• Daily Game Plan – Stocks Extend Gains

    by  • September 5, 2013 2:02 pm • Broad Market Analysis, Bryan Sapp’s Daily Game Plan, Charts to Watch • 0 Comments

    MARKET CHECK

    Stocks are higher on the day yet again, as indexes are pushing upward on better-than-expected ADP Payroll numbers, jobless claims, and also ISM Non-Manufacturing numbers.  While stocks are, in fact, higher on the day, gains across the index complex are only modest, and near yesterday’s intraday highs.  Today’s leader is the Russell 2000, which is up by about 0.4% on the session, while the relative laggard is the Dow, up by a modest 0.2%.  The big movers in today’s market are the global macro assets.  Bonds are getting hit very hard, lower by over 1.2% as the 10-year yield creeps near the key 3% threshold.  Metals are weak yet again, as gold is off 1.7% and silver is 1.1% lower for the day.

     

    CHART OF THE DAY

    Solarcity (SCTY) – The “other” Elon Musk company has been strong since its IPO, higher by over 200 percent since last December.  The shares broke above the 50 level in May, but have since pulled back sharply.  In fact, SCTY is lower by about 40% over the course of the past three months, but is beginning to show some signs of life here.  The shares are bouncing near the 28 level, site of former resistance from early May and a gap higher.  These areas could act as support going forward.  Despite its strength, analysts and speculators are still skeptical with respect to the stock.  Of the 3 analysts covering SCTY, all have it rated a “hold.”  This creates future upgrade potential.  Additionally, nearly 14% of the stock’s float is sold short.  This creates the potential for future short-covering rallies, which could act as a tailwind.

    I like a bullish entry here with a stop on a close below 28.  I would initially target a move to 36, with 44 as a stretch target.

    courtesy of stockcharts.com

     

    WHAT I’M EXPECTING

    Given the muted reaction to today’s blowout economic numbers, I would suspect that the market is waiting on tomorrow’s jobs report before making its next thrust.  This is the last major data point that we’ll see ahead of the Fed meeting in two weeks, so you could call tomorrow’s number the most important piece of data that we’ll get this year.  I still prefer the downside, especially given the fact that the market is less than impressed with today’s great data.

    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/

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