Market Commentary

Sterling Market Commentary for Friday October 26th, 2012

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Sterling Market Commentary for Friday October 26th, 2012

A Look at Thursday’s Market: The overall market finished Thursday slightly higher after an early morning rally faded and the Dow Jones Industrial Average traded around the break even mark for most of the day. Overall, the majority of the indices I track finished the day higher.  The strongest sectors were Gold/Silver, Broker/Dealer, Natural Gas, Transports, Oil & Gas, Banking, Commodities, Healthcare related, and Consumer sectors.  There was weakness in the Airlines , Retailers, Chemicals, Telecoms, and Cyclicals.  The High Tech sectors were mixed; and there was weakness in bonds as interest rates moved higher on the day.  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 Friday’s Market:  In looking at the charts from yesterday’s market it is clear that the overall market is in the process of moving lower.  However there are still a few sectors that have not yet started to participate in the current move lower.  However, barring a major upside surprise in the 3rd quarter advance GDP numbers this morning, we are looking at a sharply lower open today due to the disappointing earnings results from Apple, Inc. ‘AAPL’ and Amazon.com, Inc. ‘AMZN’.  My thoughts are that this will result in turning lower the charts of those indices that have held up the best so far during this market pullback.  If this happens we could see a full fledged move lower by the entire market.  It should also be noted that there is a good chance that another move lower today will cause the NASDAQ 100 ‘NDX’ to break its 200 day moving average.  If that happens, I see it as a sign that the market will not be returning to its earlier highs any time soon.  I have inserted a chart of the NASDAQ 100 below for your review.

NASDAQ 100 Index 'NDX' October 25th, 2012

NASDAQ 100 Index ‘NDX’

The Dow Jones Industrial Average: The Dow Jones Industrial Average closed at 13,077.95   With the recent downturn in the Dow Jones Industrial Average I am now lowering my 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 5,004.53  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.

www.sterlinginvestments.com

Market Commentary

Sterling Market Commentary for Thursday October 25th, 2012

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Sterling Market Commentary for Thursday October 25th, 2012

A Look at Wednesday’s Market:  The overall market moved moderately lower in a broad based move that saw the majority of the various sector indices I track move lower as well.  There was weakness in the High Tech,  Transports, Gold/Silver, Oil Services, Commodities, Natural Gas, Biotech, Banking, Consumer, Insurance, and Airlines indices.  There was strength in the Telecom and Chemicals.  The Healthcare related indices were mixed.  There was strength in bonds as interest rates moved lower.  In the commodities markets,  Oil was lower by $0.94 to $85.73 per barrel, and Gold was lower by $7.80 to $1,701.60 per ounce.  In the grain market, Wheat was higher by $0.152 to $8.840 per bushel, and Corn was lower by $0.014 to $7.544 per bushel, while Soybeans were higher by $0.172 to $15.704 per bushel.

A Few Thoughts on Thursday’s Market:  In looking at the charts from yesterday’s trading activity, it was very clear that every index I follow is in a clear downward trend.  It looks like the overall market is clearly experiencing what is at least an intermediate term downward movement, that has the possibility of developing into something longer term in nature.  It was disappointing yesterday that there was not some sort of close higher by the major market indices that could have counted as a bounce following the Tuesday’s sharp move lower.  While the early, pre-market futures are to the upside as I write this, it is important to remember that we have initial and continuing jobless claims being released this morning as well as durable goods orders later in the morning.  Both of these economic numbers have the ability to change the direction of the market.  Additionally, and very importantly we have advance GDP results being released tomorrow (Friday).  I think that there is a very good chance that weakness in any one of these numbers will be seen as confirming that the U.S. economy is contracting and that there is risk of recession in 2013. This would send the market sharply lower from its present levels.

In Monday’s edition of the Sterling Market Commentary,  I wrote that the MS. Consumer Index ‘CMR’ was still in an upward trend, and that if it broke this upward trend this would be seen as a potential confirmation of consumer weakness and that the US economy was headed back into a recession.  Since then,  the ‘CMR’ has broken this upward trend. I have inserted the chart below for your review.  Yesterday, the ‘CMR’ closed at 830.52  In looking at the chart of the ‘CMR’, I think that there is a very good chance that it will continue to move lower and test 811.32 on a closing basis, and if it breaks support at that level then we could see it test 801.42 on a closing basis.  Furthermore, I think one could look at the chart of the ‘CMR’ and see it as an indication of the growing ineffectiveness of the Fed’s Quantitative Easing programs.

MS Consumer Index 'CMR' through October 24th, 2012

MS Consumer Index ‘CMR’

The Dow Jones Industrial Average: The Dow Jones Industrial Average closed at 13,077.95   With the recent downturn in the Dow Jones Industrial Average I am now lowering my 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 5,004.53  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.

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 Wednesday October 24th, 2012

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Sterling Market Commentary for Wednesday October 24th, 2012

A Look at Tuesday’s Market:  The overall market moved sharply lower in a very broad based move that saw every index I track move lower on the day with the exception of the Transportation and Semiconductors.  The weakest sectors on the day were the Chemicals, Gold/Silver, Oil & Gas, Commodities, Biotech, Oil Services, Banking, Industrials, Insurance, Healthcare related and the Consumer indices. In looking at the charts from Tuesday’s trading, one of the things that I noticed was that many of the various indices I track either hit their 40 day or 200 day moving averages.  While it is tempting to say that they found support at those levels, I think it is more appropriate in today’s world of computerized trading that the computers are pretty much all programed by a bunch of programers who all read the same book on technical analysis and stopped selling once they got close to those levels and started to cover their shorts so they could be flat at the end of the day.  However, negative news before the open and we could see the market easily blow through those levels.

In the commodities markets,  Oil was lower by $1.98 to $86.67 per barrel, and Gold was lower by $16.90 to $1,709.40 per ounce.  In the grain markets,  Wheat was lower by $0.094 to $8.686 per bushel, and Corn was lower by $0.052 to $7.560 per bushel, while Soybeans were higher by $0.066 to $15.532 per bushel.

A Few Thoughts Wednesday’s Market:  The Dow Jones Industrial Average closed yesterday at 13,102.53.  In doing so, it clearly broke a supporting trendline that started in early March of this year.  I have inserted a chart on the Dow Jones Industrial Average below for you to review.  I think we are starting a new short to intermediate term downward trend.  I believe that there is a very good possibility that we could see the Dow Jones Industrial Average continue to move lower and test its 200 day moving average at 12,908.33 on a closing basis.  I should also point out that today is a rather quite day for economic news and unless there is a major earnings miss, then it is reasonable to expect a bounce in the market today.  However, initial and continuing jobless claims are due to be released Thursday morning, and we could Thursday’s economic announcements could spark a move either way in the market.  My guess is if we see a rise in initial jobless claims,  then the market will probably head back lower.

Dow Jones Industrial Average - October 23, 2012

Dow Jones Industrial Average – Chart

The Dow Jones Industrial Average: The Dow Jones Industrial Average closed at 13,102.53   With the recent downturn in the Dow Jones Industrial Average I am now lowering my 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 5,087.63  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.

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 October 23rd, 2012

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Sterling Market Commentary for Tuesday October 23rd, 2012

A Look at Monday’s Market:  The major market indices finished Monday slightly higher on a day that saw the majority of the sector indices finish the day slightly lower.  There really were not any big movers on the day.  In reviewing the charts from Monday’s trading, it really looked like traders were squaring up their positions prior to last night’s Presidential Debate in case there were any surprises during the debate. I watched the entire debate. I really did not see any surprises other than a lack of a discussion on the Benghazi attacks.  Basically I did not see anything in the debate that I thought would move the markets on Tuesday.  In Monday’s commodities markets,  Oil was lower by $1.79 to $88.65 per barrel, and Gold was higher by $2.30 to $1,726.30 per ounce.  In the grain markets, Wheat was higher by $0.056 to $8.782 per bushel, and Soybeans were higher by $0.122 to $15.464 per bushel.  We were not able to retrieve any pricing info on Corn.

A Few Thoughts on Tuesday’s Market:  It is earnings season, and so far the net income and revenue numbers that have been reported are not promising and they show an economy that is showing signs of slowing.  In looking at the charts from yesterday’s market, I am still looking at a market that is under pressure.  My thoughts are that like any form of market manipulation it can only go on for so long before reality sets in, and that is what we may be seeing start to happen with the Fed’s Quantitative Easing programs.  They can only cover up a weak economy for so long.

The Dow Jones Industrial Average: The Dow Jones Industrial Average closed at 13,345.89   I am looking at upside resistance on the Dow Jones Industrial Average at 13,610.15 on a closing basis.  I now see downside support coming in at 13,273.32 and then  13,000.71 on a closing basis.  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 13,273.32 on a closing basis.

Dow Jones Transportation Average:  The Dow Jones Transportation Average closed at 5,064.48  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.

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 October 22nd, 2012

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Sterling Marketing Commentary for Monday October 22nd, 2012

A Look at Friday’s Market:  The overall market moved sharply lower on the 25th anniversary of the stock market crash of 1987.  It was a very broad based sell off that saw continuing technical damage done to the market.  Almost every single sector index I track is showing either weakness or a clear downward trend in place.  The Amex Gold/Silver ‘XAU’ hit its 40 day moving average.  The CBOE Technology Index ‘TXX’ closed on its 200 day moving average; and the Amex Computer Index ‘XCI’ closed below its 200 day moving average, as did the Amex Interactive Index ‘IIX’.  The Morgan Stanley Healthcare Products Index ‘RXP’ broke through its short term support level.  These are all negative trading signals.  In the commodities markets, Oil was lower by $2.09 to $90.44 per barrel, and Gold was lower by $20.70 to $1,724.00 per ounce.  In the grain markets,  Wheat was higher by $0.040 to $8.724 per bushel, and Corn was higher by $0.060 to $7.614 per bushel, while Soybeans were lower by $0.112 to $15.342 per bushel.

A Few Thoughts on Monday’s Market:  The overall market is showing considerable weakness, with the high tech sector in an outright bearish trading pattern.  A lot of the weakness in the high tech sector can be attributed to a pull back in the shares of Apple, Inc. ‘AAPL’.  However it is not just Apple that is causing the weakness in the high tech sector,  there is considerable weakness in the WinTel world,  those high tech companies that are focused products utilizing either Microsoft or Intel architecture.  I think that the stock market is signalling a pullback in the U.S. Economy.  I also think that this signal would be a lot louder and clearer if it was not for the Quantitative Easing programs of the Fed and their market manipulation effects. In looking at the charts from Friday’s activity I noticed that the M.S. Consumer Index ‘CMR’ had not yet broken its recent upward trendline.  I am keeping an eye on the ‘CMR’.  If we have another couple of down days and this index breaks its upward trendline,  then I see this as a potential confirmation that the U.S. Economy is headed back into a recession.

The Dow Jones Industrial Average: The Dow Jones Industrial Average closed at 13,343.51    I am looking at upside resistance on the Dow Jones Industrial Average at 13,610.15 on a closing basis.  I now see downside support coming in at 13,273.32 and then  13,000.71 on a closing basis.  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 13,273.32 on a closing basis.

Dow Jones Transportation Average:  The Dow Jones Transportation Average closed at 5,082.16.  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.

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 October 19th, 2012

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Sterling  Market Commentary for Friday October 19th, 2012

A Look at Thursday’s Market:  The overall market moved moderately lower in a relatively broad based move.  The big news of the day was Google’s financial publisher, who files its reports with the SEC and the distribution of its press releases, accidentally released its earnings during the filing process.  This resulted in the shares of Google ‘GOOG’ being halted from trading, and then opening sharply lower following their reopening for trading.  These so called “fat finger” mistakes are unfortunate.  They result from human error, and can be corrected by better controls and procedures. However I do not see this as something that the SEC needs to be involved in. This is just part of the market,  it is just one of those things that happens. The companies that have their shares publicly traded do not need more regulations that increase the cost and difficulty in complying with the already complicated process of being a public company.

In the commodities markets,  Oil was lower by $0.06 to $92.53 per barrel, and Gold was lower by $8.30 to $1,744.70 per ounce.  In the grain markets,  Wheat was higher by $0.122 t $8.684 per bushel, and Corn was higher by $0.152 to $7.606 per bushel, while Soybeans were higher by a whopping $0.362 to $15.454 per bushel.

A Few Thoughts on Friday’s Market:  In looking at the charts from yesterday’s trading I did not see anything of significance.  It was pretty much a lackluster trading day. I am expecting some more sideways action a head of next week’s final Presidential debate.

The Dow Jones Industrial Average: The Dow Jones Industrial Average closed at 13,548.94  With yesterday’s trading activity, I am now widening trading range by raising my upside resistance to the closing high set earlier this month.  I am now looking at upside resistance on the Dow Jones Industrial Average at 13,610.15 on a closing basis.  I now see downside support coming in at 13,273.32 and then  13,000.71 on a closing basis.  I am expecting the Dow Jones Industrial Average to continue to move lower and test 13,373.32 on a closing basis.

Dow Jones Transportation Average:  The Dow Jones Transportation Average closed at 5,156.54.  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.

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

www.sterlinginvestments.com