A Look at Thursday’s Market: The overall market moved solidly higher in a relatively broad based move that saw a fairly decent amount of follow through with the various sector indices I track. A few more days like Thursday, and I will feel a lot more comfortable with the thoughts of the market moving higher. One of the things that added to my comfortable level was a strong move higher by the Dow Jones Transportation Average, which moved sharply higher based upon what appears to be a solid move in the airlines.
In the commodities markets, Oil was lower by $0.32 to $105.11 per barrel, and Gold was higher by $16.60 to $1,659.50 per ounce. I still think Gold is moving lower and yesterday’s move in Gold was probably a bounce before moving back lower. In the grain markets, Wheat higher by $0.21 to $6.646 per bushel, and Corn was higher by $0.102 to $6.690 per bushel, while Soybeans were higher by $0.186 to $13.690 per bushel.
A Few Thoughts on Friday’s Market: In looking at the charts from yesterday’s trading activity I noticed that many of the various sector indices I track moved higher and appear to be in a position where they could break upside resistance in a few days. If they are able to do so, this would signal a continuation of the upward trend that started late last year. The individual stocks with the highest volume were mostly mixed in my opinion; and this is an improvement over the last several days when I felt the high volume stocks were mostly to the downside.
It is also very important to remember that today is quarterly options and futures expiration day. It is not unusual to see a short reversal of the overall trend as traders unwind their position, only to see the trend resume at the start of next week. Therefore a word or warning, there is always the possibility that any perceived upward trend of the last couple of days could be reversed at the start of next week.
This morning we have managed to select our candidate for today’s trading position. We are looking at covered puts on Newmont Mining ‘NEM’. We have not yet selected the options position and will tweet our selection as soon as it is made. On Twitter we can be found at sterlinginv
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: We entered a paper trade with a covered Juniper Networks ‘JNPR’ going short at $20.75 per share, and selling the April $22 Puts @ $1.71l. This should result in a potential profit of $0.46/share, or approximately 20.20% annualized return by options expiration on April 21st, 2012.