• Daily Game Plan – Financial Leadership Continues

    by  • May 7, 2013 1:42 pm • Broad Market Analysis, Bryan Sapp’s Daily Game Plan, Charts to Watch • 0 Comments

    MARKET CHECK

    It’s groundhog day yet again, as markets are making fresh all-time highs.  In addition to this, the Dow is on pace today to close higher for a 17th consecutive Tuesday, which is also a record.  Much of this week’s move can be attributed to strength in financials, which are currently trading at levels not seen since the crash in 2008.  Presently, the Russell 2000 is today’s relative strength winner, up about 0.5%, with the S&P 500 and Dow Industrials slightly lagging.  The recent strength in technology has waned for the time being, as the Nasdaq is trading near breakeven on the session.  Metals are seeing some weakness, with gold and silver down about 1%, while bonds are off 0.4% on the day.

     

    CHART OF THE DAY

    CF Industries (CF) – While most agriculture stocks have been soaring, CF has seen some recent weakness.  However, there are a few signs that this stock could be setting up for a serious game of “catch up.”  You’ll notice the recent swoon on heavy volume, and the potential inverse head and shoulders pattern that is setting up.  These can often times signal downtrend reversals, and could be a sign CF is making a near-term bottom.  Additionally, this bounce is occurring around the 180 level, a key resistance area in 2011.  With CF now pulling back to this price area, it could act as support going forward.

    I like a long entry here with a stop on a close below 182.  I would initially target a move to 195, with 210 as a stretch target.

    courtesy of stockcharts.com

     

    WHAT I’M EXPECTING

    The old market mantra “Never short a dull market” immediately comes to mind.  Without any catalysts in the near term, it will be tough for markets to sell of significantly any time soon.  Perhaps the first “event” that could spark some volatility is Ben Bernanke’s speech on Friday morning.  That said, stick with what’s working and don’t fight this trend.

    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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