• Daily Game Plan – Markets Quiet

    by  • April 22, 2013 1:47 pm • Broad Market Analysis, Bryan Sapp’s Daily Game Plan, Charts to Watch • 0 Comments

    MARKET CHECK

    Markets are mixed today, after weakness around the open was met with buying.  Futures were significantly higher at about 8:00 this morning, but those prints faded into the cash open, and the selling continued until about 10:30.  However, indexes are currently near their highs of the day after dip buyers stepped back in and supported the 1550 level on the S&P 500 yet again.  Presently, the Nasdaq is leading markets higher, up 0.7% on the day amid strength in Yahoo (YHOO) and Apple Computer (AAPL).  The Russell 2000 is trading near breakeven on the session, while the S&P 500 is up about 0.2% for the day.  Perhaps much of the reason equities were higher this morning can be found in the currency/commodity complex.  The euro was significantly higher amid positive headlines out of Europe, and metals gapped up significantly this morning.  Although gold and silver are each about 1% higher, their opening gaps were met with selling.  Metals continue to trade in the ranged defined by the move between 4/12 and 4/15.

     

    CHART OF THE DAY

    Paychex (PAYX) – The payroll and outsourcing company has been very strong as of late, up 13% year-to-date and 18% over the past 52 weeks.  The shares have been ushered higher recently by their 20-day moving average, a trendline that has acted as support since early March.  Despite its recent strength, sentiment toward PAYX remains skeptical.  Currently, the Schaeffer’s Open Interest Put/Call Ratio (SOIR) ranks in the 92nd percentile, indicating that option activity has been more bearish only 8% of the time over the course of the past 52 weeks.  This creates the potential for a bullish options unwind should PAYX continue higher.  Additionally, analysts seem to despite PAYX, as only 1 of the 23 covering the equity have it rated a “buy.”  This creates the potential for future upgrades, which could act as a tailwind going forward.

    I like a long entry here with a stop on a close below 34.50.  I would initially target a move to 38, with 40 and 45 as stretch targets.

     

    courtesy of stockcharts.com

     

    WHAT I’M EXPECTING

    Given that 1550 support held yet again on the S&P 500, I’d look for a move back to the top of the range, near 1570.  From there, markets may gyrate for a bit, but I’m ultimately looking for a significant break of 1550 and then a test of 1525 and 1500.  Above 1575, this thesis is wrong.

    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