• Daily Game Plan – Still No Deal

    by  • October 15, 2013 1:49 pm • Broad Market Analysis, Bryan Sapp’s Daily Game Plan, Charts to Watch

    MARKET CHECK

    The clock keeps ticking on the debt ceiling situation, but there has yet to be a viable solution proposed by either party.  Political leaders continue to jawbone back and forth, but multiple sources are reporting that we’re still not close to solving the major issue looming at the present.  Markets have traded back and forth today, but are lower on the session.  Stocks are being pulled lower today mainly by small caps, as the Russell 2000 is lagging and lower by about 0.8% for the day.  There remain some pockets of strength in the market, bust most sectors are in the red.  Today’s relative strength winner is technology, as the Nasdaq is trading near breakeven.  Both the Dow and S&P 500 are lower by about 0.3%.  Gold and silver are trading near flat, despite their big gap lower on the open.

     

    CHART OF THE DAY

    Juniper Networks (JNPR) – The networking concern has underperformed the broad market this year, but that hasn’t stopped market participants from continuing to pile in on the long side.  In fact, sentiment in the options market is at a bullish extreme, as there have been over 2 calls bought for every put in the front three months’ option open interest.  Additionally, the analyst community is slanted bullishly, as there is only one rating of “sell” and seven “buys.”  This creates the potential for future downgrades.  JNPR is currently rallying into its 50-day moving average–this trendline creates a nice defined entry for a bearish position.

    I like a bearish entry here with a stop on a close above 21.  I would initially target a move down to 19, with 16 as a stretch target.  NOTE: JNPR is set to report earnings next Tuesday, so be aware of the fact that there could be an outsized move on that report.

    courtesy of stockcharts.com

     

    WHAT I’M EXPECTING

    I still think Washington will solve things (at least temporarily) by midnight Thursday.  However, the closer we get to that time, the more pressure we’ll likely see on markets.  I’m looking for a drift lower into tomorrow night, and then for some sort of solution to surface, which would likely spark a nice rally.

    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/