A Look at Monday’s Market: The overall market finished Monday slightly higher. However it was a relatively broad based move that saw the majority of the sector indices I track move higher on the day. There was strength in the High Tech, Financials, Airlines, Natural Gas, Oil & Gas, Commodities, Healthcare related, Chemicals, Transports, and Retailers. There was weakness in the Gold/Silver, Telecom, Consumer and Utilities. There was also weakness in the bond markets, with interest rates again moving higher.
In the commodities markets, Oil was lower by $0.51 to $107.58 per barrel, and Gold was lower by $9.0 to $1,658.30 per ounce. In the grain markets, Wheat was lower by $0.074 to $6.446 per bushel, and Corn was lower by $0.070 to $6.564 per bushel, while Soybeans were lower by $0.066 to $13.596 per bushel.
A Few Thoughts on Tuesday’s Markets: In looking at the charts from yesterday’s market, I noticed that the vast majority of the sector indices and heavy volume stocks that I follow all looked very positive on their charts. However, I am always cautious the 1st couple of days following an options expiration week. Experience has taught me that it generally takes a day or so, for the underlying trend to resume its movement. As a result, I expect the activity of Tuesday and Wednesday to set the general direction of the market for the next few weeks. Also, in general we have been in a very tight trading range for the last several months. We all know that this is rather unusual given the trading history of the markets over the last couple of years. My underlying concern is that the longer we track sideways, the greater the move to either the up or downside will be when we finally break from this tight trading range; and I do not want to be caught to heavily weighted to the wrong side.
This is going to be a tough morning to select a trading position. All of our candidates are for covered calls, and the pre-market futures are signaling a fairly decent drop on the open. I will tweet my selection once I have made it.
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 Selection: I was looking at a covered put position on Teva Pharma ‘TEVA’ yesterday. However I could not find any options with a suitable premium. So no trade.