Dow Jones Transportation Average: The Dow Jones Transportation Average closed at 5,012.71. 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 overall market moved moderately higher in a relatively broad based move. There were a few notable exceptions as the commodities based indices moved lower. A lot of this move lower was sparked by a sharp sell off in Oil, which was lower by $3.75 to $88.14 per barrel. In searching the news reports related to the sharp drop in the price of Oil, I found that it was attributed to 2 primary factors. The 1st being a slowing of the global economy, and the 2nd being a slowing of the Chinese economy. Neither of these things is good for the U.S. Economy and the overall market. In looking at a chart on the price of Oil it appears to me that their is a reasonable chance that the price of Oil could continue to move lower and test its support level of $79.01 per barrel set on June 28th of this year. While the lower price of Oil would be good for consumer’s pocket books, my concerns are that with all the computerized trading, the lower price Oil would be a sign of a significantly weakening global economy.
The Dow Jones Industrial Average: The Dow Jones Industrial Average closed at 13,482.36 I continue to see upside resistance on the Dow at 13,558.92. With last Friday’s close of 13,437.13 the Dow Jones Industrial Average broke our support level of 13,345. I now see downside support coming in at and downside support at 13,279.32 Current Expectations: I am expecting the Dow to continue to trend lower and test 13,279.32 on a closing basis.
A Look at Monday’s Market: The overall market was mixed on Monday with the S&P 500 and the Dow Jones Industrial Average finishing the day moderately higher while the NASDAQ finished the day slightly lower. Among the indices I track there was strength in the Airlines, Natural Gas, Gold/Silver, Biotech, Insurance, Healthcare related, Commodities, Transports, Retailers, and Financials. There was weakness in the Telecoms, High Tech, and Utilities. In the commodities markets, Oil was higher by $0.29 to $92.48 per barrel, and Gold was higher by $9.40 to $1,780.50 per ounce. In the Grain markets, Wheat was lower by $0.182 to $8.842 per bushel, while Corn was higher by $0.004 to $7.566 per bushel, and Soybeans were lower by a whopping $0.406 to $15.602 per bushel.
Since the previous edition of the Sterling Weekly, the Dow Jones Industrial Average rose 237.58 points or approximately 1.8% to close at 13,437.13 It has been a busy 6 months since I last published the Sterling Weekly, I am very happy to announce that during the last 6 months, my wife and I saw the birth of our 1st child, a very healthy baby boy that we are very excited to have in our lives. Over the course of that period of time the market has moved slightly higher. However the continued bond buying and quantitative easing policies of the Fed continues to cause me a great deal of concern; specifically that the Fed is creating a financial bubble unlike the world has ever seen before. I have concerns that when this bubble finally bursts there will be negative consequences that are devastating for the world economy.
We saw the end of the 3rd quarter last week. As usual, I like to take a look at the performance of the various sector indices I track and see what the market is telling us. I usually find these results somewhat interesting. I have published the results below for your review as well.
In today’s Sterling Market Commentary I look at a couple of pressures that I see facing the market. We also take a look at the Dow Jones Transportation Average and its influence on the market.
The Dow Jones Industrial Average closed Thursday at 13,485.97 I continue to see upside resistance at 13,558.92 and downside support at approximately 13,345. Volume on the Dow Jones Industrial Average continues to be light. I generally consider this to be a negative sign when the Dow Jones is trading at multi-year highs.
A Few Thoughts on Tuesday’s Market: I continue to look at the market with a nervous eye. I do not believe that the strength of the overall economy is nearly as strong as the major market indices would have us believe. This causes me to be concerned that we could see a severe and lasting downturn when the music stops. I think that the Fed has grown increasingly desperate, and it is running out of arrows in its quiver.
A Few Thoughts on Monday’s Market: The major market indices and a large number of the various sector indices that I track are obviously benefiting from the Fed’s 3rd round of quantitative easing, otherwise known as QE3. However to be very clear, I consider QE3, and the previously quantitative easings’, QE1 and QE2, to be an unprecedented form of market manipulation that is not only ineffective, but one that has very serious, negative unintended consequences that are detrimental to the US Economy. Manipulating interest rates to artificially low levels will not make up for bad fiscal policy out of our elected officials in Washington, DC. Worse yet, these artificially low interest rates are creating a bubble in all bond classes as savers either search for higher yields or safety; these artificially low interest rates punish savers with reduced interest income, and create a sense of uncertainty that is holding back business development. It seams that the only group benefiting from these artificially low interest rates is the largest companies in the US and global economy. These are the companies that dominate the major market indices; and that is why these indices are doing so well, while the rest of the economy is seems to be disconnected from the stock market.
In looking at the charts of Friday’s trading activity, very few of the charts I looked at appeared to be demonstrating any sort of a break from their recent trading ranges. The one exception to this is the gold and silver stocks. They all had breaks above recent trading ranges; and appear to be headed at least to new short term highs. Of course it is always wise to remember that gold and silver stocks have a tendency to be very volatile and can reverse course suddenly and without warning. With that being said, I found Newmo
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