• Daily Game Plan – S&P Loses 1700

    by  • August 6, 2013 1:56 pm • Broad Market Analysis, Bryan Sapp’s Daily Game Plan, Charts to Watch • 2 Comments

    MARKET CHECK

    After making new all-time highs last week and matching those levels yesterday, markets are actually lower today.  The S&P 500 has slipped back below the key former resistance area of 1700, but it appears that the bulls will not give this support level up without a fight.  Stocks were weak immediately off the open, but have since pared some of the morning’s losses.  Today’s move lower is being lead by the Russell 2000 for the second day in a row, as the index is about 1% lower on the session.  The Dow, S&P 500, and Nasdaq are each slightly stronger, lower by about 0.6% each.  Bonds are higher after a better-than-expected  two-year auction at 1:00 today.  On the open, bonds were once again very weak, but they have now turned slightly green on the session.  Metals are getting hit again today, with gold and silver both about 1% lower.

     

    CHART OF THE DAY

    The ExOne Company (XONE) – The 3d printing concern has been on a tear since its IPO in February, up by nearly 200% in only 6 months.  The shares recently peaked near the 75 level and sold off sharply.  However, they found some support near 56 and have since traded upward.  Today was a very big day for the stock, as it marks the end of the “lockup” period for IPO investors.  When companies go public, there is a set amount of time that the initial investors must hold the stock before they’re allowed to sell.  In this case, you would expect many sellers to step in after such a massive run starting in February.  However, XONE is actually up over 4% today, indicating that there aren’t any investors that are eager to part ways with their stock.  This is a great sign going forward and could trigger the next leg higher, as many bulls were likely very hesitant to step in and buy the company ahead of today.

    I like a long entry here with a stop on a close below 65.  I would initially target a move back to 75, with 80 and beyond as stretch target.s

     

    courtesy of stockcharts.com

     

    WHAT I’M EXPECTING

    Continued choppy action.  While sellers did step in today, there doesn’t seem to be much force behind the move lower.  Until the S&P 500 can break 1650, pullbacks should be bought.

    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/

    2 Responses to Daily Game Plan – S&P Loses 1700

    1. Brysapp
      August 7, 2013 1:59 pm at 1:59 pm

      I would look more at individual stocks than in the indexes themselves, and treat each name on a case by case basis. Correlations are still very low, so just because the S&P may be lower, that doesn’t necessarily mean that an individual stock will be down. Given that there are many names at multi-year or all-time highs, there are now tons of potential support levels beneath. Key on former resistance(now potential support) areas or key moving averages as places to start dipping your toes in the water, and if the first one doesn’t hold, then get out and wait for the next entry point.

      A good example of this is on the XLF – 20 was resistance for some time before breaking to the upside. This is also currently site of the 50-day moving average. I would first try buying a pullback to here, and if it breaks(not 19.99, but use something more like 19.80 as a stop, as stocks and indexes can often have good amounts of “noise” around key levels to shake out traders), then I’d wait for 18.50, the next former resistance area from March-May, to try again. Rinse and repeat. Hope this helps.

    2. rk
      August 6, 2013 5:54 pm at 5:54 pm

      Bryan, When you say ‘pullback’ – what do you exactly mean? Is today’s move considered a pull back?

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