Sterling Market Commentary for Thursday December 13th, 2012
A Look at Wednesday’s Market: The overall market was essentially mixed yesterday with the major market indices moving slightly lower, while the sectors that were commodity sensitive moved higher, and bonds moved lower. In the commodities markets, Oil was higher by $0.98 to $86.77 per barrel, and Gold was higher by $8.30 to $1,717.90 per ounce. In the grain markets, Wheat was lower by $0.094 to $8.120 per bushel, while Corn was lower by $0.024 to $7.254 per bushel, and Soybeans were higher by $0.014 to $14.734 per bushel.
A Few Thoughts on Thursday’s Market: Currently it looks like the overall trend of the market is higher and being fueled by the Fed’s unlimited bond buying program. As I have stated many times, I believe the Fed’s Quantitative Easing Programs primarily benefit the large multinational corporations and big banks, but leaves the main street and everyday business man standing on the sidelines. I believe that in the process it is creating a bond bubble that when it eventually bursts, as all bubbles do, the consequences will be far more severe than the bursting of the housing bubble. For a better look at my thoughts on this issue, please see the March 5th, 2012 edition of the Sterling Weekly.
Additionally, we still have the unresolved issue of the fiscal cliff looming over the market. At the end of the day, I just do not get the blind faith that a deal will be magically reached to avert the negative effects of the fiscal cliff. There is a lot of risk, that I am not comfortable with at these levels.
The Dow Jones Industrial Average: The Dow Jones Industrial Average closed at 13,245.45 I think the Dow Jones Industrial Average is at an inflection point. It has closed the last 2 trading sessions within 2 points of the upper end of our expected retracement range of the recent downward movement. Current Expectations: I think the next couple of trading sessions will clarify whether the Dow is going to move higher and test the October highs or turn back lower and test the November lows.
Dow Jones Transportation Average: The Dow Jones Transportation Average closed at 5,174.74 I continue to see upside resistance on the the Dow Transportation Average at 5,215.97 and downside support at 4,873.76 and then at 4,795.28. Current Expectations: I think the Dow Transports are going to track sideways between support and resistance for the foreseeable future.
S&P 500 ‘SPX’: The S&P 500 closed yesterday at 1,428.48 I currently see upside resistance on the S&P 500 at 1,457.34 and downside support on the S&P 500 at 1,405.82 Current Expectations: The current trend of the S&P 500 is to the upside, however I have concerns that the current move higher is in the process of running out of steam.
NASDAQ 100 Index ‘NDX’: The NDX closed yesterday at 2,674.57 I see upside resistance on the NDX currently at 2,741.34 and downside support at 2,524.36 on a closing basis. Current Expectations: I think the NDX is going to continue to move lower and test 2,524.36 and then 2,458.83 on a closing basis.
The Bottom Line: I think the market will continue to move lower for the next few trading sessions.