Sterling Investments Market Commentary for Thursday April 12th, 2012

A Look at Wednesday’s Market:  The overall market finished Wednesday moderately higher in a broad based move that saw the majority of the various sector indices I track move higher on the day as well.  However,  one day does not make a trend, and nothing I looked at rallied enough to break its current downward trend.  As a result, I am expecting the overall market to continue its downward trend.  In the commodities markets,  Oil was higher by $1.68 to $102.70 per barrel, while Gold was lower by $0.40 to $1,660.30 per ounce.  In the grain markets,  Wheat was higher by $0.022 to $6.280 per bushel, and Corn was higher by $0.012 to $6.360 per bushel, while Soybeans were lower by $0.040 to $14.220 per bushel.

A Few Thoughts on Thursday’s Market: In looking at the charts from yesterday’s trading I noticed that essentially none of the stocks or indices I looked at rallied enough to break their current downward trends.  Additionally volume from yesterday’s trading was light, compared to Monday and Tuesday’s move lower.  These are all bearish trading signals.  I also noticed that it looks like the entire oil and gas sector appears to be moving lower.  I do not think I could find a single stock in that sector that moved higher yesterday.  The jobless claims numbers released this morning were not good, and they moved in the wrong direction.  I think we are seeing signs that the US economy is starting slow.  This should not be a big surprise to anyone.  The Eurozone economy is under severe pressure due to its debt crisis and inability to get the right form of reform in place. As Europe moves towards an obvious recession, it is only natural that this will have a dampening effect on other economies around the world.  Additionally we are seeing a record amount of new regulations in the US, and new regulations always have a slowing effect on what is being regulated.  Combine that with the tax increases to take effect in 2013 due to the expiration of the Bush tax cuts, and I do not think it is a question of if the US economy will slow, but a question of when.

The Bottom Line:  I am expecting the overall market to continue to move lower.

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