Market Commentary

Market Commentary – July 21st, 2011

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The overall market finished Wednesday slightly lower.  Oil was higher by $0.54 to $98.40 per barrel, and Gold was lower by $4.20 to $1,596.90 per ounce.

A Few Thoughts Before the Open:

  1. In looking at the charts of the heavy volume stocks from yesterday’s trading I noticed that very few have a clear trend patterns of either to the upside or downside.  Of those that do,  the majority still have negative chart patterns.   This is not really a positive sign with respects to a market rally.
  2. Based upon the news reports I am seeing it doesn’t look like the Greek crisis is resolved.
  3. The Debt Ceiling plan proposed by the Gang of Six may not be the solution it is initially thought to be.  It looks like the plan is skimpy on details;  but what it looks like it is lacking in budget cuts and heavy on taxes.

I just don’t see any reason for the market to rally today.  I am looking for the market to move lower; and as a result I am looking for a stock to short and sell puts against the position.

www.sterlinginvestments.com

Market Commentary

Market Commentary – July 20th, 2011

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The overall market finished yesterday sharply higher in the strongest move of the year.  Essentially ever index I track, with the exception of the gold indices,  moved higher on the day.  Oil was higher by $1.61 to $96.25 per barrel, and Gold was lower by $1.30 to $1,601.10 per ounce.

A Couple of Thoughts Before the Open:

In looking at the charts of the various indices I track;  despite yesterday’s impressive market rally,  only the Amex Natural Gas Index ‘XNG’ and the Amex Computer Index ‘XCI’ appear to have broken their downward trends.  The rest of the indices need at least 1 more day of upward movement to break their downward trends.

Oil related stocks look good,  which should come as no surprise as oil is approaching $100 per barrel.

Despite yesterday’s strong move upwards,  there is a surprisingly small number of stocks that show any form of an upward trend on their charts.  Remember,  1 day does not make a trend.  I am not convinced yet we have started a new move higher in the market.

www.sterlinginvestments.com

Market Commentary

Market Commentary – July 19th, 2011

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The Dow Jones Industrial Average closed lower yesterday at 12,385.16 Oil was lower by $1.35 to $96.25 per barrel, and Gold was higher by $12.30 to $1,602.40 per ounce.

A Thought Before the Open: 

In looking at the charts from yesterday’s trading activity I have the following thoughts.

  1. Despite the pre-market futures being higher this morning,  with the exception of the gold indices,  the chart patterns on every index I track are looking negative with several indices breaking below their 40 day moving averages.
  2. The very vast majority of the high volume stocks have negative chart patterns,  however some positive earnings announcements could change that.
  3. The KBW Banking Index ‘BKX’ closed yesterday at 45.63  In the process it closed below support set in early June and also set a new 2011 closing low.  My thoughts are that we could see another approximately 10% decline to support at roughly 41.70
  4. The S&P 500 ‘SPX’ closed at 1,305.44 and below its 40 day moving average.  This is a bearish sign.  I am expecting the S&P 500 ‘SPX’ to continue to move lower and test 1,265.42 on a closing basis.
  5. The Amex Pharmaceuticals Index ‘DRG’ closed at 327.92, below its 40 Day moving average.  This is bearish trading signal.
  6. The S&P Healthcare Index ‘HCX’ closed at 403.88, below its 40 day moving average.  This is a bearish trading signal.  I see support coming in at 401.01.  If the ‘HCX’ breaks below that level, then I think we could see a pullback down to 391.31
  7. The N.A. Telecom Index ‘XTC’ closed at 892.08,  below its 200 day moving average.  This is a bearish signal.  I see downside support coming in at 871.74
  8. The Morgan Stanley Cyclical Index ‘CYC’ closed at 1,054.76,  below its 40 day moving average.  This is a bearish signal.  I see downside support coming in at 1,008.27

 

 

Market Commentary

Market Commentary – July 18th, 2011

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A Few Thoughts Before the Open:

  1. The Dow Jones Industrial Average closed Friday at 12,479.73  Despite Friday’s move higher, the chart continues to show weakness.  I think it is possible we could see it test its 40 day moving average,  currently at 12,350.52 within the next few days.  Absent a concrete deal on the debt ceiling within the next few days,  I continue to think the Dow Jones Industrial Average will test 11,934.58
  2. Last Friday was options’ expiration.  It is not uncommon to see a brief, temporary trend reversal on options expiration day as traders unwind their positions.
  3. The S&P Banking Index ‘BIX, and the KBW Banking Index ‘BKX’ both look weak and on the verge of setting new yearly lows.
  4. The Dow Jones Transportation Index closed Friday at 5,342.54,  basically on its 40 day moving average.  I am seeing continued weakness and expect it to test 5,060.59
  5. The Morgan Stanley Healthcare Providers Index ‘RXP’, the S&P Healthcare Index ‘HCX’, and the Amex Pharmaceuticals Index ‘DRG’ all basically closed on their 40 day moving average.  I consider this to be a sign of weakness.
  6. All the various technology sector indices are showing weakness.

I am going to be looking for stocks showing weakness to short and write puts against.

Market Commentary

Market Commentary – July 15th, 2011

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A Couple of Thoughts Ahead of the Open:

Today is options expiration day.

Our charting service has been down for the last 2 days and just came up. So a quick look at the various sector indices before the open.

  1. The Dow Industrial Average looks to be moving lower.
  2. The Banking indices are under pressure.
  3. The Dow Transports closed yesterday at 5,349.86 on its 40 day moving average.  The index is showing continued weakness and could test 5,060.59 on a closing basis.
  4. The NASDAQ 100 Index ‘NDX’ hit is 40 day moving average yesterday.  This may provide support, but I doubt it.
  5. The S&P 500 ‘SPX’ closed at 1,308.87 yesterday.  This is below its 40-day moving aver.  I think there is a good chance the ‘SPX’ could move lower and test 1,265.42 on a closing basis.
  6. The Amex Broker/Dealer Index ‘XBD’ closed at 102.90 yesterday, setting a new 9-month low yesterday and looks to continue to move lower.
  7. The S&P Insurance Index ‘IUX’ looks to be under pressure.
  8. Keep an eye on the Philadelphia Semiconductor Index ‘SOX’  It could break support today.
  9. The high tech indices are under pressure.

Overall,  the broad market looks to be continuing to move lower.