Markets are significantly higher today, as the continued fears about actions taken toward Syria have subsided for the time being. Today, Russian President Vlaimir Putin proposed that Syria place all of its chemical weapons under international control. This request seems to have stemmed fears for the time being, in that he is attempting to reach a compromise in order to avoid future conflict. Stocks moved straight up off the open, and are currently trading near the highs of the day. Currently, the Russell 2000 is leading markets, higher by 1.1% on the session. Other major indexes are higher by between 0.7% and 1.0% today. Despite the strong move higher in stocks, bonds are seeing a bid as well, higher by 0.5%. Gold and silver are slightly lower on the session.
CHART OF THE DAY
Green Mountain Coffee Roasters (GMCR) – The coffee company has been on a tear this year, more than doubling since January. The shares recently made new two-year highs and have since pulled back, offering a nice entry from the long side. Despite its strength, sentiment toward the equity remains skeptical. Currently, over 24% of the stock’s float is sold short. This creates the potential for future short-covering rallies. Additionally, sentiment in the options market remains very bearish. In fact, there are nearly two puts open for every call in the front three months’ open interest. Should GMCR continue higher, this creates the potential for a bullish unwind, which could propel GMCR even higher.
I like a long entry here with a stop on a close below 82. I would initially target a move back to 90, with 100 as a stretch target.
WHAT I’M EXPECTING
My bearish thesis from the past week or so has been proven incorrect, but I’m still hesitant to jump in the bull camp here. I’m maintaining a neutral stance on the market, as this week should largely be fairly uneventful(limited economic data) ahead of next week’s potential fireworks. The highly-anticipated FOMC meeting starts on Tuesday, so any news regarding tapering the QE purchases or not will likely cause a big move.