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Sterling
Weekly for January 16th, 2006
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The overall
market continues to look strong.
I think the overall economy
is performing very well and
unless we experience a "shock
to the system" I don't
see anything that will interrupt
our current strong economic
growth. The Bottom Line:
I am expecting the overall market
to remain strong and the Dow
Jones Industrial Average to
set new record highs later this
year.
I have decided
to take a look at the price
of Oil & the Amex Oil Index
'XOI' this week. I have inserted
charts of both below and included
separate discussions of each.
While I haven't generally tried
to make predictions for the
upcoming year, I do think that
the price of oil will have an
impact upon the economy and
our lives in 2006.
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A
close look at the chart of the
'XOI' I've inserted below shows
that the 'XOI' reached a closing
high of 1,091.02 on September
29th of last year and then pulled
back to a low of 912.63 Since
late December the XOI has rallied
sharply higher and closed last
week at 1,078.40 This has helped
the XOI create a "cup pattern"
and if the 'XOI' closes above
1,091.02 then it will complete
this pattern which forecasts the
XOI continuing to move higher
towards the 1,269.41 level, or
an approximate 16% increase. By
the way, I would like to point
out that if the price of Oil rises
the same percentage above its
previous closing high, then the
price of oil would move to $81.25/barrel.
This is reasonably close to what
my analysis of the chart of Oil
indicates it could reach. Current
prices for Oil can be found (here.)
Our most recent analysis of the
Amex Oil Index 'XOI' can be found
(here.) |
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I have inserted
below a daily chart on the price
of oil. The price of Oil reached
a closing high of $69.82/barrel
on August 30th following Hurricane
Katrina, and then trended lower
until it reached $56.15/barrel
on November 18th. Since roughly
mid-December the price of Oil
has been trending higher. This
is where it becomes important
to remember the 1st rule of
trends, they remain in place
until they are broken. My analysis
of this chart indicates that
the price of crude oil is going
to continue to move higher and
test $69.82/barrel. If the price
of Oil closes above this level,
then it will have completed
the cup pattern I have outlined
below, which then forecasts
a continued move higher to approximately
$83.50/barrel. While there is
no guarantee that the price
of Oil will close above its
old highs, if it does, look
for it to continue to move higher
to the mid $80/barrel price
range.
Note:
In case you are wondering about
my track record with the price
of oil in the past. In the March
7th, 2005 edition of the
Sterling Weekly with oil in
the mid $40/barrel range I forecast
that oil would move to $64-$69/barrel.
In the August
29th edition of the Sterling
Weekly following Hurricane Katrina
I wrote that the price of Oil
might "hit $70 barrel,
but that should be about it."
I stand by what I've wrote and
there it is for you to read.
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| Sterling
Calendars for the Week of January
16th, 2006 |
| Date |
Est.
Time |
Release |
For |
Briefing.com |
Consensus |
Prior |
| 1/17 |
8:30am |
NY Empire State
Index |
Jan |
22.0 |
22.0 |
28.7 |
| 1/17 |
9:15am |
Capacity
Utilization |
Dec |
80.7% |
80.5% |
80.2% |
| 1/17 |
9:15am |
Industrial
Production |
Dec. |
0.7% |
0.6% |
0.7% |
| 1/18 |
8:30am |
Core
CPI |
Dec. |
0.2% |
0.2% |
0.2% |
| 1/18 |
8:30am |
CPI |
Dec. |
0.2% |
0.2% |
(0.6%) |
| 1/18 |
9:00am |
Net Foreign Purchases |
Nov. |
n/a |
n/a |
$106.8b |
| 1/18 |
10:30am |
Crude Inventories |
1/13 |
n/a |
n/a |
(2,887K) |
| 1/18 |
2:00pm |
Fed's Beige Book |
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| 1/19 |
8:30am |
Housing
Permits |
Dec. |
2,100k |
2,100k |
2,163k |
| 1/19 |
8:30am |
Housing
Starts |
Dec. |
2,080k |
2,050k |
2,123k |
| 1/19 |
8:30am |
Initial
Claims |
1/14 |
320k |
N/A |
309k |
| 1/19 |
12:00pm |
Philadelphia
Fed. |
Jan |
14.0 |
13.4 |
12.6 |
| 1/20 |
9:50am |
Michigan
Sentiment-Prel. |
Jan. |
92.0 |
93.0 |
91.5 |
| Date: |
Comments: |
| 1/16 |
The
stock market is closed in observance
of Martin Luther King Day. |
| 1/17 |
Continental
Airlines 'CAL' reports earnings before
the open. Est. ($1.63) |
| 1/17 |
Intel
Corp. 'INTC' reports earnings. Time
n/a. Est. $0.43/share. |
| 1/17 |
IBM
reports earnings after the close.
Est. $1.94/share |
| 1/17 |
MDC
Holdings 'MDC' reports earnings before
the open. Est. $4.01/share. |
| 1/17 |
Wells
Fargo 'WFC' reports earnings before
the open. Est. $1.15/share. |
| 1/17 |
Yahoo,
Inc. 'YHOO' reports earnings. Time
n/a. Est. $0.17 |
| 1/18 |
AMR
Corporation 'AMR' reports earnings.
Time n/a. Est. ($2.45) |
| 1/18 |
Apple
Computer 'AAPL' reports earnings after
the close. Est. $0.55 |
| 1/18 |
eBay
'EBAY' reports earnings. Time n/a.
Est. $0.22/share. |
| 1/18 |
JP
Morgan Chase 'JPM' reports earnings
before the open. Est. $0.72 |
| 1/19 |
Capital
One Financial 'COF' reports earnings
after the close. Est. $0.93 |
| 1/19 |
D.R.
Horton 'DHI' reports earnings before
the open. Est. $0.94 |
| 1/19 |
Merrill
Lynch 'MER' reports earnings. Time
N/A. Est. $1.30 |
| 1/20 |
Citigroup
'C' reports earnings before the open.
Est. $1.00 |
| 1/20 |
General
Electric 'GE' reports earnings. Time
N/A. Est. $0.55 |
| 1/20 |
Schlumberger
'SLB' reports earnings before the
open. Est. $0.96 |
The
full earnings calendar for this
week can be found (here) |
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Prime
Update:
Sterling
Investment Services is an investment research
and money management firm publishing the
Prime
Stock Newsletter. The Prime
Stock Newsletter is a daily comprehensive
newsletter that is useful for investors
and traders alike. Whether you are looking
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or if you looking to acquire a long term
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Highlights
from Recent editions of the Prime
Stock Newsletter |
| Recommendation |
Date |
Entry
Point |
Recent
Close or Exit Price |
Profit* |
Note |
| Advanced
Micro 'AMD' |
Nov.
7th |
$24.63 |
$37.46 January 12th
intra-day high. |
$12.835 |
|
| Capital
One 'COF' |
Dec.
19th |
$85.74 |
$89.14 January 11th
intra-day high |
$3.40 |
|
| Gold
Corp. 'GG' |
Dec.
29th |
$21.72 |
$25.29 |
$3.48 |
Should continue
to move higher. |
| * The
per share PROFIT is a theoretical
calculation based upon the opening
price the day the recommendation is
published and the intra day high (or
low for short sales) on the exit day.
The exit day is determined based upon
the application of our "Rules
for Trading", the implementation
of "stops" within our stated
policy, and may not reflect the complete
or full movement of the underlying
recommendation. |
|
Dow Jones Industrial
Average (INDU)
Current
Opinion:
Closed @ 10,959.87 Last Signal:
Called Higher with the close of 10,823.72
on December 13th.
Current Expectations: I think the
end of the year weakness is over for
the market. I am expecting the Dow Jones
Industrial Average to move higher and
test 10,940.55 on a closing basis.
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The
S&P 500
Current
Opinion: Closed
@ 1,287.61 Last Signal: Called
higher with the close of 1,267.43 on December
13th. Current Expectation: I am
expecting the S&P 500 to continue
to move higher and test
1,312.54 on a closing basis.
|
The
NASDAQ 100 (NDX)
Current
Opinion:
Closed @ 1,746.78 Last Signal:
Called Higher with the close of 1,679.93
on January 3rd. Current Expectations:
This index was hit harder by the end of
the year selling, declining more than
the other major indices. I am now expecting
the NDX to continue to move higher and
test 1,751.45 on a closing basis. |
CBOE
Ten Year Treasury Index (TNX)
Current
Opinion: Closed
@ 4.350% Last Signal:
Called Lower after the close of trading
on January 13th with a close of 4.350%
Current Expectations:
This index should move lower and test
then 4.176% on a closing basis. |
Disclaimer:
The Sterling Investments series of newsletters is produced by Sterling
Investment Services, Inc. All information
used in the production has been obtained
from sources believed to be reliable and
accurate. Sterling Investment Services
does not warrant or assume any liability
for inaccuracy of the information used
to produce our publications. To receive
further information on these services
please visit our web page at: www.sterlinginvestments.com
If you would like to contact us our fax
# is (404)-816-8830 Email address is:
enelson@sterlinginvestments.com Sterling
Investment Services may hold positions
in the securities recommended or may be
providing consulting services to the companies
mentioned within this report. |
Last
Week's Edition of the Sterling Weekly
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