Sterling Marekt Commentary for Wednesday April 11th, 2012

A Look at Tuesday’s Market:  The overall market moved sharply lower on Tuesday in a broad based move that saw basically every sector index I track move lower on the day as well.  The Dow Jones Industrial Average broke significantly below its 40 day moving average, and closed below its March 6th closing low in what I believe is a significant breaking of support.  The Dow Jones Industrial Average also closed below a pair of support levels set in July and August of last year.  I consider this to be significant and think that there is a real good chance that the Dow Jones Industrial Average could continue to move lower and test 12,231.11 on a closing basis.

In the commodities markets,  Oil was lower by $1.44 to $101.02 per barrel, and Gold was higher by $16.80 to $1,660.70 per ounce.  In the grain markets,  Wheat was lower by $0.172 to $6.256 per bushel, and Corn was lower by $0.142 to $6.346 per bushel, while Soybeans were lower by $0.050 to $14.260 per bushel.  It should be noted that Argentina is currently experiencing a mild drought that expected to noticeably reduce its Soybean production, and the USDA is reporting dry soil conditions in Iowa that could impact the germination of seeds planted this spring.  We could see a very interesting grain market this year, with significantly higher prices.

A Few Thoughts on Wednesday’s Market:  In looking at the charts from Tuesday’s trading activity I noticed a couple of items of significance.  The 1st being that volume increased significantly on Tuesday.  Heavy volume on the way lower is always considered a bearish trading signal for the markets.  The other significant item I noticed was that the very vast majority of the indices and individual stocks I looked at broke through support during their moves lower.  This break below support was significant enough that even a 100 point move higher in the Dow Jones Industrial Average will not get many of these stocks back above those support levels, which are now upside resistance levels.

While early morning futures are looking positive,  I do not see any move higher today being much more than a bounce before the market moves back lower.  I am going to be looking for a covered put position to enter for this morning’s trade.

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