Market Commentary

Market Commentary – August 17th, 2011

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A Few Thoughts Before the Open:

The overall market moved moderately lower yesterday in a relatively broad based move that saw the majority of the indices I track move lower on the day.  In reviewing the charts from yesterday’s trading activity, it looks like the market is basically settling into a new trading range at the current levels. Oil was lower yesterday by $1.29 to $86.85 per barrel, and Gold was higher by $27.00 to $1,783.40 per ounce.  Wheat was higher by $0.122 to $7.246 per bushel, and corn was higher by $0.066 to $7.140 per bushel.

It should be noted that this week is options expiration week.  I am somewhat expecting a brief rally at the end of the week as traders unwind their positions.

Additionally it should be noted that we have Producer Price Information ‘PPI’ Information being released today and Consumer Price Information ‘CPI’ being released on Thursday.  This along with the unemployment numbers has the potential to move the market this week.

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

Dow Jones Industrial Average:  The Dow Jones Industrials closed at 11,405.93  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 1,192.76 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 2,194.27  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 4,593.53  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 894.07.  I see upside resistance on the ‘CRX’ at 924.89 and downside support at 847.10

KBW Banking Index ‘BKW:  The ‘BKW’ closed at 38.45.  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 114.56.  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 92.23  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 164.98  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 210.28     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 1,148.78  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 884.38  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 699.59  I currently see upside resistance on the ‘CMR’ at 710.94 and downside support at 691.44 on a closing basis.

www.sterlingivnestments.com

 

Market Commentary

Market Commentary – August 16th, 2011

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A Few Thoughts Before the Open:

As I write this,  pre-market futures are sharply lower in the U.S. due to news form Europe that economic growth is slowing on that side of the Atlantic.  Not sure where the futures will be in a couple of hours.  I would like to point out that we are basically in the midst of retracement a/k/a bounce from the market’s spike downward.

Prior to market’s sell off the Dow Jones Industrial Average closed at 12,724.41 and reached a low of 10,719.94 for a decline of 2,004.97  A typical retracement is from 1/3 to 2/3rds of the move being retraced.  In this case it would be between a 661.64 and 1,323.28 point move back higher.  From our low of 10,719.94 on the Dow,  this would put the retracement move on the Dow to somewhere between 11,381.63 and 12,043.22 on a closing basis.

Basically as of right now I think we are just in the midst of a standard retracement move, and until the Dow closes above 12,043.22 I think we could turn back lower at any point.

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

Dow Jones Industrial Average:  The Dow Jones Industrials closed at 11,482.90  The Dow has basically rallied to the upper end of its trading channels.  I realize that the Dow closed above upside resistance at 11,444.08  However, if the market pulls back today as early futures are indicating,  then 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 1,204.49 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 2,21412  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 4,684.44  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 907.87.  I see upside resistance on the ‘CRX’ at 924.89 and downside support at 847.10

KBW Banking Index ‘BKW:  The ‘BKW’ closed at 39.30.  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 116.87.  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 92.23  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 164.98  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 212.43    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 1,169.65  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 899.37  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 700.15  I currently see upside resistance on the ‘CMR’ at 710.94 and downside support at 691.44 on a closing basis.

Market Commentary

Market Commentary – August 15th, 2011

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A Few Thoughts After the Close: 

The overall market moved sharply higher yesterday in a relatively broad based move that saw basically every sector index I track move higher on the day.  The strongest sectors were the N.A. Telecom,  Banking,  Airlines, Biotech, Oil Services,  Oil & Gas, and Utilities.  Oil was higher by $2.50 to $87.88 per barrel, and Gold was higher by $15.40 to $1,756.40 per ounce.  Wheat was higher by $0.10 to $7.12 per bushel, and Corn was higher by $.054 to $7.072 per bushel.

I’ll be back in the morning with a few thoughts on the market from a technical perspective.

A Few Thoughts Before the Open:

Last week was probably one of the wildest rides in the history of the market.  While it might be tempting to think the after 2 solid days of upward movement that the downward pressure on the market is gone,  I would like to offer a few thoughts and words of caution.

In Technical Analysis, the study of charts, certain indicators have very significant importance.  One of these is the 9-Day moving average of a stock price.  For the lack of better description,  the 9-Day moving average is somewhat of a neutral point from which the price of the stock doesn’t want to get to far away from.  To further aid in the analysis of a stock’s price relationship to its 9-Day moving average, market technicians will plot the standard deviations from the 9-Day moving average.  What is important about this is that this is used to determine an over-bought and an over-sold condition of a stock or index.

I mention this because despite the market’s strong rally at the end of last week,  the major market indices and most of the sector indices I track only really managed to rally back close to their 9-Day moving average.  In other words,  the rally last week in the market only really helped the market recover from a severely oversold condition; and is not signaling the start of a move higher.  This isn’t to say a rally higher might not occur,  I am just saying it is not baked into the cake yet.

In looking at the charts from last week’s activity on the individual stocks it is very clear that a significant amount of technical damage has been done to the market.  I think the market landed in a form of no-man’s land.  I think it could take 1 to 2 weeks for the market to get a clear indication as to the direction it wants go from here.  My expectations are for it to track sideways for a while and then make a break to either the up or downside.

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

Dow Jones Industrial Average:  The Dow Jones Industrials closed at 11,269.02  I continue to see upside resistance on the Dow at 11,444.08 and downside support at 11,006.22 on a closing basis.

S&P 500 ‘SPX’:  The S&P 500 closed at 1,178.81 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 2,182.05  I see upside resistance on the NDX at 2,192.96 and downside support at 2,100 on a closing basis.

The Dow Jones Transportation Average:  The Dow Transports closed at 4,622.58  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 882.30.  I see upside resistance on the ‘CRX’ at 924.89 and downside support at 847.10

KBW Banking Index ‘BKW:  The ‘BKW’ closed at 19.99.  I see upside resistance on the ‘BKW’ at 34.28 and downside support at approximately 6.74 (a level not seen since 1989) on a closing basis.

S&P Banking Index ‘BIX’:  The ‘BIX’ closed 112.62.  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 89.73  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 161.12  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 206.55  Despite record high prices in the price of Gold, the ‘XAU’ is actually down 12.65% year to date.  I see upside resistance on the ‘XAU’ at 208.78 and downside support at 189.48  Unfortunately as of right now I have no clear indication as to the direction of the ‘XAU’.  My thoughts are that we are going to need a few more trading days to see a clearer picture on the ‘XAU’.

Amex Oil & Gas Index:  The Amex Oil & Gas Index ‘XOI’ closed at 1,129.01  I currently see upside resistance on the ‘XOI’ at 1,141.92 on a closing basis.  I am expecting the ‘XOI’ to continue to move lower and test 1,093.89 on a closing basis.

M.S. Cyclicals Index:  The M.S. Cyclicals Index ‘CYC’ closed yesterday at 881.21  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 690.36  I currently see upside resistance on the ‘CMR’ at 691.44 and downside support at 649.86 on a closing basis.

www.sterlinginvestments.com

Market Commentary

Market Commentary – August 12th, 2011

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A Few Thoughts Before the Open:

Despite Thursday’s sharp rally,  the vast majority of the various indices I track still remain severely oversold.  I see two (2) possible solutions for this.  The 1st being that the market rallies upwards,  which at this point means about a 300 point move higher on the Dow; or the market tracks sideways and the various short-term moving averages catch up with the current pricing.

I am not sure which will exactly happen. However, I do feel confident we are not going to see a move back about 12,000 on the Dow Jones Industrial Average anytime soon.

From a trading perspective,  I am going to sit the day out and hopefully we will see a decline in the sharpness of the market’s moves and a return to more normalized market movement.

Market Commentary

Market Commentary – August 11th, 2011

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A Few More Thoughts Before the Open:

I’ve got a few more minutes in the office this  morning and wanted to update the support and resistance points on a couple of the sector indices I have talked about recently.

M.S. Commodities Related Equity Index ‘CRX’:  The ‘CRX’ closed at 845.16.  I see upside resistance on the ‘CRX’ at 847.10 and downside support at 814.77.

KBW Banking Index ‘BKW:  The ‘BKW’ closed at 19.46.  I see upside resistance on the ‘BKW’ at 34.28 and downside support at approximately 6.74 (a level not seen since 1989) on a closing basis.

S&P Banking Index ‘BIX’:  The ‘BIX’ closed 108.25.  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 84.97  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 152.72  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 205.54  Despite record high prices in the price of Gold, the ‘XAU’ is actually down 12.65% year to date.  I see upside resistance on the ‘XAU’ at 208.78 and downside support at 189.48  Unfortunately as of right now I have no clear indication as to the direction of the ‘XAU’.  My thoughts are that we are going to need a few more trading days to see a clearer picture on the ‘XAU’.

Amex Oil & Gas Index:  The Amex Oil & Gas Index ‘XOI’ closed at 1,062.76  I currently see upside resistance on the ‘XOI’ at 1,093.86 on a closing basis.  I am expecting the ‘XOI’ to continue to move lower and test 1,029.20 on a closing basis.

M.S. Cyclicals Index:  The M.S. Cyclicals Index ‘CYC’ closed yesterday at 830.08  I currently see upside resistance on the ‘CYC’ at 868.97 and downside support at 792.28  on a closing basis.

M.S. Consumer Index:  The M.S. Consumer Index ‘CMR’ closed at 657.87  I currently see upside resistance on the ‘CMR’ at 691.44 and downside support at 649.86 on a closing basis.

A Few Thoughts Before the Open:

The overall market sold off sharply yesterday in a broad based move that saw every sector index I track move lower on the day.  Despite the 519 point drop by the Dow Jones Industrial Average it was not the worst performing index on the day.  The worst performing sectors were actually the Financials and the Healthcare indices.  It should be no surprise that both of these sectors were the subject of massive new regulations during the 1st two (2) years of the Obama presidency. Regulation matters.  I’ve often said that bull markets were the result of either new technology or deregulation.  Well the opposite side of that coin is also true;  too much regulation can lead to bear markets.

Oil was higher by $3.59 to $82.89 per barrel, and Gold was higher by $41.30 to $1,782.70  per ounce.  Corn was lower by $0.20 to $6.78 per bushel, and Wheat was higher by $0.1320 to $6.85 per bushel.  Corn and wheat can be very sensitive to volatile information such as the weather.  However I think all four (4) of these commodities are somewhat of an indicator of future economic growth and inflation.  My thoughts are that Gold and Oil are going to be key indicators about the future direction of our economy.  I think Oil is going to be an indicator for economic growth and Gold an indicator for inflation.  The price of Gold is clearly signaling rising inflation.  If Oil continues to drop in price, then that is a sign of a stagnating economy.

With yesterday’s selloff and new closing low on the Dow,  I thought I should again take a look at the technical support and resistance levels on the charts.

Dow Jones Industrial Average:  The Dow Jones Industrials closed at 10,719.94  I continue to see upside resistance on the Dow at 11,006.22 and downside support at 10,698.75 and then 10,415.54 on a closing basis.

S&P 500 ‘SPX’:  The S&P 500 closed at 1,120.76 I see upside resistance on the S&P 500 at 1,127.79 and downside support at 1,115.01 and then 1,096.48 on a closing basis.

NASDAQ 100 Index ‘NDX’:  The NASDAQ 100 closed at 2,073.09  I see upside resistance on the NDX at 2,100 and downside support at 1,975.33 on a closing basis.

The Dow Jones Transportation Average:  The Dow Transports closed at 4,377.14  I see upside resistance on the Dow Transports at 4,320.05.  If that level of downside support fails, then the next downside support level is at 4,277.44 on a closing basis.

www.sterlinginvestments.com

Market Commentary

Market Commentary – August 10th, 2011

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A Few Thoughts Before the Open:

Despite yesterday’s late market surge,  the major market indices are still in an oversold position.  I think we are in a position where we will continue to see several hundred point moves in the Dow on a daily basis.

While it may be tempting to think the market will quickly recover following a 400+ point gain in the Dow,  my thoughts are that we will not see the Dow move back to the 12,000 level anytime soon.  I would be fairly surprised to see the Dow trade significantly above its 200 day moving average which is currently around 11,500.  My expectations are we may see a few more days of gains before the Dow moves back to toward the mid 10,000 level.