• Daily Game Plan – Expiration Lull

    by  • February 15, 2013 1:37 pm • Broad Market Analysis, Bryan Sapp’s Daily Game Plan, Charts to Watch • 0 Comments


    As has been the case with most recent options expiration Fridays, action is very muted today.  We remain trapped below the recent highs near 1525 on the S&P 500, as markets are currently near the middle of their daily range.  One positive sign for bulls continues to be the relative strength by small caps.  Today, the Russell 2000 is once again leading markets, and made another new all-time high.  Currently, that index is up 0.2%, while the S&P 500 and Nasdaq both trade near flat on the day.  After rallying with stocks yesterday, bonds are selling off today, currently down 0.6% on the day.  Perhaps the most noteworthy market move today is happening in metals, as gold and silver are both selling off sharply, down about 2% each.  Some of this could be attributed to yesterday’s news that many hedge fund giants, such as George Soros, are significantly trimming their long positions in gold.



    The Mosaic Company (MOS) – The phosphate and potash company has been  strong lately, up about 10% since the beginning of the year.  This week was rough for some agriculture names, yet MOS held up very well, all things considered.  Since breaking to new 52 week highs on  1/25, MOS has consolidated nicely back near its 20-day moving average, a trendline that has provided support since late November.

    On the sentiment front, I’m still seeing signs of skepticism surrounding the company.  Currently, puts outnumber calls in the front three months’ options series by about 1.3:1.  This ranks in the 84th percentile of all readings taken during the past year.  Capitulation by these bears could act as a tailwind toward MOS going forward.  On February 26 and 27, MOS is set to present at three different agricultural conferences.  Such events can often times spark buying in names like this, so that catalyst looms on the near horizon.  I like an entry here with a stop placed on a close below the 61 level.  I would initially target a move back near the 67 level(the highs from January, 2010), with a stretch target of 75.

    courtesy of stockcharts.com



    If markets don’t see a catalyst that can lead to a gap above the 1525 level on the S&P’s on Tuesday, I’d look for more choppy action between 1500 and 1525.  Should we see a gap higher, 1550 is the next overhead level to watch.


    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.


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