• Daily Game Plan – S&P Back to 1650

    by  • July 9, 2013 1:51 pm • Broad Market Analysis, Bryan Sapp’s Daily Game Plan, Charts to Watch • 0 Comments

    MARKET CHECK

    The recent sharp selloff on Fed tapering news seems to be a thing of the past, as equities continue to erase those losses and now eye the recent all-time highs.  Stocks gapped higher this morning, sold off a bit, but have since run back near the highs of the day.  At present levels, the Russell 2000 is leading, up by about 0.9% on the session and continues to outperform other major indexes.  The S&P 500 is higher by about 0.7%, while the Nasdaq and Dow are lagging yet again.  Bonds have been fairly volatile intraday, but are currently flat for the session.  Metals are again slightly higher, with gold and silver both up by 0.6%.

     

    CHART OF THE DAY

    ExOne Co. (XONE) – The 3D printing name has been on an absolute tear as of late, up by over 200% since its IPO in February.  The shares have recently gone parabolic, but today appear to be exhausted at current price levels.  While the trend remains sharply higher, in my opinion there currently exists a nice setup for a mean-reversion play.  Today, XONE is currently printing a doji candle on the daily chart, and could be a sign that its recent move could be coming to an end for the time being.  This is by no means a high-probability setup, but it offers excellent reward potential for limited risk.  That said, size your position accordingly.

    I like a bearish entry here with a stop on a close above 75.  I would initially target a move down to 65, with 50 as a stretch target.

    courtesy of stockcharts.com

     

    WHAT I’M EXPECTING

    At the present time, I’m still not convinced of the recent rally.  That said, a move back above 1660 on the S&P 500 would be a sign to me that markets are ready to challenge their all-time highs seen in May.  Sentiment has gone from extremely bullish near the top, to very bearish after the Fed news, to back in the overweight camp at the present time.  Any sort of negative news could cause recent new longs to quickly panic out of their positions, as recent market sentiment swings wildly in a matter of days instead of weeks.  I continue to believe that a long/short portfolio is the optimal way to play the current low-correlation environment.

    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