Sterling Market Commentary for Friday September 28th, 2012

A Look at Thursday’s Market: The overall market moved moderately higher on Thursday in a broad based move that saw the vast majority of the various sector indices we track move higher on the day as well.  In the commodities markets,  Oil was higher bu $1.87 to $91.85 per barrel, and Gold was higher by $26.90 to $1,777.60 per ounce. In the grain markets,  Wheat was lower by $0.136 to $8.554 per bushel,  and Corn was lower by $0.084 to $7.162 per bushel, while Soybeans were lower by $0.022 to $15.706 per bushel.

A Few Thoughts on Friday’s Market:  In looking at the charts from yesterday’s market activity I noticed that every single sector index I track moved higher on the day.  My feelings are that we have a market that is dominated by a combination of computer programs taking their trading signals from news headlines and what is essentially market manipulation by the Fed.  In my opinion, both of things are ultimately bad for the overall market and the health of the U.S. economy.  My concerns are that the overall market is vulnerable to headline risk that could result from adverse news coming from either Europe or China.

Dow Jones Industrial Average:  The Dow Jones Industrial Average closed Thursday at 13,485.97  I continue to see upside resistance at 13,558.92 and downside support at approximately 13,345.  Volume on the Dow Jones Industrial Average continues to be light. I generally consider this to be a negative sign when the Dow Jones is trading at multi-year highs.

The Bottom Line:  I think that the U.S. economy is showing weakness as demonstrated by yesterday’s announcement of 2nd quarter GDP being revised lower, and weak durable goods report.  My estimate is that barring some change in Washngton, DC this year, we will see the U.S. economy will probably drop back into a recession in the 1st half of 2013.