• Daily Game Plan – Metals Rip Higher

    by  • May 20, 2013 2:18 pm • Broad Market Analysis, Bryan Sapp’s Daily Game Plan, Charts to Watch • 0 Comments

    MARKET CHECK

    Equities are largely flat today, after trading higher in the morning, but giving most of those gains away near lunch time.  The “news” in markets today is happening in gold and silver.  After a massive down move in silver futures last night, the metal has reversed off the lows, and currently is trading about 2.5% higher.  There are rumors today of a forced liquidation trade in a big long position that caused this action, but the reversal is undoubtedly noteworthy.

    Currently, the Nasdaq is today’s relative laggard, about 0.5% lower despite AAPL trading nearly 2% higher.  The S&P 500 and Russell 2000 are both trading near breakeven on the day, while bonds are slightly higher, up 0.2% for the session.  Volatility is catching a bid, with the VIX up about 5% for the day.

     

    CHART OF THE DAY

    Citrix Systems (CTXS) – The networking concern has been a relative laggard as of late, trading near its year-to-date breakeven level despite the S&P 500 being up nearly 20% this year.  The shares recently filled their down gap from 4/25, a result of a worse-than-expected earnings report.  Despite its weakness, sentiment toward CTXS remains fairly bullish.  Currently, there are nearly two calls for every put in the front three months’ option open interest.  Additionally, short interest on the equity is trading near multi-year lows.  This creates the potential for new bears to enter a position, which could act as a headwind toward the shares going forward.

    I like CTXS for a bearish play here, and would exit the position should it close above 68.50.  I would initially target a move down to 62, with 57.50 as a stretch target.

    courtesy of stockcharts.com

     

    WHAT I’M EXPECTING

    Given how markets continue to grind higher, trying to call a top would be pretty foolish.  That said, we’re extremely overextended in the near term, and could definitely use some selling.  I have a really hard time buying much of anything here for more than a very short-term trade, but continue to trail stops on your winners and hold them for the time being.  Picking individual stocks for bearish positions is a good way to hedge any long exposure that you may have at this juncture.

    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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