• Daily Game Plan – Market Rises Yet Again

    by  • March 14, 2013 2:02 pm • Broad Market Analysis, Bryan Sapp’s Daily Game Plan, Charts to Watch • 0 Comments

    MARKET CHECK

    The beat goes on, as markets continue their slow grind higher.  Dow Industrials are higher for the tenth consecutive session, and current sit near a new all-time high.  Likewise, the Russell 2000 is currently at an all-time high.  While these two indexes continue to impress, the S&P 500 is a stone’s throw from its all-time highs, but the Nasdaq has some serious catching up to do.

    Currently, the Russell 2000 is leading markets higher today, up 0.6% on the day.  The S&P 500 and Dow are each higher by about 0.3%, while the Nasdaq trails all other indexes, up a modest 0.2% today.  Despite continued equity strength, bonds have held their bid relatively well this week.  Today, they are off only 0.1% on the day.  Metals are near flat on the day, but miners are seeing a strong bid, up 1.3% on the session.  The grinding price action is killing volatility, as VIX made a new intraday multi-year low.  Currently, that Index is off 2% for the session.

     

    CHART OF THE DAY

    Zynga (ZNGA) – ZNGA is involved in the social gaming space, and the stock has been a graveyard for money since its IPO in late 2011.  However, there have been some positive developments in the online gaming space, and ZNGA is poised to take advantage of that opportunity should some favorable legislation develop.  The shares recently bottomed near the $2 level, and the chart looks constructive from a risk/reward perspective at this juncture.

    On the sentiment front, bears have recently come out of the woodwork, as short interest has nearly doubled in the past month.  Should ZNGA continue its recent trend higher, this creates an increased potential for a short-covering rally,which could be very strong given the recent glut of new bearish positions.  I like an entry here with a stop placed on a close below 3.50.  I would initially target the 4 level, with 5 being a stretch target.

    courtesy of stockcharts.com

     

    WHAT I’M EXPECTING

    A test of all-time highs on the S&P 500 next week.  There is an FOMC meeting on Tuesday and Wednesday, and the days leading into these events are typically very bullish.  Given that we’re only about 1% off these highs, a rally into that level seems very likely.  From there, it’s tough to say what will happen.

     

     

    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/

    Leave a Reply