• Daily Game Plan – Fed Day

    by  • March 20, 2013 1:08 pm • Broad Market Analysis, Bryan Sapp’s Daily Game Plan, Charts to Watch • 0 Comments

    MARKET CHECK

    Markets have shaken off yesterday’s weakness, as everyone is anxiously awaiting the FOMC decision that will be announced at 2:00 today.  After gapping higher on headlines that somewhat reduce fear of a Cypress bank run, the S&P 500 has traded in a very narrow intraday range.  At present levels, The Russell 2000 is leading markets higher, up 0.6%, while the other major indexes are each about 0.5% higher.  Metals are somewhat flat ahead of the announcement, while bonds are drifting lower, currently off 0.6% for the day.

     

    CHART OF THE DAY

    Murphy Oil Corp (MUR) – The oil and gas exploration company has been strong as of late, up about 40% since bottoming last June.  The shares recently  spiked higher near their 52-week high, and have since consolidated sideways.  Now looks to be an opportune time to enter a long position.

    Sentiment toward MUR is growing bearish, as the current Schaeffer’s Open Interest Put/Call Ratio (SOIR) is in the 93rd percentile of all readings taken over the past 52 weeks, and indicating near-extreme bearishness.  An unwinding of these bearish bets could act as a tailwind toward the stock going forward.  I like an entry here at the 50-day moving average, and would use a close below the 60 level as a sign to exit the position.  I would initially target a move to 65, with 75 as a stretch target.

    courtesy of stockcharts.com

     

    WHAT I’M EXPECTING

    There’s no telling what will be said on the FOMC release, so my directional exposure is very light ahead of it.  I have been adding a good amount of volatility as of late, as I’m expecting the results of this meeting and continued uncertainty out of the Eurozone to cause some big market moves in the near future.

    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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