Here is a copy of the Market Commnetary I wrote yesterday at Investools.com

Rising oil prices and inflation were the culprits behind today's sell off in US markets. Crude oil rallied strong today closing at $123.53, just a few cents off of the daily highs. A recent report by Goldman Sachs predicted a rise in oil prices to as much as $200 per barrel, and every passing day investors are starting to understand that this could potentially become a reality. In fact, I started crunching numbers today to predict what it will cost to fill up my tank in a few months. I concluded that it might be time to be a little more "economical" in my means of transportation.

In today's trading session the Dow Jones finished down 206 closing at 12,814. The S&P 500 finished off by 25 points closing at 1392, and the NASDAQ finished down 44 points closing at 2438. The market finds itself in a balancing act at the moment. The concern is whether or not the consumer will cut back their spending based on higher energy prices, food costs, and overall living expenses. There are mixed signals to this point, but we saw how the market treated the rise in oil today. The higher it goes; the worse off the market will react. To hedge this movement in the market, remember that the easy money still appears to be in commodity related groups, such as oil, coal, steel, natural gas, etc. Look for profit opportunities in these stocks as the market takes the time to make up its mind.

Major Airlines, Railroads, and Mortgage Investment companies led the rally to the downside today, while General Contractors, Toy Stores, and the occasional technology name were the few groups that were able to post gains on the day.

Outlook

In my opinion, this retracement in the averages is a healthy event, and was going to happen sooner than later. In fact, it is reminiscent to the great bull market we saw last year where "the sharpest corrections would occur in the context of an uptrend." I don't think oil will trade too much higher before it pulls back, which should trigger investors to come out and buy stocks for a while.

Despite the horrible curb appeal, I am still looking at this week's activity as a buying opportunity. However, the averages are trading near some important psychological levels. Watch the Dow as it trades around 13,000, and keep an eye on the S&P 500 as it trades near the 1400 mark.

I mentioned last week to look at bearish opportunities in airlines. Going forward I would start to slowly take profits at these lows.

Economic News

The rest of the week will be relatively light as far as economic announcements are concerned. Below is a table of what to expect throughout the week.

Top Picks

Long: RIMM, CSH, and CNQR

Short: FII, WYNN, and HANS

Sincerely,

The Option Addict