Dow Jones Transportation Average

The Dow Jones Transportation Average is a 20-stock, price-weighted index that represents the stock performance of large, well-known U.S. companies within the transportation industry. It was the first U.S. stock index, assembled by Charles Dow in 1884.

No Image

Sterling Market Commentary for Tuesday October 2nd, 2012

October 2, 2012 sterlinginvestments 0

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.

No Image

Sterling Weekly for the Week of October 1st, 2012 – 3rd Quarter Performance Report

October 1, 2012 sterlinginvestments 0

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.

No Image

Sterling Market Commentary for Monday September 24th, 2012

September 24, 2012 sterlinginvestments 0

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.

No Image

Sterling Market Commentary for Friday March 16th, 2012

March 16, 2012 sterlinginvestments 0

It is also very important to remember that today is quarterly options and futures expiration day. It is not unusual to see a short reversal of the overall trend as traders unwind their position, only to see the trend resume at the start of next week. Therefore a word or warning, there is always the possibility that any perceived upward trend of the last couple of days could be reversed at the start of next week.

This morning we have managed to select our candidate for today’s trading position. We are looking at covered puts on Newmont Mining ‘NEM’. We have not yet selected the options position and will tweet our selection as soon as it is made. On Twitter we can be found at sterlinginv

No Image

Sterling Market Commentary for Tuesday March 13th, 2012

March 13, 2012 sterlinginvestments 0

I have written many times in the past that I believe that during options expiration week you will see a reversal of the overall trend of the market as traders unwind their positions prior to the actual expiration; then following expiration at the start of the next current month, the trend will resume. What that means for today and this month is that I have felt there is a slight downward bias to the market, that could see a temporary reversal back to the upside this week before resuming its slight downward movement next week. ….

No Image

Sterling Market Commentary for Thursday March 8th, 2012

March 8, 2012 sterlinginvestments 0

In looking at the charts from Wednesday’s trading the trend of the market remains weak, however yesterday’s big bounce tends to pull stocks and indices that recently broke below support back above those support levels. What this really ends up doing in my opinion is that it greatly reduces the number of potential trading candidates for the day. It also tends to throw the continuation of any downtrend in doubt.

With the volatility we have seen in the market over the last several years I have adopted my strategy from one of being a purely short term, day trader to one of selling covered puts and calls. This results in my building a portfolio of covered puts and calls over the course of a month that then reverts back to cash on options expiration. During this process I generally try to build a portfolio that is a mixture of long and short positions. I am looking for today to be a day where I can balance out my put positions with a call position that will not get stopped out prior to expiration.

No Image

Sterling Market Commentary for Monday March 5th, 2012

March 5, 2012 sterlinginvestments 0

In looking at the charts from Friday’s market activity I noticed three (3) things that really stood out. The first thing I noticed is that a majority of the sector indices I looked at had negative chart patterns. This is generally a precursor for a broader market pullback. The second thing I noticed was very few of the stocks setting new yearly highs had average daily trading volume above 1 million shares. To me, this indicates that the larger companies are not participating as much in the recent market rally. The third thing I noticed was the majority of the stocks with heavy volume looked to be moving lower. This is generally a bearish trading signal.

No Image

Sterling Weekly for the Week of March 5th, 2012 – A Look at Bond Prices and Higher Rates

March 5, 2012 sterlinginvestments 0

Regular readers of the Sterling Weekly will recall that I have been voicing my concerns about the Fed’s manipulation of interest rates to abnormally low levels for quite some time. I have expressed my concerns that this is inflationary in nature, and that as a result we could see interest rates rise to levels not seen since the mid to late 1990’s when the 30-Year Bond yielded approximately 7.5%. (Sterling Weekly for September 26th, 2011) I thought it would be a good idea to take a look how an increase in interest rates would affect the price of current government bonds.

As of last Friday March 2nd, the US Government 5-Year Bonds was yielding approximately 0.85%, the 10-Year Bond was yielding approximately 1.99%, and 30-Year Bond was yielding approximately 3.14%. I have said for a very long time that I believe these bond yields are artificially low due to their manipulation by the Federal Reserve. I think that this is causing a bubble in the bond market that could have very disastrous consequence when it finally bursts, as all bubble ultimately do.

I think that it is very realistic to expect that we will see the price of US Government bonds return to their pre-2008 levels at some point in the reasonable future, by this I mean interest rate levels seen…..

No Image

Sterling Market Commentary for Friday February 24th, 2012 – A Quick Look at Oil

February 24, 2012 sterlinginvestments 0

Also, it should be noted that despite the upward movement of the Dow Jones Industrial Average and the S&P 500, the Dow Jones Transportation Index has been moving lower. For those who believe in the Dow Theory this is a negative signal for the overall market. My thoughts are that the Dow Transports are being pushed lower due to higher oil prices; additionally the Dow Jones Transportation Average is generally considered to be a fairly reliable indicator as transports companies ship goods and services, thus providing a good look at where the economy is going. If this trend continues, then the odds are that the broad market will follow the transports lower, not the other way around. ….