Market Commentary

Market Commentary – September 2nd, 2011

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A Few Thoughts Before the Open:

The employment numbers released this morning were horrible.  As a result we are looking at a sell off on the open.  I’ve updated my support and resistance levels on some of the indices I track.

In looking at the various indices I track, I have the following comments.

Dow Jones Industrial Average:  The Dow Jones Industrials closed at 11,493.57  The Dow has basically rallied to the upper end of its trading channels.  I feel that our downside support level remain at 11,006.22 on a closing basis, and the new upside resistance level, while somewhat in flux remains around the 11,613.30 level on a closing basis.

S&P 500 ‘SPX’:  The S&P 500 closed at 1,204.42 I see upside resistance on the S&P 500 at 1,225.85 and downside support at 1,127.79 on a closing basis.

NASDAQ 100 Index ‘NDX’:  The NASDAQ 100 closed at 2,219.05  I continue to see downside support on the NDX at 2,100  and  upside resistance at 2,292.34.

The Dow Jones Transportation Average:  The Dow Transports closed at 4,599.85  I see upside resistance on the Dow Transports at 4,749.99 and downside support level  at 4,320.05 on a closing basis.

M.S. Commodities Related Equity Index ‘CRX’:  The ‘CRX’ closed at 904.71.  I see upside resistance on the ‘CRX’ at 924.89 and downside support at 847.10

KBW Banking Index ‘BKW:  The ‘BKW’ closed at 37.31.  I see upside resistance on the ‘BKW’ at 41.42 and downside support at approximately 36.33 on a closing basis.

S&P Banking Index ‘BIX’:  The ‘BIX’ closed 116.91.  I see upside resistance on the ‘BIX’ at 117.52 and downside support at 100.96 on a closing basis.

Amex Broker/Dealer Index ‘XBD’:  The ‘XBD’ closed at 88.99  I see upside resistance at 92.97 and downside support at 80.87 on a closing basis.

S&P Insurance Index ‘IUX’:  The ‘IUX’ closed at 161.49  I see upside resistance on the ‘IUX’ at 175.13 and downside support at 143.80 on a closing basis.

Amex Gold & Silver Index:  The Amex Gold & Silver Index ‘XAU’ closed at 219.29     I see upside resistance on the ‘XAU’ at 220.36 and downside support at 208.78

Amex Oil & Gas Index:  The Amex Oil & Gas Index ‘XOI’ closed at 1,154.13  I currently see upside resistance on the ‘XOI’ at 1,228.18 on a closing basis.  I am expecting the ‘XOI’ to continue to move lower and test 1,141.92 on a closing basis.

M.S. Cyclicals Index:  The M.S. Cyclicals Index ‘CYC’ closed yesterday at 866.24  I currently see upside resistance on the ‘CYC’ at 913.44 and downside support at 868.97  on a closing basis.

M.S. Consumer Index:  The M.S. Consumer Index ‘CMR’ closed at 716.31  I currently see upside resistance on the ‘CMR’ at 725.78. and downside support at 691.44 on a closing basis.

I’ll be back over the weekend.

www.sterlingivnestments.com

 

Market Commentary

Market Commentary – September 1st, 2011

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A Few Thoughts Before the Open:

In looking at the yesterday’s charts of the various sector indices that I track I noticed that many of the indices rallied up to their 40 day moving average before turning back lower yesterday.  This may be just normal activity before the market continues it move higher,  or it may be a point of technical resistance that cuts short the current market retracement.  The next couple of trading days should clarify the situation.

I am looking for trading volume to be light ahead of the Labor Day weekend.

I’ll be back with more updates tomorrow morning.

www.sterlinginvestments.com

Market Commentary

Market Commentary – August 31st, 2011

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A Few Thoughts Before the Open:

It is good to be back in to the office after a couple of weeks of travel and working off site.  In looking at this week’s economic calendar it should be noted that in addition to weekly jobless claims on Thursday,  we have nonfarm payrolls and the unemployment rate for the month of August to be released on Friday.  The current expectations are for the unemployment rate to tick upwards to 9.2%  Other news items of note for the remainder of the week include the ISM index on Thursday.

Despite having the overall market stage a nice rally since the start of last week, it is always important to remember that nothing moves in a straight line.  It should also be noted that Congress returns from its Summer Vacation on Tuesday September 6th;  only God has any real idea what sort of gobbly gook is going to be said once Reid and Polosi get back to Washington DC.  Either way,  my best guess is that they will say something not too positive for the markets.  My thoughts are that it might be smart for short term traders to be flat ahead of the Labor Day weekend.

Earlier this week I saw a technical analyst (whose name I can’t remember) on CNBC who claimed that the Dow Transports were now confirming a “buy signal” in the market,  I have to respectfully disagree.  Just because the overall market rallies for a few days it is not the start of a new short or medium term trend,  especially when the market was rallying from such a steep sell off.  In the August 16th edition of this blog,  I discussed what I would consider to be the level of a normal retracement in the Dow Jones Industrial Average following the recent sell off.  I continue to stand by my earlier post,  a typical retracement would see the Dow Jones Industrial Average rallying to somewhere between 11,381.63 and 12,043.22 on a closing basis.  With yesterday’s close of 11,559.95  the Dow has basically reached just passed the minimum level for standard retracement.  In my opinion,  until the Dow Jones Industrial Average closes above 12,043.22 we could see a turn back lower at any point in time with the real possibility of the Dow moving below its August lows.

I’ll be back tomorrow morning with more thoughts on the market.

www.sterlinginvestments.com

Market Commentary

Market Commentary – August 29th, 2011

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I’ve been traveling the last couple of weeks and apologize for not posting on a regular basis.

A Few Thought Before the Open:

Despite the move higher last week,  the overall market looks to be consolidating at these levels and more or less tracking sideways.  The Dow Jones Industrial Average is a good example of this.  The Dow closed Friday at 11,284.54  With the way individual stocks and market averages tend to fluctuate,  a 9-day moving average is generally considered to be somewhat “neutral” in terms of a directional indicator.  Market technicians tend to like to plot out “envelop channels” from the 9-day moving average,  which are basically an attempt to determine if movements above or below the 9-day moving average are out of line and a sign of being over bought or sold.

My models are showing that the fluctuations in the Dow are basically within the normal fluctuations around the 9-day moving average.  What this is telling me is that as of right now, there is no clear indication that the market is set to rally back up to its previous highs, or anything close to them.  Additionally there is no clear indication that the market is going to fall off a cliff again either.

As of right now,  I am looking for a consolidation at these levels.

I’ll be back with more after the close.

www.sterlinginvestments.com

Market Commentary

Market Commentary – August 19th, 2011

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A Few Thoughts Following the Close:

The overall market again moved lower Friday in a broad based selloff that saw every index I track move lower on the day.  The Dow Jones Industrial Average closed down approximately 173 points at 10,817.65  This places the Dow Jones down approximately 1.5% year-to-date,  and the S&P 500 which finished the day at 1,192.76 is down over 5% year-to-date.  I continue to expect the Dow to settle into a trading range somewhere between 10,600 on the high side and 9,600 on the low side.

Corn was higher by $0.12 to $7.11 per bushel as concerns over the high heat in Iowa pushed down yield estimates.  Wheat was higher by $0.23 to $7.30 per bushel. Oil was lower by $0.10 to $82.41 per barrel, and Gold was higher by $30.20 to $1,850.10 per ounce.

A Few Thoughts Before the Open:

The overall market sold off sharply yesterday.  The sell-off is obviously the result of expectations of a double dip recession.  If this continues for much longer, then it runs the possibility of becoming a self-fulfilling prophecy.

In looking at the chart on the Dow Jones Industrial Average, I see a real strong possibility that the Dow could easily, and probably will drop into a trading range between approximately 10,600 and 10,000 with a chance the lower end of the trading range may be around 9,600.  I would also like to add a note of concern,  if we drop below 9,600 then we could be in for a pretty hard drop from there down to the 8,000 level. Let’s hope that doesn’t happen.

The other thing to worry about is that the decline in the market causes people to pullback on their economic activity and we fall into a second recession that is worst than the last one.  Then we really be in for a “Great Recession” to rival the Great Depression.

In looking at the various indices I track, I have the following comments.

Dow Jones Industrial Average:  The Dow Jones Industrials closed at 10,990.58  The Dow Jones Industrial Average appears to have resumed its move back lower. I am seeing upside resistance on the Dow Jones Industrial Average at 11,006.22 and downside support at 10,698.75 and then at 10,415.54 on a closing basis.

S&P 500 ‘SPX’:  The S&P 500 closed at 1,140.65 I see upside resistance on the S&P 500 at 1,225.85 and downside support at 1,127.79 on a closing basis.

NASDAQ 100 Index ‘NDX’:  The NASDAQ 100 closed at 2,073.03  I continue to see downside support on the NDX at 1,975.33  However,  upside resistance is somewhat in flux as the market recovers from an extreme sell off earlier this month.

The Dow Jones Transportation Average:  The Dow Transports closed at 4,299.55  I see upside resistance on the Dow Transports at 4,320.05 and downside support level  at 4,277.44 on a closing basis.

www.sterlinginvestments.com

Market Commentary

Market Commentary – August 18th, 2011

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A Few Comments Before the Open:

Early morning pre-open futures are indicating an almost 200 point drop in the Dow Jones Industrial Average.  While this is obviously a big move,  I would like to point out that a 200 point move lower on the Dow Jones Industrial Average will take the Dow down to its 9 day moving average, which is at 11,213 This is not a cause of panic.

I think the Dow would need to close below 11,006 before there is an indication that we have started moving lower again.  So I wouldn’t panic over this morning’s futures.

In looking at the various indices I track, I have the following comments.

Dow Jones Industrial Average:  The Dow Jones Industrials closed at 11,410.21  The Dow has basically rallied to the upper end of its trading channels.  I feel that our downside support level remain at 11,006.22 on a closing basis, and the new upside resistance level, while somewhat in flux remains around the 11,444 level on a closing basis.  Hopefully this will clarify itself in the next few trading sessions.

S&P 500 ‘SPX’:  The S&P 500 closed at 1,193.89 I see upside resistance on the S&P 500 at 1,225.85 and downside support at 1,127.79 on a closing basis.

NASDAQ 100 Index ‘NDX’:  The NASDAQ 100 closed at 2,181.62  I continue to see downside support on the NDX at 2,100  However,  upside resistance is somewhat in flux as the market recovers from an extreme sell off earlier this month.

The Dow Jones Transportation Average:  The Dow Transports closed at 4,577.18  I see upside resistance on the Dow Transports at 4,749.99 and downside support level  at 4,320.05 on a closing basis.

M.S. Commodities Related Equity Index ‘CRX’:  The ‘CRX’ closed at 900.35.  I see upside resistance on the ‘CRX’ at 924.89 and downside support at 847.10

KBW Banking Index ‘BKW:  The ‘BKW’ closed at 38.74.  I see upside resistance on the ‘BKW’ at 41.42 and downside support at approximately 36.33 on a closing basis.

S&P Banking Index ‘BIX’:  The ‘BIX’ closed 115.79.  I see upside resistance on the ‘BIX’ at 117.52 and downside support at 100.96 on a closing basis.

Amex Broker/Dealer Index ‘XBD’:  The ‘XBD’ closed at 91.29  I see upside resistance at 92.97 and downside support at 80.87 on a closing basis.

S&P Insurance Index ‘IUX’:  The ‘IUX’ closed at 163.57  I see upside resistance on the ‘IUX’ at 175.13 and downside support at 143.80 on a closing basis.

Amex Gold & Silver Index:  The Amex Gold & Silver Index ‘XAU’ closed at 212.52     I see upside resistance on the ‘XAU’ at 220.36 and downside support at 208.78

Amex Oil & Gas Index:  The Amex Oil & Gas Index ‘XOI’ closed at 1,155.31  I currently see upside resistance on the ‘XOI’ at 1,228.18 on a closing basis.  I am expecting the ‘XOI’ to continue to move lower and test 1,141.92 on a closing basis.

M.S. Cyclicals Index:  The M.S. Cyclicals Index ‘CYC’ closed yesterday at 876.88  I currently see upside resistance on the ‘CYC’ at 913.44 and downside support at 868.97  on a closing basis.

M.S. Consumer Index:  The M.S. Consumer Index ‘CMR’ closed at 700.34  I currently see upside resistance on the ‘CMR’ at 710.94 and downside support at 691.44 on a closing basis.

www.sterlingivnestments.com