• Daily Game Plan – Global Selloff

    by  • June 24, 2013 2:06 pm • Broad Market Analysis, Bryan Sapp’s Daily Game Plan, Charts to Watch • 0 Comments

    MARKET CHECK

    Markets opened sharply lower this morning, as Asian equity markets saw massive downside moves overnight.  The major move lower was seen in Shanghai, where stocks traded over 5% lower in a single session.  As you might expect, futures were sharply lower into this morning’s cash market open, but buyers stepped in near midday and have help to stop the bleeding for the time being.  At present levels, the Russell 2000 is today’s relative laggard, down about 1% on the session.  There exists relative strength in the Dow, as the index is off a modest 0.6%, while the S&P 500 and Nasdaq are down about 0.8% each.  As you would expect with Chinese weakness, much of today’s carnage can been seen commodity-related names.  Gold miners are down nearly 4%(despite being well off their lows), and steel and coal names are also getting hit hard.  Bonds have caught a slight bid intraday, as they have turned green after a move lower this morning.

     

    CHART OF THE DAY

    Apple Computer (AAPL) – The tech giant has been extremely weak so far this year, but there are signs that it could find some support here at the round-number 400 level.  This price level also happens to be the site of heavy put open interest for the July option series, so those short these options have an incentive to defend the current price levels.  If you take a look at the Relative Strength Index(RSI) on AAPL, you’ll notice that previous pullbacks to the current reading led to near-term bounces on the last few occasions.  In addition to this technical support, there were a few pieces of bad news that hit the tape this morning.  Today’s selloff could be a little overblown, and lead to an upside move from here.

    I like a long entry here with a stop on a close below 394.  I would initially target a move to 420, with 450 as a stretch target.

    courtesy of stockcharts.com

     

    WHAT I’M EXPECTING

    I’m looking for another bounce back near 1600 here on the S&P 500.  Today’s lows of 1560.33 could mark a near-term bottom, and a new range appears to be intact.  That said, don’t overstay your welcome on the long side, as the primary trend is lower until bulls can usher the S&P back above 1610.

    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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