The overall market as measured by the Dow Jones Industrial Average gained approximately 782.62 points, or approximately 9.7% last week to finish at 8,829.04 last week. However the Dow Jones Industrial Average promptly dropped 687 points or approximately 7.8% today. The overall stock market still has a lot of issues facing it. President-elect Obama may have a great set of speech writers but it will take more than that to solve the structural problems that are facing our economy. Until those can be addressed properly the market will continue to trend downwards.

In last week's edition of the Sterling Weekly I briefly discussed the problems surrounding mark to market accounting. The Emergency Economic Stabilization Act of Act 2008, enacted and signed by the President on October 3, 2008, among other things requires the Commission to conduct a study of "mark-to-market" accounting applicable to financial institutions, including depositary institutions, and submit a report to Congress with the findings and determinations within 90 days. The SEC has set up a web page to keep the public informed of their progress and to solicit comments. The SEC's web page on the topic can be found (here). We will do our best to keep everyone informed as to the progress on this issue, as we believe this is one of the key causes of our current economic crisis and reforming the rules around this is one of the keys to an economic recovery.

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Dow Jones Industrial Average (INDU)

Current Opinion: Closed @ 8,141.36Last Signal: Called Lower (again) with the close of 8,378.95 on October 24th. Current Expectations: We might see a short term rally however the Dow should continue to move lower and test 7,762.34 on a closing basis.

The S&P 500

Current Opinion: Closed @ 816.21 Last Signal: Called Lower (again) with the close of 876.77 on October 24th. Current Expectations: We might see a short term rally however the S&P 500 should continue to move lower and test 752.44 on a closing basis.

The NASDAQ 100 (NDX)

Current Opinion: Closed @ 1,091.16 Last Signal: Called Lower (again) with the close of 1,202.27 on October 22nd. Current Expectations: The NDX should continue to move lower and test 957.05 on a closing basis.

CBOE Ten Year Treasury Index (TNX)

Current Opinion: Closed @ 2.719% Current Expectations: With the current market turmoil it is anyone's guess where interest rates are going. However, my guess is that short term debt instruments will be more sought after than longer term ones.