Sterling Market Commentary for September 30th, 2011

A Look at Thursday Market:  The overall market finished Thursday sharply higher in a wild day that saw the Dow Jones Industrial Average open up over 250 points higher before selling off and going negative before a late day rally caused the Dow to close up 143 points on the day.  Despite the late day rally, the major market indices were mixed with the Dow Jones Industrial Average and S&P 500 finishing the day higher, while the NASDAQ was lower on the day.   It was a relatively broad based move that saw the majority of the indices I track finish higher on the day.  The strongest sectors were Insurance,  Banking, Broker/Dealers, Transports, Utilities, Cyclicals, Oil & Gas, Healthcare related, and Consumer indices.  There was weakness in the Retailers.  and  High Tech indices.  Oil was higher by $0.93 to $82.14 per barrel, and Gold was lower by $0.60 to $1,615,50 per ounce.  In the grain markets,  Wheat was higher by $0.154 to $6.542 per bushel, and Corn was higher by $0.016 to $6.324 per ounce, while Soybeans were higher by $0.064 to $12.30 per bushel.

A Few Thoughts Before the Open: In looking at the charts from yesterday’s trading activity, despite the approximately 140 point move higher by the Dow Jones Industrial Average, I really did not see anything with a bullish chart pattern. There were only a very small handful of stocks setting new yearly highs, and none of them looked interesting.  The very vast majority of the heavy volume stocks continue to have bearish chart patterns. Really, the only stocks that look to be moving higher are utilities, and I have a tough time getting excited about them due to the constant regulatory overhang from our current administration.

In yesterday’s blog, I commented on the fact that I have noticed a very short term 16 day cycle that indicates we could see a short term high on or about October 3rd.  Guess in a couple of days we will see if I am accurate on this.

In this morning’s Wall Street Journal,  there was an editorial by Stephen Moore discussing how the current tax debate is drawing the focus back to the Flat Tax.  In the Sterling Weekly for the week of October 21st, 2008 I wrote a comparison of the various tax models and discussed there merits. I continue to stand by my argument that the Flat Tax is the fairest tax, and that the Flat Tax is the best tax to promote economic growth. For a look at that discussion,  please click here.

The Bottom Line:  I continue to believe the overall market is in a sideways trading pattern with a downward bias.