• Daily Game Plan – Syria Fears Weigh on Market

    by  • August 27, 2013 2:07 pm • Broad Market Analysis, Bryan Sapp’s Daily Game Plan, Charts to Watch • 0 Comments

    MARKET CHECK

    Markets are continuing yesterday afternoon’s slide, as fears of an attack on Syria continue to grow.  There were numerous comments made today by different global leaders, and it appears that the threat of a U.S. attack is very real.  Futures were treading water overnight, but the European market open was met with aggressive selling.  Since then, markets have essentially done nothing but go lower, and stocks are currently near their lows of the day.  The Russell 2000 is today’s major laggard, off 1.8% from yesterday’s close.  Other major indexes are down anywhere between 0.8 and 1.6% on the session.  Gold is catching a strong bid, possibly as the “fear trade” grows amid these macro worries.  The metal is 1.2% higher on the day.  Additionally, bonds are moving swiftly higher, up 1% on the session.  Volatility is getting bid up as well, with the VIX higher by over 10% on the session.

     

    CHART OF THE DAY

    Deere & Co (DE) – The farm machinery concern has been weak this year, down about 3% since January and majorly lagging the broad market.  The shares have been capped by their 80-day moving average for some time, and the recent bounce into that trendline could be an ideal spot to make a bearish play.  Despite its weakness, sentiment in the options market is near a bullish extreme, indicating that speculators continue to make bets on future upside in the stock.  These options could act as a headwind toward DE going forward, and cap any major rallies.

    I like a bearish entry here with a stop on a close above 86.  I would initially target a move down to 80, with 75 as a stretch target.

    courtesy of stockcharts.com

     

    WHAT I’M EXPECTING

    The S&P 500 broke the key 1640 level today, and now appears headed toward 1600.  I am going to avoid the bull side until there’s some sort of sign that buyers are stepping back in.  There is some support around 1625, so key an eye on that level as well.

    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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