Sterling Market Commentary for Tuesday April 3rd, 2012

A Look at Monday’s Market:  The overall market moved moderately higher on Monday and showed broad based strength in the process as the majority of the various sector indices I track moved higher, displaying solid chart patterns in the process.  It has been a long time since I felt the overall market showed the strength that I saw in Monday’s charts. I am looking for the overall market to continue to move higher.  In looking at a chart of the Dow Jones Industrial Average, I see that it completed a “cup pattern” in late February with a measured move to 14,955.78  While I do not expect the move to 14,955.78 to be in a straight line, and I expect at least 1 pullback along the way,  I am now setting our new intermediate to long term target on the Dow Jones Industrial Average at 14,955.78

In the commodities markets, Oil was higher by $2.21 to $105.23 per barrel, and Gold was higher by $7.80 to $1,679.70 per ounce.  In the grains market,  Wheat was lower by $0.036 to $6.570 per bushel, and Corn was higher by $0.11 to $6.550 per bushel, while Soybeans were higher by $0.18 to $14.21 per bushel.

A Few Thoughts on Tuesday’s Market:  A big number of the various sector indices I look at set new yearly highs yesterday,  and I am starting to see more of the stocks I look at break above resistance levels.  These are bullish trading signals and a big chance from a couple of weeks ago.  I am now a lot more optimistic on the market than I have been in a long time.  I am looking to increase our long, covered call positions as a percentage mix in our overall portfolio.

Twitter Model Portfolio Tweet Policy:  Currently Sterling Investment Services is managing a trading strategy based upon covered puts and calls.  Sterling Investments is currently running a “Model Portfolio” that is based upon this strategy.  It should be noted, that at this point in time, Sterling Investment Services is only “paper trading” this model portfolio, and not actually executing trades and creating actual positions within this model portfolio.  Therefore, please do not look for actual volume associated with our options selections.  It is Sterling Investment Services goal to initiate trading in an actual account based upon our model portfolio in the near future.  When that change actually occurs, Sterling Investments will notify its readers via Twitter and our website.

Yesterday’s Trade Selection:  On Monday we were looking at a covered put position on Valero Energy ‘VLO’.    We shorted ‘VLO’ and sold the April $26 Puts.  If this position holds through to options expiration in 2 1/2 weeks, then we will have made a profit of $0.54 or approximately 39% on an annualized basis.  Time will tell on this one.