• Daily Game Plan – Relief

    by  • November 9, 2012 2:00 pm • Breaking News, Broad Market Analysis, Bryan Sapp’s Daily Game Plan • 1 Comment

    MARKET CHECK

    Indexes are mostly flat for the day, but significantly off their highs at present time.  Similar to yesterday, the cash market open was met with strong buying, but that buying didn’t abate until early this afternoon, unlike yesterday’s fifteen-minute rally.  At 1:00, President Obama gave a speech regarding his agenda for the upcoming fiscal cliff, and markets obviously didn’t like the talk of higher taxes.  At present time, the S&P 500 sits about 10 points off the pre-speech highs.

    There are a few bright spots in today’s market, and one on everyone’s radar is Apple (AAPL).  The stock is currently up about 2 percent on the day, and the fierce selling it’s seen over the past weeks seems to have stopped, at least temporarily.  Given the fact that a few words uttered by The President can completely reverse any momentum that the market picked up today, it’s pretty obvious that traders, and the market as a whole, are on edge here.

     

     

    CHART OF THE DAY

    Cirrus Logic (CRUS) – The stock that could do no wrong for most of 2012 now looks vulnerable.  The company reported blowout earnings on 10/31, but the price action that followed the next day was less than stellar.  Although things have been scary for the past few weeks, CRUS could be at a point where it will see some support.  The 30 level is the high from its gap up on 7/30, and this also happens to coincide with its 200-day moving average.  Even though the stock has hit a rough patch lately, it’s still up about 100 percent on the year–hardly anything to sneeze at.  Despite the fact that it’s been so strong, there is still some skepticism surrounding the company, as over 10 percent of its float is sold short.  Should the equity gain footing here and see some upside momentum, the potential for more short covering comes into play.  Also, the recent selloff could be a byproduct of the weakness in AAPL.  As a supplier for Apple, CRUS’s profitability is largely dependent upon what its big brother does.  Keep a close eye on both of these two names going forward, as I believe the recent swoon is overdone at his juncture.

    courtesy of stockcharts.com

     

    WHAT I’M EXPECTING

    Given what I’ve seen this week, bears are in control of this market at the present time.  That said, it’s very tough to get short here and now if you missed the opportunity earlier this week.  The S&P 500 continues to flirt with its 200-day moving average, and some noise around this trendline could be expected.  Until there’s a clear break in either direction, sitting tight is most prudent.  While the broad market is on shaky ground, there still exists the potential to run a long/short book and pick individual stocks and/or trade on a shorter time frame.  If you’re a long-term investor, raising some cash here makes a lot of sense.

    Next week looks to be pretty eventful, so hopefully we’ll get a catalyst that can signal the broad market’s next move.  Some economic data points that I’ll be watching include PPI, CPI, Retail Sales, Philly Fed Index, Industrial Production, Jobless Claims, and the FOMC Minutes.

    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/

    One Response to Daily Game Plan – Relief

    1. Mark
      November 9, 2012 4:24 pm at 4:24 pm

      Love the clear and direct comments. Thank you!

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