Blog – Page 10 – Sterling Holdings & Investments, LLC.

Sterling Market Commentary for March 12th, 2012

March 12, 2012 sterlinginvestments 0

In looking at the charts from Friday’s trading activity there was not a whole lot to see, it was pretty much a dull market. There really was not a whole lot to see, with many of the sector indices and individual stocks are somewhere between support and resistance. Basically a lot of sideways movement, but not a lot of clear breakouts to the upside or downside. There has been a definite decrease in the volatility in the markets this year. While this decreased volatility has gotten a minor amount of coverage in the press, one of the consistent themes for this decreased volatility is the upcoming “Volker Rule,” and that many of the big banks and investment banking firms have curtailed their proprietary trading operations. I definitely believe that time will tell on this topic, I do think the volatility last fall had gotten out of hand, and that sort of volatility can do long term damage to the market. While I still have some mixed feelings about the Volker Rule, I think any reduction in volatility, if it can be legitimately attributed to the Volker Rule, is more of an unintended consequence than a designed effect.

Sterling Market Commentary for Thursday March 8th, 2012

March 8, 2012 sterlinginvestments 0

In looking at the charts from Wednesday’s trading the trend of the market remains weak, however yesterday’s big bounce tends to pull stocks and indices that recently broke below support back above those support levels. What this really ends up doing in my opinion is that it greatly reduces the number of potential trading candidates for the day. It also tends to throw the continuation of any downtrend in doubt.

With the volatility we have seen in the market over the last several years I have adopted my strategy from one of being a purely short term, day trader to one of selling covered puts and calls. This results in my building a portfolio of covered puts and calls over the course of a month that then reverts back to cash on options expiration. During this process I generally try to build a portfolio that is a mixture of long and short positions. I am looking for today to be a day where I can balance out my put positions with a call position that will not get stopped out prior to expiration.

Sterling Market Commentary for Wednesday March 7th, 2012

March 7, 2012 sterlinginvestments 0

A Few Thoughts on Wednesday’s Market: In looking at the charts from yesterday’s trading activity it is pretty clear that basically every index I track has broken its upward or sideways trend and looks to starting what should be at least a short term pullback. There only 2 stocks with a more than a million shares in average daily trading volume that closed at a new yearly high yesterday; and the very vast majority of the heavy volume stocks moved lower on the day.

I continue to see support on the Dow Jones Industrial Average coming in at….

Sterling Market Commentary for Tuesday March 6th, 2012

March 6, 2012 sterlinginvestments 0

In my review of the charts from yesterday’s trading activity I noticed that the vast majority of the various indices I track appear to be starting to move lower. This is generally a bearish signal for the overall market. The second thing I noticed was the vast majority of the heavy volume stocks appear to be moving lower, another bearish signal for the overall market. It looks to me as if we are starting a market pullback. If that is the case, then I expect the Dow Jones Industrial Average to move lower and test support at 12,719.49 If that level fails to hold support on the Dow Jones Industrial Average, then I see a good possibility that the Dow Industrials will move lower and test …..

Sterling Market Commentary for Monday March 5th, 2012

March 5, 2012 sterlinginvestments 0

In looking at the charts from Friday’s market activity I noticed three (3) things that really stood out. The first thing I noticed is that a majority of the sector indices I looked at had negative chart patterns. This is generally a precursor for a broader market pullback. The second thing I noticed was very few of the stocks setting new yearly highs had average daily trading volume above 1 million shares. To me, this indicates that the larger companies are not participating as much in the recent market rally. The third thing I noticed was the majority of the stocks with heavy volume looked to be moving lower. This is generally a bearish trading signal.

Sterling Weekly for the Week of March 5th, 2012 – A Look at Bond Prices and Higher Rates

March 5, 2012 sterlinginvestments 0

Regular readers of the Sterling Weekly will recall that I have been voicing my concerns about the Fed’s manipulation of interest rates to abnormally low levels for quite some time. I have expressed my concerns that this is inflationary in nature, and that as a result we could see interest rates rise to levels not seen since the mid to late 1990’s when the 30-Year Bond yielded approximately 7.5%. (Sterling Weekly for September 26th, 2011) I thought it would be a good idea to take a look how an increase in interest rates would affect the price of current government bonds.

As of last Friday March 2nd, the US Government 5-Year Bonds was yielding approximately 0.85%, the 10-Year Bond was yielding approximately 1.99%, and 30-Year Bond was yielding approximately 3.14%. I have said for a very long time that I believe these bond yields are artificially low due to their manipulation by the Federal Reserve. I think that this is causing a bubble in the bond market that could have very disastrous consequence when it finally bursts, as all bubble ultimately do.

I think that it is very realistic to expect that we will see the price of US Government bonds return to their pre-2008 levels at some point in the reasonable future, by this I mean interest rate levels seen…..

Sterling Weekly for February 27th, 2012 – A Look at the Price of Oil

February 28, 2012 sterlinginvestments 0

The price of oil reached a short term high of $113.92 per barrel on April 29th, 2011, and then declined to $76.78 on October 4th, 2011. What is very important about this chart is that if the price of oil closed above $113.92 per barrel, then it will have completed a “cup pattern” with a measured move to $151.06 per barrel. I consider cup patterns to be very highly reliable, and very predictable. On Friday the price of wholesale gasoline closed at $3.15 per gallon. This is a ratio of just under 35 to 1 between the price of oil and gasoline. Applying that ratio to $150 per barrel oil and you get an estimated wholesale gasoline of approximately $4.28 per gallon. That would most likely put the price at the pump close to….

Sterling Market Commentary for Friday February 24th, 2012 – A Quick Look at Oil

February 24, 2012 sterlinginvestments 0

Also, it should be noted that despite the upward movement of the Dow Jones Industrial Average and the S&P 500, the Dow Jones Transportation Index has been moving lower. For those who believe in the Dow Theory this is a negative signal for the overall market. My thoughts are that the Dow Transports are being pushed lower due to higher oil prices; additionally the Dow Jones Transportation Average is generally considered to be a fairly reliable indicator as transports companies ship goods and services, thus providing a good look at where the economy is going. If this trend continues, then the odds are that the broad market will follow the transports lower, not the other way around. ….

Sterling Market Commentary for Tuesday February 21st, 2012

February 21, 2012 sterlinginvestments 0

In looking at the charts from Friday’s market, the vast majority of the stocks and various sector indices I looked at continue have upward chart patterns. This is obviously a busllish sign for the market. However, a point of concern is that the Dow Jones Transportation Average now has a negative chart pattern and appears to be headed lower. While the Dow Jones Transportation Average may reverse this trend and head back higher, my concerns are that the rising price of oil and other regulatory issues are going to put the earnings of the components under pressure and ultimately send the Dow Jones Transportation Average lower. However, if you believe in the Dow Theory, as I do, then

Sterling Market Commentary for Tuesday February 14th, 2012

February 14, 2012 sterlinginvestments 0

A Few Thoughts on Tuesday’s Market: In looking at the charts of the various indices I track, I noticed a couple of things. The 1st being that several of the various sector indices appear to be looking as if they could easily turn lower. Additionally the Gold/Silver indices continue to look weak. The second thing that I noticed is that a couple of the high tech indices appear to have gone parabolic with their chart patterns. In effect, they sort of look similar to the chart of Apple, Inc. ‘AAPL’ over the course of the last several months. The NASDAQ 100 has also been effected by this as well. This is a result of the way in which these indices are designed. They are capitalization weighted indices, which means that the ratio, or weighting, of the stocks within the index is based upon the market capitalization of the companies that comprise the index. I have never been in favor of this form of index construction. I think it has several drawbacks, some of which can have very devastating consequences……