• Daily Game Plan – Fed Unchanged

    by  • May 1, 2013 2:23 pm • Broad Market Analysis, Bryan Sapp’s Daily Game Plan, Charts to Watch • 0 Comments

    MARKET CHECK

    Many market participants were stymied ahead of today’s FOMC release, but the minutes didn’t say a whole lot different than what we’ve heard for months now.  Essentially rates were unchanged, but there was a note in the minutes that said they were prepared to increase or reduce the bond buying programs going forward, depending upon their inflation and employment forecasts.  Markets slid into the Fed minutes, but have bounced slightly since that news.

    Presently, markets are lower, with the Russell 2000 today’s relative strength loser, down 1.7% on the day.  The S&P 500 and Dow are both off by about 0.5%, while the Nasdaq continues to outperform, only down 0.2% on the session.  After very strong price action in the morning, strength in bond markets has waned.  However, they remain up about 0.5% on the day.  Metals are again weak, down about 2%.

     

    CHART OF THE DAY

    Sarepta Theraputics (SRPT) – The biopharmaceutical company has been very strong lately, up about 25% year-to-date and over 500% over the past 52 weeks.  The shares recently gapped lower on an unfavorable FDA decision, however the initial reaction appears to be of the knee-jerk fashion.  SRPT pulled back near the 29 level, site of resistance from earlier this year, and have bounced sharply today on a positive analyst report.  It appears this level could act as support, and offers great risk/reward on a long entry.  In addition to this, SRPT has respected its 100-day moving average very well on the past two pullbacks.  Today, it again bounced off that trendline.

    I would enter here and stop out of the position on a close below 29.  35 is my initial target, with 40 as a stretch target.

    courtesy of stockcharts.com

     

    WHAT I’M EXPECTING

    A move lower from here.  Whether today is simply an overreaction to the “Sell in May…” mantra remains to be seen, but risk/reward definitely lies with the bears here.  Futures spiked two points above their all-time highs this morning prior to the cash market open, and one would have to think that the last thrust was a stop run on the shorts.  It’s tough to fight this trend, but markets are due for a bit of selling.  A few other factors that lead me to believe we’re heading lower in the near term are the continued strength in bonds and recent weakness in small caps.

    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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