Market Commentary

Sterling Market Commentary for Wednesday November 7th, 2012

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Sterling Market Commentary for Wednesday November 7th, 2012

A Look at Tuesday’s Market:  The overall market moved sharply higher Tuesday in a very broad based move that saw virtually every sector index I track move higher with the exception of the Utilities.  During the day, the financial news outlets were attributing the move higher as a sign that Barack Obama was going to be re-elected as President of the United States. I think the utilities are under pressure for several reasons, the 1st being the damage that was sustained in the northeast from Hurricane Sandy and the political fallout that could occur in New York as Governor Cuomo has made statements about the utilities loosing their monopoly status.  The 2nd reason being that if Mitt Romney would have won the election, then Ben Bernanke would have been most likely out of a job and that would have almost certainly guaranteed a rise in interest rates.  Rising interest rates are normally bad for utility stocks which have a large portion of their valuation based upon dividend yield.  The 3rd item I see weighing on the Utilities is that the re-election of Barrack Obama will give the Environmental Protection Agency (EPA) the green light to implement all the new regulations that they were holding off on until after the elections.  Basically it looks like the utilities were in a loose – loose situation this election year.

In the commodities markets, Oil was higher by $3.06 to $88.71 per barrel, and Gold was higher by $31.80 to $1,715.00 per ounce. In the grain markets,  Wheat was higher by $0.110 to $8.770 per bushel, and Corn was higher by $0.054 to $7.410 per bushel, while Soybeans were higher by $0.122 to $15.154 per bushel.  Loose money and a weak dollar almost always leads to more inflation; and those two policies are a hallmark of the Obama administration.  I think the commodities markets were reacting to the prospects of Obama winning re-election yesterday.

A Few Thoughts on Wednesday’s Market:  I think it is too early to say that the direction of yesterday’s market is a new trend.  In looking a the charts from yesterday’s trading activity, I think there is a good chance that the market may be starting to put in a bottom or find some support.  However, as I write this blog this morning, the pre-market futures are sharply lower.  If we give up yesterday’s gains, and move lower over the course of the next several days, then I do not see any support being formed at these levels and I think we could look for a continued move towards our stated support targets.  I personally think it will take a couple of days or even a few weeks to sort out the election results.

The Dow Jones Industrial Average: The Dow Jones Industrial Average closed at 13,245.68  I see upside resistance level on the Dow Jones Industrial Average at 13,275.20 on a closing basis.  I now see downside support coming in at 13,000.71 and then at 12,943.82 on a closing basis.  I should point out that the support level at the 12,943.82 level is basically a “double bottom” on the charts and breaking through this level would be significant.  Current Expectations:  I think we are starting a new trend lower in the Dow.  I am expecting the Dow Jones Industrial Average to continue to move lower and test 13,000.71 and then 12,943.82 on a closing basis.

Dow Jones Transportation Average:  The Dow Jones Transportation Average closed at 5,203.64  I see upside resistance on the the Dow Transportation Average at 5,215.97 and downside support at 4,873.76  and then at 4,795.28.  Current Expectations:  I think the Dow Transports are going to track sideways between support and resistance for the foreseeable future.

NASDAQ 100 Index ‘NDX’:  The NDX closed yesterday at 2,681.05  I see upside resistance on the NDX currently at 2,687.52 and downside support at 2,647.47 and then at 2,623.33 on a closing basis.  Current Expectations:  I think the NDX is going to continue to move lower and test 2,647.47 and then 2,623.33 on a closing basis.

The Bottom Line:  I think the market will continue to move lower for the next few trading sessions.

www.sterlinginvestments.com

Market Commentary

Sterling Market Commentary for Tuesday November 6th, 2012

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Sterling Market Commentary for Tuesday November 6th, 2012

A Look at Monday’s Market:  The overall market moved slightly higher yesterday in a broad based move that saw the majority of the indices I track move higher on the day as well.  There was strength in the Biotech, Oil Services, High Tech, Transports, Chemicals, Financials, Cyclicals, Commodities, and Retailers.  There was weakness in the Gold/Silver, Telecom, Pharmaceuticals, and Consumer indices.  There was strength in bonds as interest rates moved lower.

A Few Thoughts on Tuesday’s Market:  In looking at the charts from Monday’s trading activity I really did not see anything that had any significance.  It was pretty much a lackluster trading session as the market basically tracked sideways prior to the election.  My best estimates are that we are going to see the market continue to move sideways to lower until the results of the election are known.

I would like to take this opportunity to encourage everyone to vote today.  I believe that democracy works best when as many people as possible participate in the process.  I believe that participation is more than just voting;  I believe that participation in the process involves being informed on the issues and knowing the  position of the candidates on those issues, as well as their record of actions on those issues.  Please try to form your own opinions and draw your own conclusions; and ask yourself,  do you think the candidate you are considering voting for is actually capable of doing what they say they are going to do.

The Dow Jones Industrial Average: The Dow Jones Industrial Average closed at 13,112.44  I see upside resistance level on the Dow Jones Industrial Average at 13,275.20 on a closing basis.  I now see downside support coming in at 13,000.71 and then at 12,943.82 on a closing basis.  I should point out that the support level at the 12,943.82 level is basically a “double bottom” on the charts and breaking through this level would be significant.  Current Expectations:  I think we are starting a new trend lower in the Dow.  I am expecting the Dow Jones Industrial Average to continue to move lower and test 13,000.71 and then 12,943.82 on a closing basis.

Dow Jones Transportation Average:  The Dow Jones Transportation Average closed at 5,123.86  I see upside resistance on the the Dow Transportation Average at 5,215.97 and downside support at 4,873.76  and then at 4,795.28.  Current Expectations:  I think the Dow Transports are going to track sideways between support and resistance for the foreseeable future.

NASDAQ 100 Index ‘NDX’:  The NDX closed yesterday at 2,672.91  I see upside resistance on the NDX currently at 2,687.52 and downside support at 2,647.47 and then at 2,623.33 on a closing basis.  Current Expectations:  I think the NDX is going to continue to move lower and test 2,647.47 and then 2,623.33 on a closing basis.

The Bottom Line:  I think the market will continue to move lower for the next few trading sessions.

www.sterlinginvestments.com

Market Commentary

Sterling Market Commentary for Monday November 5th, 2012

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Sterling Market Commentary for Monday November 5th, 2012

A Look at Friday’s Market:  The overall market moved sharply lower on Friday in a broad based move that saw the majority of the sector indices I track move lower as well.  There was weakness in the Gold/Silver, High Tech, Commodities, Oil Services, Biotech, Natural Gas, Chemicals, Oil & Gas, Cyclicals, Transports, Consumer, Financials, Healthcare related indices.  There was strength in the retailers.  There was weakness in the bond market as interest rates moved higher.  In the commodities markets,  Oil was lower by $2.23 to $84.86 per barrel, and Gold was lower by $40.30 to $1,675.20 per ounce.  In the grain markets, Wheat was lower by $0.04 to $8.644 per bushel, and Corn was lower by $11.40 to $7.394 per bushel, while Soybeans were lower by $0.33 to $15.266 per bushel.

A Few Thoughts on Monday’s Market:  In looking at the charts from Friday’s market it is pretty clear that the vast majority of the various indices I follow are in a downward trend.  I think the market is going to drift lower until the results of tomorrow’s election are known.  Of note, the M.S. Commodities Index ‘CRX’ closed at 829.57 on Friday and in the process broke through downside support at 833.17  I have included a chart below for your review.  I am now seeing downside support on the ‘CRX’ at 819.20 and then at 798.04, the point from which it gapped higher on the open of trading on September 6th of this year.  I am expecting the ‘CRX’ to continue to move lower and test those trading levels over the course of the next couple of weeks.

M.S. Commodities Index ‘CRX’

The Dow Jones Industrial Average: The Dow Jones Industrial Average closed at 13,093.162   I see upside resistance level on the Dow Jones Industrial Average at 13,275.20 on a closing basis.  I now see downside support coming in at 13,000.71 and then at 12,943.82 on a closing basis.  I should point out that the support level at the 12,943.82 level is basically a “double bottom” on the charts and breaking through this level would be significant.  Current Expectations:  I think we are starting a new trend lower in the Dow.  I am expecting the Dow Jones Industrial Average to continue to move lower and test 13,000.71 and then 12,943.82 on a closing basis.

Dow Jones Transportation Average:  The Dow Jones Transportation Average closed at 5,110.17  I see upside resistance on the the Dow Transportation Average at 5,215.97 and downside support at 4,873.76  and then at 4,795.28.  Current Expectations:  I think the Dow Transports are going to track sideways between support and resistance for the foreseeable future.

NASDAQ 100 Index ‘NDX’:  The NDX closed yesterday at 2,656.25  I see upside resistance on the NDX currently at 2,687.52 and downside support at 2,647.47 and then at 2,623.33 on a closing basis.  Current Expectations:  I think the NDX is going to continue to move lower and test 2,647.47 and then 2,623.33 on a closing basis.

The Bottom Line:  I think the market will continue to move lower for the next few trading sessions.

www.sterlinginvestments.com

Market Commentary

Sterling Market Commentary for Friday November 2nd, 2012

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Sterling Market Commentary for Friday November 2nd, 2012

A Look at Thursday’s Market:  The overall market moved sharply higher Thursday in a broad based move that saw virtually every index I track move higher on the day as well, with the exception of the Utility sector. It is really common for the market to rally following a natural disaster.  The logic for this trade is that the stimulative effects of the government spending to repair the storm damage is going to be greater than the depressing economic effect resulting from the storm damage. I do not really agree with this logic,  but it is the standard market reaction to these storms, particularly when there hasn’t been one in a while.  In the commodities markets, Oil was higher by $0.85 to $87.09 per barrel, and Gold was lower by $3.60 to $1,715.50 per ounce.  In the grain markets, Wheat was higher by $0.040 to $8.684 per bushel, while Corn was lower by $0.046 to $7.510 per bushel, and Soybeans were higher by $0.112 to $15.600 per bushel.

A Few Thoughts on Friday’s Market:  In looking at the charts from Thursday’s market I noticed that pretty much everything went up by a similar amount. My thoughts are that basically the short sellers took the remainder of the week off.  While we could see near normal trading volume today, my estimate is that it will be sometime next week before the market returns to normalized trading.  I know a little bit about these sort office disruptions.  I was trading in the Atlanta office of Momentum Securities in the summer of 2009 when Mark Barton came into the office on a Thursday afternoon and opened fire, killing four (4) of my friends before he went across the street to AllTrade and shot 16 more people.  The office remained closed for about a month before it reopened.  During that period of time some people took an extended vacation, others traded remotely, and still some others moved to other firms.  While not exactly the same,  I think you will see a lot of people taking some extended time off, whether by choice of necessity, some working remotely, some returning to the office, and unfortunately a few firms may be down for a while.  I think the real excitement in the market will begin sometime after next Wednesday when the election results begin to roll in.

The Dow Jones Industrial Average: The Dow Jones Industrial Average closed at 13,232.62   I see upside resistance level on the Dow Jones Industrial Average at 13,275.20 on a closing basis.  I now see downside support coming in at 13,000.71 and then at 12,943.82 on a closing basis.  I should point out that the support level at the 12,943.82 level is basically a “double bottom” on the charts and breaking through this level would be significant.  Current Expectations:  I think we are starting a new trend lower in the Dow.  I am expecting the Dow Jones Industrial Average to continue to move lower and test 13,000.71 and then 12,943.82 on a closing basis.

Dow Jones Transportation Average:  The Dow Jones Transportation Average closed at 5,167.499  I see upside resistance on the the Dow Transportation Average at 5,215.97 and downside support at 4,873.76  and then at 4,795.28.  Current Expectations:  I think the Dow Transports are going to track sideways between support and resistance for the foreseeable future.

NASDAQ 100 Index ‘NDX’:  The NDX closed yesterday at 2,657.66  I see upside resistance on the NDX currently at 2,687.52 and downside support at 2,647.47 and then at 2,623.33 on a closing basis.  Current Expectations:  I think the NDX is going to continue to move lower and test 2,647.47 and then 2,623.33 on a closing basis.

The Bottom Line:  I think the market will continue to move lower for the next few trading sessions.

Market Commentary

Sterling Market Commentary for Thursday November 1st, 2012

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Sterling Market Commentary for Thursday November 1st, 2012

A Look at Wednesday’s Market:  The overall market moved moderately lower on the 1st day of trading following 2 days of market closure due to the storm damage caused by Hurricane Sandy, a Category 1 hurricane that struck the northeastern United Stateson Monday October 29th, 2012 .  Yesterday’s market was a rather lack luster session in which the main accomplishment was that the New York Stock Exchange was actually able to get people to the exchange so it could function.  The opening of yesterday’s market was very crucial and important due to the significance of the month end reporting.  It is not as easy as one might think to adjust the statement date at the end of the month for accounting purposes.  Having the market function, and allowing month end positions to be squared up, and statements be produced is of a far greater importance than most people realize; and the nation owes a collective thanks to all the people who make the exchange function.

A Few Thoughts on Thursday’s Market:  All things considered, I am again expecting another relatively lackluster market.  The damage to the financial district in New York City is very severe, and it is going to take a while for things to return to normal.  C0mbine this with the election next week,  we are probably looking at a sideways market between now and the week of so following the election.

The Dow Jones Industrial Average: The Dow Jones Industrial Average closed at 13,096.46   I see upside resistance level on the Dow Jones Industrial Average at 13,275.20 on a closing basis.  I now see downside support coming in at 13,000.71 and then at 12,943.82 on a closing basis.  I should point out that the support level at the 12,943.82 level is basically a “double bottom” on the charts and breaking through this level would be significant.  Current Expectations:  I think we are starting a new trend lower in the Dow.  I am expecting the Dow Jones Industrial Average to continue to move lower and test 13,000.71 and then 12,943.82 on a closing basis.

Dow Jones Transportation Average:  The Dow Jones Transportation Average closed at 5,087.29  I see upside resistance on the the Dow Transportation Average at 5,215.97 and downside support at 4,873.76  and then at 4,795.28.  Current Expectations:  I think the Dow Transports are going to track sideways between support and resistance for the foreseeable future.

NASDAQ 100 Index ‘NDX’:  The NDX closed yesterday at 2,657.66  I see upside resistance on the NDX currently at 2,719.21 and downside support at 2,647.47 and then at 2,623.33 on a closing basis.  Current Expectations:  I think the NDX is going to continue to move lower and test 2,647.47 and then 2,623.33 on a closing basis.

The Bottom Line:  I think the market will continue to move lower for the next few trading sessions.

Note:  We published an update report on Probe Manufacturing ‘PMFI’ this morning. Please feel free to check it out at: http://www.sterlinginvestments.com/research/pmfi/

Market Commentary

Sterling Market Commentary for Monday October 29th, 2012

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Sterling Market Commentary for Monday October 29th, 2012

A Look at Friday’s Market:  The overall market finished Friday mixed, with the Dow Jones Industrial Average and the NASDAQ 100 finishing slightly higher, while the S&P 500 finished the day slightly lower.  A majority of the various sector indices I track finished the day lower as well.  There was weakness in the Biotech, Banking, Airlines, Gold/Silver, Oil Services, Insurance, Commodities, Consumer, and Cyclical indices.  There was strength in the Retailers, Natural Gas, Chemicals, Telecom, Transports, and the Oil & Gas indices.  The High Tech indices were mixed.

In the commodities markets,  Oil was higher by $0.32 to $86.05 per barrel, and Gold was higher by $11.40 to $1,713.00 per ounce.  In the grain markets,  Wheat was lower by $0.112 to $8.726 per bushel, and Corn was lower by $0.124 to $7.420 per bushel, while Soybeans were lower by $0.064  to $15.640 per bushel.

A Few Thoughts on Monday’s Market:  In looking at the charts from Friday’s trading activity, it is very clear that most of the chart patterns are bearish and continue to indicate a further pullback in the overall market.  Additionally I noticed that the Amex Disk Drive Index ‘DDX’ hit a multi-year closing low on Friday.  I’ve inserted a chart on the ‘DDX’ below for your review.  I think that their is a good possibility that the ‘DDX’ will continue to move lower test its long term support levels in the mid 40’s range.  As for the overall market, we have significant economic data to be released this week, including personal consumption and spending as well as the unemployment rate later this week.  I am not looking for any upside surprises in the numbers, and I am expecting surprises to the downside if anything.  I think the over all market is going to continue to drift lower throughout the week.

Chart of the NYSE Arca Disk Drive Index 'DDX'

The NYSE Arca Disk Drive Index ‘DDX’

The Dow Jones Industrial Average: The Dow Jones Industrial Average closed at 13,107.21   I see upside resistance level on the Dow Jones Industrial Average at 13,275.20 on a closing basis.  I now see downside support coming in at 13,000.71 and then at 12,943.82 on a closing basis.  I should point out that the support level at the 12,943.82 level is basically a “double bottom” on the charts and breaking through this level would be significant.  Current Expectations:  I think we are starting a new trend lower in the Dow.  I am expecting the Dow Jones Industrial Average to continue to move lower and test 13,000.71 and then 12,943.82 on a closing basis.

Dow Jones Transportation Average:  The Dow Jones Transportation Average closed at 5,052.35  I see upside resistance on the the Dow Transportation Average at 5,215.97 and downside support at 4,873.76  and then at 4,795.28.  Current Expectations:  I think the Dow Transports are going to track sideways between support and resistance for the foreseeable future.

NASDAQ 100 Index ‘NDX’:  The NDX closed yesterday at 2,663.89  I see upside resistance on the NDX currently at 2,719.21 and downside support at 2,647.47 and then at 2,623.33 on a closing basis.  Current Expectations:  I think the NDX is going to continue to move lower and test 2,647.47 and then 2,623.33 on a closing basis.

The Bottom Line:  I think the market will continue to move lower for the next few trading sessions.

www.sterlinginvestments.com