 31 analysts covering the equity have it rated a “buy,” with only one rating of “sell.”  Should ORCL continue its trek lower, this creates the potential for future downgrades, which could act as a headwind toward the equity.

    I like a bearish entry here with a stop on a close above 34.  I would initially target a move back to 32, with 30 as a stretch target.

    courtesy of stockcharts.com

     

    WHAT I’M EXPECTING

    More choppy action.  August is notorious for a boring market, and this is no exception.  Assuming we don’t get any sort of catalyst in the near future, I’d look for the S&P to remain in the 1685-1710 range.  Next week is options expiration, and there are a decent amount of economic data points to hit the tape, so the range could potentially break then on any big surprises.

    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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