We are very pleased to announce that Erik Nelson, President of Sterling Investment Services had the following artilce, ‘Searching for a Micro-Cap Biotechnology Fund’ published in the 2nd Quarter edition of Micro-Cap Review Magazine. We have reprinted the article below for your reading, and a printer friendly copy of is available here.
In looking at the charts from Friday’s market, I noticed a couple of things. The 1st being that there were a significant number of stocks that broke through downside support on fairly heavy trading volume, and a lot less stocks broke through upside resistance on heavier than normal trading volume. The other item I noticed is that the S&P 500 ‘SPX’ has yet to surpass its yearly high of 1,419.04 set on April 2nd of this year; while the S&P 100 ‘OEX’ (which we do not hear much about anymore) surpassed its yearly high of 645.29 set on April 2nd of this year with its close of 646.22 on August 10th. While a couple of weeks of action may not be too significant in the long run, until we reach the long run there may be some significance in the short term message………………….
One of the things I noticed in my review of the charts from yesterday’s market was that the Dow Jones Transportation Average has not really participated in the market’s move higher this year. While the Dow Jones Industrial Average is higher by approximately 7.8% year to date; the Dow Jones Transportation Average is higher by only 62.09 points or approximately 1.24% year to date. For those who follow the Dow Theory and the relationship between the Dow Jones Industrial Average and the Dow Jones Transportation Average, the lack of movement in the Dow Transportation Average is a significant signal. For me, this usually signals that either the Dow Jones Transportation Average is going to move sharply higher and play a game of catch up; or there is a significant risk that the Dow Jones Industrial Average will move back lower and give up the majority of its year to date gains.
I would not get too excited about the Dow Jones Industrial Average’s recent move above 13,000. On March 15th of this year the Dow Jones Industrial Average closed at 13,252.76 only to move back lower. On April 2nd of this year the Dow Jones Industrial Average closed at 13,264.49 only to move back lower. On May 1st of this year, the Dow Jones Industrial closed at 13,279.32 I think this forms an upward sloping trendline that is upside resistance. At the current levels, I see this resistance coming into play at approximately 13,330 on the Dow Jones Industrial Average. Until the Dow Jones Industrial Average closes above this level, I would not get too excited about the current move higher.
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