• Daily Game Plan – Lack of Conviction

    by  • February 13, 2013 2:24 pm • Broad Market Analysis, Bryan Sapp’s Daily Game Plan, Charts to Watch • 1 Comment


    Markets are once again slowing moving back and forth, as volumes have dried up and most participants appear uninterested.  After coming within a stone’s throw of the 1525 level on the S&P 500 this morning, markets sold off about a half percent to the lows.  Since then, they’ve stabilized, but are still in the bottom half of the day’s range.  Currently, the Nasdaq is leading us higher, up 0.3% amid strength by AMZN.  The Russell 2000 and S&P 500 are both near flat on the day.  Bonds are seeing some sellers, as  today’s 10-year note auction was met with strong supply and lack of demand.  Metals and miners are again weak, as those assets are down about 1% on the day.



    Diamond Foods (DMND) – The much maligned nut company saw a big move on Monday amid heavy volume.  The company has been under an SEC probe in regard to its accounting practices, the stock has obviously been hammered on that news.  However, there are signs that there could be a tradable bottom in place for a quick long position.

    DMND broke from this symmetrical triangle on very heavy volume, and the stock since checked back and bounced today, indicating potential support.  Currently, 36 percent of DMND’s float is sold short.  Given what happened on Monday, the current environment in that stock is very precarious if you are an aggressive bear.  Should DMND continue to move higher, these shorts will be forced to cover, which would act as a tailwind toward the shares.  The chart pattern on DMND is what’s knows as a symmetrical triangle, and a break of this pattern implied a move back near the 18 level.  I’d look to enter here with a stop below Tuesday’s lows of 15.25.  Initially target a move to 18, with a full gap fill back near the 20 level being a possibility.


    courtesy of stockcharts.com



    Given the move to 1525 today and the aggressive selling we saw there, the S&P will likely now enter a range between 1500 and 1525.  It’s tough getting inspired on either side here and now, but individual stock setups still remain.


    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.


    One Response to Daily Game Plan – Lack of Conviction

    1. akabeachguy
      February 13, 2013 5:46 pm at 5:46 pm

      Of note today – SPY 15 min after lifting at open fell followed my move up to a lower high followed by a drop to a lower low followed by an end of day lift to a lower high. Is very short term but could indicate some direction depending on what follows.

      For me tomorrow will answer a lot of questions.

      One big question for me is if Fed agenda of giving the President a good market to hang his hat on for State of the Union is enough and printing presses will be given a rest or if protection of wealth effect will keep Fed printing more money. Benny B has committed to $85 billion a month but wonder if that goes on “ad infinitum?”

      Like I said, tomorrow hopefully will answer that question.

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