Sterling Market Commentary for Thursday October 18th, 2012

Sterling Market Commentary for Thursday October 18th, 2012

A Look at Wednesday’s Market: The overall market moved moderately higher yesterday in a broad based move that saw several of the various sector indices I track demonstrate strong moves higher.  In particular,  the Amex Broker/Dealer ‘XBD’, the MS Commodities ‘CRX’, the S&P Chemicals ‘CEX’, the Oil Services ‘OSX’, the S&P Insurance ‘IUX’, and Amex Oil & Gas ‘XOI’, and the MS Cyclicals ‘CYC’ all put in solid performances yesterday.  In the commodities markets, Oil was higher by $0.05 to $92.59 per barrel, and Gold was higher by $6.70 to $1,753.00 per ounce.  In the grain markets,  Wheat was higher by $0.084 to $8.562 per bushel, while Corn was higher by $0.072 to $7.454 per bushel, and Soybeans were higher by $0.154 to $15.092 per bushel.

A Few Thoughts on Thursday’s Market:  In looking at the charts from yesterday’s trading, one of the key things I noticed was many of the various sector indices I track have staged a significant rebound over the last couple of trading sessions.  Despite my concerns about the Fed’s attempts to manipulate the market through its Quantitative Easing programs, it now looks like the market is poised to move higher.  We have recently seen some positive economic reports,  however I would like to caution our readers that those reports are from lagging economic indicators.  They are showing that the economy has already improved, not what it is expected to do in the future.

The Dow Jones Industrial Average: The Dow Jones Industrial Average closed at 13,557.00  With yesterday’s trading activity, I am now widening trading range by raising my upside resistance to the closing high set earlier this month.  I am now looking at upside resistance on the Dow Jones Industrial Average at 13,610.15 on a closing basis.  I now see downside support coming in at 13,273.32 and then  13,000.71 on a closing basis. Current Expectations:  I think we are starting a new trend lower in the Dow.  I am expecting the Dow Jones Industrial Average to continue to move lower and test 13,373.32 on a closing basis.

Dow Jones Transportation Average:  The Dow Jones Transportation Average closed at 5,148.70.  I 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.

The Bottom Line:  I think the market will continue to trend sideways to lower for the next few trading sessions.