• Daily Game Plan – Tech Rally

    by  • December 6, 2012 1:53 pm • Broad Market Analysis, Bryan Sapp’s Daily Game Plan, Charts to Watch • 0 Comments


    Markets are mixed at the present time, with technology being the relative strength winner, up about 0.5% on the day.  This tech rally comes on the heels of an abysmal day for Apple Computer (AAPL) yesterday, which today has seen a massive 30-point intraday reversal.  The S&P 500 and Russell 2000 are both near breakeven on the day, while bonds and commodities are slightly higher.

    There continue to be rumblings about fiscal cliff resolutions, but nothing concrete has transpired.  A little before 1:00 EST today, news leaked that the Senate is set to vote this afternoon on giving President Obama power over the federal debt ceiling.  If this does pass, then you would have to assume that there is a much greater chance of something being accomplished before the end of the year.  Keep an eye out for headlines, as positive news could be a catalyst for markets.



    Time Warner, Inc (TWX) – It’s tough to find a prettier trending stock out there than this one.  While TWX isn’t a very volatile stock, with a beta of about 1.2, it has seen significant gains this year.  Since January, TWX is up by about 28 percent.  On Monday, the shares made a new 4-year high, and have since pulled back near the 46 level, site of previous resistance from September and October.  This level could act as support going forward.

    Even though TWX has been very strong, sentiment surrounding the equity remains rather skeptical.  Currently, there nearly four times the amount of puts as calls in the front three months’ options series.  This ratio ranks in the 98th percentile of all readings taken over the past year.  Additionally, 10 of the 25 analysts covering TWX have it rated a “Hold.”  This creates the potential for future upgrades should TWX continue its trek higher.  TWX looks poised to make a quick move to the 48 level, with 50 being an extended target.

    courtesy of stockcharts.com



    Resolution to the recent range very soon.  Before the market open tomorrow, the November employment report will be released.  In addition to this catalyst, there is a good deal of market-moving data to be released next week.  Given the recent consolidation after the sharp move up from 11/16, seasonality effect into year end, and much fear being priced into the market, my bias remains to the upside.  Look for a break of 1425 on the S&P 500 as a clue that we’re about to run higher into 2013.




    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.


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