Sterling Market Commentary for Monday October 15th, 2012
A Look at Friday’s Market: The overall market finished Friday mixed with the Dow Jones Industrial Average closing slightly higher while the S&P 500 closed slightly lower. In the commodities markets, Oil was lower by $0.21 to $91.86 per barrel, and Gold was lower by $10.90 to $1,759.70 per ounce. In the grain markets, Wheat was lower by $0.292 to $8.566 per bushel, and Corn was lower by $0.204 to $7.526 per bushel, while Soybeans were lower by $0.260 to $15.224 per bushel. While I could not find any specific reason to account for the sharp move lower in the grain markets, it appears to have been part of a much broader move in the overall commodities markets.
A Few Thoughts on Monday’s Market: In looking at the charts from Friday’s market I noticed a couple of items of interest. The 1st being that the majority of the various sector indices I track appear to continue to be moving lower. The Amex Gold/Silver Index ‘XAU’, the S&P Chemicals Index ‘CEX’ and the Amex Oil & Gas Index ‘XOI’ (which touched its 200 day moving average on Friday) all appear to be in the process of breaking support and heading lower. The banking indices, the S&P Banking Index ‘BIX’ and the KBW Banking Index ‘BKW’ both sold off sharply on Friday. The ‘BIX’ broke below an upward sloping trendline that had provided support and looks to be starting a new downturn. While the ‘BKW’ is right on the its upward sloping trendline. Another down day in the banking stocks and we could see some real the start of an intermediate downtrend in these stocks. As far as the overall market goes, I am expecting a lackluster, with a slight downward bias, pair of trading days prior to Tuesday night’s Presidential debate.
The Dow Jones Industrial Average: The Dow Jones Industrial Average closed at 13,328.85 I am now looking at upside resistance on the Dow Jones Industrial Average at 13,406.91 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 13,373.32 on a closing basis.
Dow Jones Transportation Average: The Dow Jones Transportation Average closed at 5,044.63. 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 trend sideways to lower for the next few trading sessions.