Weekly Newsletter

Sterling Weekly for the Week of April 2nd, 2012 – A Look at 1st Quarter Index Performance Results

by  •  • 0 Comments

1st Quarter Index Performance Results

Since the previous edition of the Sterling Weekly the Dow Jones Industrial Average rose 221.98 points or approximately 1.7% to 13,199.55 Despite the market weakness we saw on Tuesday of this week, I am fairly optimistic on the market for the intermediate term. In yesterday’s edition of our blog, I stated that I see the Dow Jones Industrial Average moving to 14,955.78 over the intermediate term. I generally consider that to be anywhere from 6 to 18 months. Granted there will always be some form of storm clouds on the horizon, and I see the European debt crisis continuing to cause periodic problems. Additionally it is no sure thing that the Dow Jones Industrial Average will reach those levels, but at the end of the day I consider the Dow Jones Industrial Average to be essentially a scale that weighs the size of the U.S. economy, and the bigger the population, the bigger the U.S. economy.

We saw the end of the 1st quarter of the year 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 to be somewhat interesting. I have published the results below for your review as well.

Sterling Investment Services 2012 1st Qtr. Index Performance Report
Ticker
Closing Level
1st Quarter
Index Name
Symbol
31-Mar-12
31-Dec-11
Points
Percent
1 Amex Airlines Index XAL 37.74 32.44 5.30 16.34%
2 Amex Biotech Index BTK 1412.97 1,091.42 321.55 29.46%
3 Amex Disk Drive DDX 125.66 101.79 23.87 23.45%
4 Amex Gold Bugs HUI 472.9 498.73 (25.83) -5.18%
5 Amex Gold Miners GDM 1371.91 1,428.98 (57.07) -3.99%
6 Amex Interactive IIX 332.22 281.74 50.48 17.92%
7 Amex MS Commodities CRX 886.46 844.94 41.52 4.91%
8 Amex Networking NWX 257.26 215.15 42.11 19.57%
9 Amex Oil & Gas XOI 1267.43 1,229.10 38.33 3.12%
10 Amex Pharmaceuticals DRG 341.96 332.94 9.02 2.71%
11 Amex Sec. Broker/Dealer XBD 105.43 83.27 22.16 26.61%
12 CBOE Technology Index TXX 1076.61 851.59 225.02 26.42%
13 Computer Tech. Index XCI 1182.08 973.96 208.12 21.37%
14 Dow Jones Industrial Avg. DJ-30 13212.04 12,217.56 994.48 8.14%
15 Dow Jones Transportation DJ-20 5253.16 5,019.69 233.47 4.65%
16 Dow Jones Utilities Index DJ-15 458.93 464.68 (5.75) -1.24%
17 KBW Banking Index BKW 49.74 39.38 10.36 26.31%
18 MS Consumer Index CMR 801.543 759.13 42.41 5.59%
19 MS Cyclical Index CYC 1017.023 874.14 142.88 16.35%
20 MS. Healthcare Providers RXP 1954.924 1,733.89 221.03 12.75%
21 MS. High Tech. Index MSH 716.79 588.88 127.91 21.72%
22 NASDAQ 100 Index NDX 2755.27 2,277.83 477.44 20.96%
23 Natural Gas Index XNG 649.539 636.15 13.39 2.11%
24 North Am. Telecom Index XTC 920.74 881.99 38.75 4.39%
25 Phlx. Gold/Silver Index XAU 175.46 180.64 (5.18) -2.87%
26 Phlx. Oil Services Sector OSX 238.16 216.28 21.88 10.12%
27 Phlx. Semiconductor Index SOX 438.64 364.44 74.20 20.36%
28 Phlx. Utility Sector UTY 469.09 481.45 (12.36) -2.57%
29 Russell 1000 Index RUI 778.92 693.36 85.56 12.34%
30 S&P 100 Index OEX 640.69 570.79 69.90 12.25%
31 S&P 500 Index SPX 1408.47 1,257.60 150.87 12.00%
32 S&P Banking Index BIX 158.01 130.52 27.49 21.06%
33 S&P Chemicals Index CEX 341.77 298.73 43.04 14.41%
34 S&P Healthcare Index HCX 435.76 401.90 33.86 8.42%
35 S&P Insurance Index IUX 188.42 170.17 18.25 10.72%
36 S&P Retail Index RLX 622.38 523.20 99.18 18.96%
37 CBOE 5 Yr. Treasury Yield FVX 10.43 8.30 2.13 25.66%
38 CBOE 10 Yr. Treasury Yield TNX 22.16 18.71 3.45 18.44%
39 CBOE 30 Yr. Treasury Yield TYX 33.45 28.29 5.16 18.24%
———- ———-
Average 105.77 12.21%

In looking at the results of the 1st quarter 2012, the average index gained 12.21%. Overall a very good performance, but one that we should not expect to be repeated for each of the remaining 3 quarters as that would equate to a 48% plus annualized return. As far as the major market indices are concerned, the Dow Jones Industrial Average was up by 994.48 points or approximately 8.14%, the S&P 500 was higher by 150.87 points or approximately 12%, and the NASDAQ 100, obviously benefiting from the effect of Apple, was higher by 477.44 points or approximately 20.96%.

I have included a table below showing the various indices I track ranked based upon their 1st quarter performance results.

Ticker
Closing Level
1st Quarter
Index Name
Symbol
31-Mar-12
31-Dec-11
Points
Percent
1 Amex Biotech Index BTK 1412.97 1,091.42 321.55 29.46%
2 Amex Sec. Broker/Dealer XBD 105.43 83.27 22.16 26.61%
3 CBOE Technology Index TXX 1076.61 851.59 225.02 26.42%
4 KBW Banking Index BKW 49.74 39.38 10.36 26.31%
5 CBOE 5 Yr. Treasury Yield FVX 10.43 8.30 2.13 25.66%
6 Amex Disk Drive DDX 125.66 101.79 23.87 23.45%
7 MS. High Tech. Index MSH 716.79 588.88 127.91 21.72%
8 Computer Tech. Index XCI 1182.08 973.96 208.12 21.37%
9 S&P Banking Index BIX 158.01 130.52 27.49 21.06%
10 NASDAQ 100 Index NDX 2755.27 2,277.83 477.44 20.96%
11 Phlx. Semiconductor Index SOX 438.64 364.44 74.20 20.36%
12 Amex Networking NWX 257.26 215.15 42.11 19.57%
13 S&P Retail Index RLX 622.38 523.20 99.18 18.96%
14 CBOE 10 Yr. Treasury Yield TNX 22.16 18.71 3.45 18.44%
15 CBOE 30 Yr. Treasury Yield TYX 33.45 28.29 5.16 18.24%
16 Amex Interactive IIX 332.22 281.74 50.48 17.92%
17 MS Cyclical Index CYC 1017.023 874.14 142.88 16.35%
18 Amex Airlines Index XAL 37.74 32.44 5.30 16.34%
19 S&P Chemicals Index CEX 341.77 298.73 43.04 14.41%
20 MS. Healthcare Providers RXP 1954.924 1,733.89 221.03 12.75%
21 Russell 1000 Index RUI 778.92 693.36 85.56 12.34%
22 S&P 100 Index OEX 640.69 570.79 69.90 12.25%
23 S&P 500 Index SPX 1408.47 1,257.60 150.87 12.00%
24 S&P Insurance Index IUX 188.42 170.17 18.25 10.72%
25 Phlx. Oil Services Sector OSX 238.16 216.28 21.88 10.12%
26 S&P Healthcare Index HCX 435.76 401.90 33.86 8.42%
27 Dow Jones Industrial Avg. DJ-30 13212.04 12,217.56 994.48 8.14%
28 MS Consumer Index CMR 801.543 759.13 42.41 5.59%
29 Amex MS Commodities CRX 886.46 844.94 41.52 4.91%
30 Dow Jones Transportation DJ-20 5253.16 5,019.69 233.47 4.65%
31 North Am. Telecom Index XTC 920.74 881.99 38.75 4.39%
32 Amex Oil & Gas XOI 1267.43 1,229.10 38.33 3.12%
33 Amex Pharmaceuticals DRG 341.96 332.94 9.02 2.71%
34 Natural Gas Index XNG 649.539 636.15 13.39 2.11%
35 Dow Jones Utilities Index DJ-15 458.93 464.68 (5.75) -1.24%
36 Phlx. Utility Sector UTY 469.09 481.45 (12.36) -2.57%
37 Phlx. Gold/Silver Index XAU 175.46 180.64 (5.18) -2.87%
38 Amex Gold Miners GDM 1371.91 1,428.98 (57.07) -3.99%
39 Amex Gold Bugs HUI 472.9 498.73 (25.83) -5.18%

I have stated many times that I believe that Bull Markets are primarily the result of 2 things; the first being new technology, and the second being changes in government regulation. The results of the 1st quarter are pretty well explained by that thesis. The top performing indices were either the result of new technologies, such as the Amex Biotech Index and the various technology indices that were heavily influenced by Apple, Inc. ‘APPL.’ The second set of indices, those influenced by government regulation were the interest rate indices, the TYX, TNX, and FVX. The poor performing indices reflect the same results, rising interest rates is a negative for the Utility industry, and precious metals such as gold and silver. Additionally the beginning of the implementation of Obamacare and its massive amounts of regulation is a negative for the Healthcare related indices.

Do I see any insight into the 2nd quarter of 2012? I see interest rates continuing to increase, and as a result, I see continued pressure on the interest rate sensitive indices such as the utilities. The other thing that I am sure of is that the second quarter results are going to be far different than what we saw in the 1st quarter of 2012.

Sterling Calendars for the Week of April 2nd, 2012

Economic Calendar

Date

 Est. Time Release For Consensus Prior

04/02

 10:00am ISM Index Mar. 53.0 52.4
04/02 10:00am Construction Spending Feb. 1.0% (0.8%)
04/02 10:00am Factory Orders Feb. 1.4% (1.1%)
04/03 2:00pm FOMC Minutes 3/13
04/03 2:00pm Auto Sales Mar N/A 5.5M
04/03 2:00pm TrucK Sales Mar. N/A 5.9M
04/04 7:00am MBA Mortgage Index 03/31 4.8% (2.7%)
04/04 8:15am ADP Employment Change Mar. 217K 216K
04/04 10:00am ISM Services Mar. 56.7 57.3
04/04 10:30am Crude Inventories 03/31 N/A 7.102M
04/05 7:30am Challenger Job Cuts Mar. N/A 2.0%
04/05 8:30am Initial Claims 03/31 355K 359K
04/05 8:30am Continuing Claims 03/24 3,360K 3,340K
04/06 8:30am Nonfarm Payrolls Mar. 200K 227K
04/06 8:30am Nonfarm Private Payrolls Mar. 215K 233K
04/06 8:30am Unemployment Rate Mar. 8.3% 8.3%
04/06 8:30am Hourly Earnings Mar. 0.2% 0.1%
04/06 8:30am Average Workweek Mar. 34.5 34.5
04/06 3:00pm Consumer Credit Feb. $14.0B $17.8B

Sterling Market Commentary Blog

As part of our new services we are now publishing a blog. The primary focus of our blog is a daily market commentary.

Small Cap Research

Sterling Investment Services publishes custom research on micro and small cap companies. Our focus is on companies that are not receiving research coverage from the brokerage community.

Our latest research report Probe Manufacturing, Inc. (OTC: ‘PFMI’) This company is a contract electronics that we feel is an interesting turn around story. To see a of our report, please here.

Companies that are interested in obtaining research coverage should click here.
Disclaimer: The Sterling Investments series of newsletters is produced by Sterling Investment Services, Inc. All information used in the production has been obtained from sources believed to be reliable and accurate. Sterling Investment Services does not warrant or assume any liability for inaccuracy of the information used to produce our publications. To receive further information on these services please visit our web page at: www.sterlinginvestments.com If you would like to contact us our fax # is (404)-816-8830 Email address is: enelson@sterlinginvestments.com Sterling Investment Services may hold positions in the securities recommended or may be providing consulting services to the companies mentioned within this report.