• Daily Game Plan – Quiet Day

    by  • July 2, 2013 1:41 pm • Broad Market Analysis, Bryan Sapp’s Daily Game Plan, Charts to Watch • 0 Comments

    MARKET CHECK

    Markets are very quiet today, as the next two(technically 1.5) trading days left this week look to be very volatile.  The stock market will close early tomorrow in observance on The Fourth of July Holiday, and will likewise be closed all day Thursday.  Despite the shortened trading day, there is a great deal of economic data to be released, so some fireworks could be expected.

    Volumes are very light across the board today,  and stocks are largely trading near breakeven.  Today’s relative leaders are the S&P 500 and Nasdaq, each about 0.2% higher, while the Russell 2000 lags, down about 0.4% on the session after outperforming over the past week or so.  Bonds are also trading near breakeven on the session.  After a sharp upside move since last week, metals and miners have resumed their downtrend.  Gold and silver are each about 1% lower, while miners are off by 3.5% today.

     

    CHART OF THE DAY

    Arris Enterprises (ARRS) – The telecommunications equipment company was very strong in the beginning of the year, but has since pulled back near its year-to-date breakeven level.  Coincidentally, this area happens to be the site of former resistance for the past three years.  As a result, the 14 level could act as support going forward.  On the options front, sentiment has soured, as there are currently 1.5 puts open for every call in the front three months’ options series.  Should ARRS find some footing here and resume its rally, this creates the potential for a bullish unwind going forward.  Additionally, analysts are somewhat disinterested in the equity, as “hold” ratings predominate.  This creates future upgrade potential, which could act as a tailwind going forward.

    I like a long entry here with a stop on a close below 14.  I would initially target a move to 16, with 18 as a stretch target.

    courtesy of stockcharts.com

     

    WHAT I’M EXPECTING

    More volatility this week than most.  Stocks remain trapped in this recent range of 1600-1625 on the S&P 500, but the options market is signaling a big move in macro securities(i.e. bonds, gold, silver, etc.) this week.  For this reason, I would expect the shortened trading week to be fairly eventful into Friday’s jobs report.  I continue to respect the recent range, but will not get overly exposed to one side of the market until the range is broken.

    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