• Daily Game Plan – News-Driven Tape

    by  • November 28, 2012 1:57 pm • Broad Market Analysis, Bryan Sapp’s Daily Game Plan, Charts to Watch • 0 Comments

    MARKET CHECK

    Indexes are all over the place today, and seemingly every new bit of “news” or rumor that surfaces regarding the fiscal cliff has a dramatic impact on markets.  The S&P 500 has traded in a 20-point range in about four hours’ time, and indexes are currently near their highs of the day.  At current levels, technology stocks are leading the move higher, and all major indexes are about 0.4% in the green.  Despite this bullish move, commodities remain in the red and bonds have a small bid.

    This erratic price action began yesterday afternoon, when Senate majority leader Harry Reid declared that little progress had been made toward resolving the major issue at hand.  At that time, his commentary caused about a 10 point selloff in the S&P 500, and its effects lingered this morning as we gapped lower on  continued worries.  Fast forward to about 10:30 this morning, where Speaker of the House, John Boehner, made public comments stating that he was optimistic that a deal with Obama and the democrats could be reached.  Markets responded very favorably, and rallied sharply to their present levels.  Net/net, markets have gone nowehere since yesterday afternoon.  However, it’s been a roller-coaster ride since then.

     

    CHART OF THE DAY

    Domino’s Pizza (DPZ) – DPZ has been very strong this year, up about 30% year-to-date.  While it underperformed the indexes until mid-Summer, the equity has played a quick game of “catch up” since mid-June.  Over the last 6 months, it’s up nearly 50 percent.

    A little over a month ago, DPZ reported better-than-expected earnings and the stock soared by about 10%.  Since then, it has continued to test the 42 level, which it has failed to break through multiple times.  Generally speaking, the more times a support or resistance level is tested, the more prone it is to eventually breaking.  Keep a close eye on this, as a break above could spark some short covering and lead to a dramatic spike higher.

    courtesy of stockcharts.com

    WHAT I’M EXPECTING

    While my bias remains to the upside, the past 8 hours of trading are evidence that it could be an eventful ride over the next couple weeks.  Given the potential for many new news developments, rumors, speculation, etc., anything is possible.  The current environment is eerily similar to the height of the eurozone crisis, where every new headline would result in 20 point moves in the S&P 500.  If you are actively trading this market, be sure to have stops in place and defined risk on every position.

    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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