Sterling Market Commentary for Tuesday March 13th, 2012

A Look at Monday’s Market:  The major market indices finished Monday mixed with the Dow Jones Industrial Average finishing the day slightly higher while the S&P 500 and the NASDAQ finished the day slightly lower. In looking at the Dow Jones Industrial Average and its components,  Exxon, Procter and Gamble,  and Merck were the stronger performers on the day; which probably account for the Dow finishing in positive territory while the other major market indices were lower on the day.  The overall market and the various sector indices I track were mostly to the downside.  There was weakness in the Oil Services, Gold Miners, Gold/Silver, Natural Gas, Networking, Airlines, High Tech, Commodities, Banking, Biotech, Cyclicals, Telecom, Transports, Chemicals, and Oil & Gas indices.  There was strength in the Pharmaceuticals, Retailers, and Consumer indices.

In the commodities markets, Oil was lower by $1.06 to $106.34 per barrel, and Gold was lower by $11.70 to $1,699.80 per ounce.  In the grain market, Wheat was higher by $0.082 to $ 6.512 per bushel, and Corn was higher b $0.144 to $6.594 per bushel, while Soybeans were lower by $0.032 to $13.344 per bushel.

A Few Thoughts on Tuesday’s Markets:  In looking at the charts from Monday’s trading activity, I noticed a couple of points of interest.  The 1st being of the various sector indices that showed any movement other than sideways,  the majority of them appear to be moving lower.  The second point of interest is that the stocks with the heaviest volume, more appear to be moving lower than higher. I think that this points to continued pressure on the overall market going into options expiration at the end of the week. Additionally I am seeing continued weakness in the Dow Jones Transportation Average; and that always makes me nervous with respects to the overall market going higher.

I have written many times in the past  that I believe that during options expiration week you will see a reversal of the overall trend of the market as traders unwind their positions prior to the actual expiration;  then following expiration at the start of the next current month, the trend will resume.  What that means for today and this month is that I have felt there is a slight downward bias to the market, that could see a temporary reversal back to the upside this week before resuming its slight downward movement next week.

With respect to my trading plans for today; I am looking for a covered put or call position that I feel will move with the market following options expiration.  I think I have my work cut out for me today.