• Daily Game Plan – No Action

    by  • March 12, 2013 2:05 pm • Broad Market Analysis, Bryan Sapp’s Daily Game Plan, Charts to Watch • 0 Comments

    MARKET CHECK

    Markets are very quiet today, as there’s no real catalyst to spark a significant move.  However, we did see a bit of responsive selling early this morning as the Dow Industrials made yet another all-time high.  After a quiet, yet strong open, equities are currently near their lows of the day.  Price is being led lower by technology stocks, as the Nasdaq is off about 0.6% amid weakness in AAPL and GOOG.  The S&P 500 and Russell 2000 are both off about 0.3%, while the Dow is down about 0.1%.  Bonds are seeing a strong bid after recent weakness, up 0.7%, and metals and miners are spiking higher.  Gold and silver are both up by about 0.7%, but the gold miners ETF (GDX) is up over 2.5% on the day.  As of late, strength in gold miners is usually synonymous with weakness in equities.

     

    CHART OF THE DAY

    Wynn Resorts Ltd. (WYNN) – The casino operator has been strong lately, as more news of online gamine regulation continues to surface.  The equity is up about 5% year-to-date, and has been guided higher by its 100-day moving average(blue trendline below).  However, despite the pending news and strength in the name, sentiment remains sour.  Currently, there are nearly three puts for every call in the front three months’ open interest on WYNN.  This heavy put/call ratio ranks in the 94th percentile of all readings taken during the past year, and indicates continued skepticism toward the equity.  An unwinding of these bearish bets could act as a tailwind toward the equity.

    In addition to the heavy put bias, there is an accumulation of puts at the March 117.50-strike.  Those short these options have an incentive to prop up WYNN, and this strike could act as support into Friday’s expiration.  I like an entry here with a stop placed on a close below 115.  I would initially target a move to 125, with 135 as a stretch target.

    courtesy of stockcharts.com

     

    WHAT I’M EXPECTING

    After the lull over the past two days, I’m looking for some volatility into Friday.  Before tomorrow’s open, February retail sales data will be released.  Additionally, there are two bond auctions and a handful of other important data points between now and the weekend.  As we press against all-time highs on many indexes, this data could spark the next big move in the market.  That said, I have no directional bias and continue to pick stocks in a long/short fashion.

    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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