Sterling Market Commentary for Wednesday November 14th, 2012
A Look at Tuesday’s Market: The overall market moved moderately lower on Tuesday in what was the 1st day of trading this week by the bond markets, which were closed Monday due to the Veterans Day holiday. Through the 1st couple of days of this week, the overall market has continued to drift lower towards the support levels I discussed in last Friday’s Sterling Market Commentary. If you have not had a chance to do so, you should check out the chart I included in that post, I think it clearly shows the probable trading range the Dow Jones Industrial Average is heading towards. In the commodities markets, Oil was lower by $0.19 to $85.38 per barrel, and Gold was lower by $6.10 to $1,724.80 per ounce. In the Grain markets, Wheat was lower by $0.066 to $8.510 per bushel, and Corn was higher by $0.054 to $7.234 per bushel, while Soybeans were higher by $0.030 to $14.08 per bushel.
A Few Thoughts on Wednesday’s Market: In looking at the charts from yesterday’s trading activity, the vast majority of the indices I looked are clearly showing weakness and moving lower. The market is clearly showing weakness and as it continues to drift lower it is approaching various support levels that as they are broken will further increase the weakness in the overall market. I think there is a great deal of political risk to the market. Despite having the election last week, we still have the issue of the “Fiscal Cliff” and a Lame Duck Congress; and there is no reason to believe that either Harry Reid or any of the Congressmen that were defeated in their re-election bids are in any way going to be accommodating. I think that there is a much greater risk that Harry Reid is going to play hard ball; after all that has been his track record, and he has been very successful at it. In other words, I think Harry Reid will take things as close to the brink as possible, gambling that by the time 2014 rolls around the votes will have forgotten about the games he likes to play. So here is my forecast, I think Harry Reid is going to take us as close to the Fiscal Cliff, and possibly over the edge, if he thinks he can get what he wants; and he doesn’t care what happens to the rest of us in the mean time. I do not see it getting resolved before the end of December, and as a result I think the overall market will continue to move south.
The Dow Jones Industrial Average: The Dow Jones Industrial Average closed at 12,756.18 I have lowered my upside resistance level on the Dow Jones Industrial Average at 13,000.71 on a closing basis. I now see downside support coming in at 12,715.93 and then at 12,118.57 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 12,715.93 and then 12,118.57 on a closing basis.
Dow Jones Transportation Average: The Dow Jones Transportation Average closed at 5,054.71 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.
NASDAQ 100 Index ‘NDX’: The NDX closed yesterday at 2,561.86 I see upside resistance on the NDX currently at 2,623.33 and downside support at 2,458.83 on a closing basis. Current Expectations: I think the NDX is going to continue to move lower and test 2,458.83 on a closing basis.
The Bottom Line: I think the market will continue to move lower for the next few trading sessions.