Tag Archive for Financial Markets

Sterling Market Commentary for Wednesday March 7th, 2012

A Few Thoughts on Wednesday’s Market: In looking at the charts from yesterday’s trading activity it is pretty clear that basically every index I track has broken its upward or sideways trend and looks to starting what should be at least a short term pullback. There only 2 stocks with a more than a million shares in average daily trading volume that closed at a new yearly high yesterday; and the very vast majority of the heavy volume stocks moved lower on the day.

I continue to see support on the Dow Jones Industrial Average coming in at….

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

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…..

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

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. ….

Sterling Market Commentary for Tuesday February 14th, 2012

A Few Thoughts on Tuesday’s Market: In looking at the charts of the various indices I track, I noticed a couple of things. The 1st being that several of the various sector indices appear to be looking as if they could easily turn lower. Additionally the Gold/Silver indices continue to look weak. The second thing that I noticed is that a couple of the high tech indices appear to have gone parabolic with their chart patterns. In effect, they sort of look similar to the chart of Apple, Inc. ‘AAPL’ over the course of the last several months. The NASDAQ 100 has also been effected by this as well. This is a result of the way in which these indices are designed. They are capitalization weighted indices, which means that the ratio, or weighting, of the stocks within the index is based upon the market capitalization of the companies that comprise the index. I have never been in favor of this form of index construction. I think it has several drawbacks, some of which can have very devastating consequences……

Sterling Market Commentary for Monday Feburary 13th, 2012

In looking at the charts from Friday’s market I noticed that a pretty high number of the various sector indices I track appear to be turning negative. Also in looking at the stocks with the highest trading volume, the majority of those that are not moving sideways look weak with negative chart patterns. History has taught me that this generally precedes a turn lower by the market. My thoughts are that the recent move higher may be beginning to run out of steam. With respect to the Greek Financial Crisis, I just do not see the Greek people easily accepting the mandated reforms. I do not think the Greek Financial Crisis is over yet……..

Sterling Weekly for the Week of February 13th, 2012 – 2011 Index Performance Results

I was fairly surprised when I looked at the performance results of the various indices I track. Sterling Investment Services tracks roughly 39 various sector indices. Of these indices, 3 are interest rate indices that track the movement of interest rates, and the other 36 indices are stock based indices that either track the broad market or are designed to track specific market sectors.

The 3 interest rate indices I track obviously did well as the Fed manipulated interest lower, sending bond prices higher in the process. It is tough to get any message from a manipulated market. However, what I do see is a bubble forming that I am very concerned will be far more damaging to the US and world economy when it bursts than the housing bubble was when it burst. Of the 36 stock indices I track, 13 managed to show positive gains for 2011, however it should be noted that

Sterling Market Commentary for Friday January 27th, 2012

The overall market is rather dull right now; something I find rather interesting considering the Fed’s recent announcement of prolonged ultra-low interest rates and what I consider to be rather good corporate earnings announcements. I take this to be a sign that investors are not really to enthused about the prospects for the world economy for 2012. While it is tempting to call for a market pullback, there is an old saying about never short a dull market. While my 1st Rule of Trends is that a trend remains in place until it is broken; my 2nd Rule of Trends is ……….

Market Commentary – September 8th, 2011

The overall market moved sharply higher yesterday in a broad based move that saw basically every sector index I track move higher on the day. The strongest sectors were the Banking, High Tech, Insurance, Broker/Dealers, Transports, Airlines, Biotech, and Cyclicals. Oil was higher by $3.32 to $89.34 per barrel, and Gold was sharply lower by $55.70 to $1,814.90 per ounce. Wheat was lower by $0.084 to $7.51 per bushel, and Corn was lower by $0.076 to $7.48 per bushel.

I know the Dow Jones Industrial Average staged an impressive 275 point rally on the day, but I just don’t see any justification for the move. I didn’t really see any news to justify the move higher other than the German court decision stating that Germany can proceed with its part in the Greek bailout, but the court’s decision basically stated that every phase of the bailout would require authorization by the German parliament. Considering that the German Chancellor’s party has lost every local election since agreeing to the bailout terms ………….