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Dow Jones Industrial Average

Commentary Archieve

The Sterling Home Page S&P 500 Index NASDAQ 100 IndexCheck out our Current Commentary

Comments (5-27-03): The overall market slightly higher on Friday in a pre-holiday weekend session that saw the bond market close early. There was strength in the Biotech, interest rate sensistive, and heavy industrial indices. There was weakness in the cyclicals, high tech, broker/dealers, and the drug sector. The Dow Jones Industrial Average 'INDU' continues to trade between two converging trendlines. While I thought there would be a break from these trendlines a couple of weeks ago, it looks like the Dow will do everything it can to delay its move until the latest possible day. It appears from looking at the chart of the Dow that the converging trendlines will have only another 1 maybe 2 weeks before the normal daily fluctuations take the Dow outside of these trendlines. Until then, the previous short term upward trend has been broken, and it appears that the downward trend remains in place. The Bottom Line: The overall market should move lower.

Today's Opinion: Closed @ 8,601.38 Current Expectations: Downgraded with a Sell Signal on May 19th, with the close @ 8,493.39 The Index should move lower and test 8,303.78 and then 8,197.94


Comments (5-20-03): The Dow Jones Industrial Average closed Monday at 8,493.39 down 185.58 points. The sell off was broad based after comments from Treasury Secretary John Snow indicating that the US was abandoning its long standing strong dollar policy and the US Supreme Court in a very narrow ruling upheld a Maine law mandating price controls on the state's Medicaid program and the homeless and uninsured. There are two things the stock market hates; uncertainty and price controls. John Snow provided the uncertainty and the Supreme Court provided the price controls. For the last 2 weeks the Dow has been stuck between two converging trendlines that indicate the Dow will make a sharp move to either the upside or the downside. The difficulty in determining what the upcoming move will be is that some trendlines are easier to draw than others, and those that are difficult to draw usually see the stock or index oscillate around them. In other words those trendlines tend to be a little fuzzy. This seems to be the problem we are currently having with the Dow. The recent highs haven't significantly broken above the downward sloping trend line, and today's drop in the market did not significantly break below the supporting trendline. Our indicators did generate a "Sell Signal". In additional our nightly review of the activity of individual stocks showed that most of them were starting a retracement from their recent run ups a/k/a a round of profit taking. The Bottom Line: The overall market should move lower.
Comments (5-5-03): The Dow Jones Industrial Average closed Monday at 8,531.57 down 51.11 points. The Dow Jones Industrial Average (INDU) has broken through the recent upward resistance level. Once resistance is broken, the "Rule of Thumb" is that the resistance then becomes support. We'll see if that happens. The current chart of the Dow shows converging trend lines that the Dow will either fail to move higher and move lower and possibly test the 8,000 level again or the Dow will break through the near term downward trending resistance line and be able to sustain a move to the 8,750 level. I know that sounds vague, but please keep in mind I am not trying to predict the movement of the market, I am simply interpreting the chart patterns and what they tell me. Since I believe a trend remains in place until it is broken, and the current trend is higher. The Bottom Line: The overall market should move higher.

Today's Opinion: Closed @ 8,531.57 Current Expectations: Called Higher on April 14th, with the close @ 8,351.10 The Index should move higher and test 8,521.97. If the Dow closes above 8,771.01


Comments (4-29-03): The Dow Jones Industrial Average closed Monday at 8,471.61 up 165.26 points. The Dow Jones Industrial Average is in a very precarious position. There is an obvious post-war rally and a change in sentiment due to the victory in Iraq. However there are still long issues facing the economy, not to mention the potential for major news from North Korea. Our technical indicators indicate that the Dow has reached an overbought condition, and it appears to be up against a downward trendline that has created resistance against breaking through the 8,500 level. Yet, it appears that we have an upward trend at work to that appears to have been in place since late March. I've seen this occur before. It creates in "technical analysis" what is referred to a triangle pattern. What it means to you and I, is that within a few days one of these trendlines will break, and the market will either move sharply higher or back lower. There isn't a sure way to tell. Since a trend remains in place until it is broken, the current upward trend remains. The Bottom Line: The overall market should move higher.
Comments (4-21-03): The Dow Jones Industrial Average closed Thursday at 8,337.65 up 80.04 points. The market moved slightly higher ahead of the 3 day Easter Weekend. I would have felt more comfortable if the market had closed above Tuesday's closing level of 8,402.36, but unfortunately it did not. While our indicators appear to be turning to the upside, and I am still expecting the overall market to move higher, there is still the chance we could see a short term trend reversal to the downside. Monday's activity should help clarify the situation.The Bottom Line: The overall market should move higher.

Today's Opinion: Closed @ 8,337.65 Current Expectations: Called Higher on April 14th, with the close @ 8,351.10 The Index should move higher and test 8,521.97.


Comments (4-17-03): The Dow Jones Industrial Average closed Wednesday at 8,241.78 down 160.58 points. While I used to consider a 160 point move in the Dow Jones Industrial Average to be a sharp or big move, with the current market conditions I think moves of this magnitude are more normal and do not mean what they used to. I have felt for a long time the move to decimalization has increased the volatility in the market. This is due to the fact that the brokerage firms that "make markets" in NASDAQ stocks or the specialist who handle the trading in exchange listed shares would typically be able to earn the difference between the bid and offer prices on a stock. Decimalization has narrowed the gap between the bid and offer and as a result reduced the profitability of holding securities in inventory. What this means is that these brokerage firms are less willing to hold positions that at best are less profitable for them. It's a basic risk vs. reward decision. What this means is that with the brokers less willing to trade their own account, unless there is a customer limit order on the side of the market order, then a market order is more likely to impact the price of stock. The bottom line result is that an increased level of market volatility is here to stay. This also means that identifying the very short term trends of the market is going to be more difficult. As far of the Dow Jones Industrial Average is concerned, the short term upward trend still appears to be in place, but our indicators are pointing lower indicating we could see a trend reversal and move back to or below the 8,000 level.

Today's Opinion: Closed @ 8,241.78 Current Expectations: Called Higher on April 14th, with the close @ 8,351.10 The Index should move higher and test 8,521.97. However it looks like we could see a trend reversal with a move lower on Thursday.


Comments (4-14-03): The Dow Jones Industrial Average closed Monday at 8,351.10 up 147.69 points. The Dow Jones Industrial Average and the overall market continues to benefit from positive developments with the war in Iraq. As the war winds down the market should begin to stabilize. I am looking for the focus on the market to begin shift to the economy. I am not expecting sudden surprises in the market unless there is unexpected violence in Iraq or unless the conflict escalates outsideof Iraq. The Bottom Line: The Dow Jones Industrial Average should continue to move higher.
Comments (4-1-03): The Dow Jones Industrial Average closed Monday at 7,992.31 down 153.64 points. The rally that began on March 13th after the US announced it would not return to the United Nations and seek additional time to deal with Iraqi was a combination of short covering and over enthusiasm that caused the market to move too high too fast. A pullback was inevitable, and I voiced a cautionary note in the March 24th edition of the Sterling Weekly. In the March 25th edition, I stated our indicators were pointing lower and said if it closed down again it they would generate a "Sell Signal". The question now is, when does the market reverse the current downward trend and move higher? While the market looks oversold on a very short term basis, it hasn't reached a point of support that would be a natural turning point. As a result I am expecting the Dow Jones Industrial Average to continue to move lower and test 7,749.87, its February closing low. The Bottom Line: The Dow Jones Industrial Average should continue to move lower.

Today's Opinion: Closed @ 7,992.31 Current Expectations: Called Lower on March 25th, with a Sell Signal generated with the close on March 25th. The Index should move lower and test 7,749.87


Comments (3-25-03): The Dow Jones Industrial Average closed Monday at 8,214.68 down 307.29 points.

Today's Opinion: Closed @ 8,214.68 Current Expectations: Our indicators are pointing lower on the Dow Jones Industrial Average. If the Dow closes lower today, then a sell signal will be generated indicating the start of a new downward trend.


Comments (3-24-03): The Dow Jones Industrial Average closed Friday at 8,521.97, up 235.37 points. Last week the Dow Jones Industrial Average completed one of its best weeks in almost 20 years. The gains were incredibly impressive with the Dow rising 662.85 points on the week, and 997.91 points from it's short term closing low of 7,524.06 set on March 11th. In percentage terms, the Dow rose 8.43% on the week, and has risen 13.26% since March 11th.

I must confess the recent rally in the Dow caught me by surprise. I received a "Buy Signal" with the Dow's close of 7,821.75 on March 13th, but I second guessed my indicators. I remembered the lack luster market prior to the start of the first Persian Gulf War, and the rally that occurred the day the war started. I was expecting a similar rally once the current war started, evidently so was a large portion of "the street". I was not expecting the rally to occur on a breakdown in talks with the United Nations, I was expecting a continued move lower. Combined with a few indications of the market moving higher that did not produce the expected result, I lost a very important opportunity to call a major move higher in the Dow Jones Industrial Average.

There is a very important lesson to be learned form this. Do not become your own worst enemy. I have in the past published 11 Rules for Trading, and Rule # 11 is "Do not become your own worst enemy". When I added this to my list of rules, what I was attempting to say was that if you have developed something that allows you to accurately gauge the changes in the market or a stock, then do not let your attempts to improve upon it cause it to become less accurate and hurt your ability to make good decisions. The market hates uncertainty. The uncertainty I was feeling over the unusual circumstance of the Iraqi situation caused me to second guess myself, when the right decision was plainly there. The Bottom Line is if something works 80% of the time, then you must continue to trust it during the 20% of the time it is not working, or you risk loosing your ability to interpret the market signal to less than random guessing or worse.

Today's Opinion: Closed @ 8,521.97 Current Expectations: The Dow should move higher and test 8,771.01 A note of caution, this index is very over extended and in the last 6 trading days crossed above its 30, 50 and 200 day moving averages.


Comments (3-17-03): The Dow Jones Industrial Average closed Friday at 7,859.71, up 37.96 points. The chart on the Dow indicates that Thursday's rally probably isn't sustainable. The news from the Azores over the weekend indicates the US is going into Iraq with or without the United Nations. It is just a matter of time. However I expect the market will experience a very volatile move lower until the shooting starts and Iraq is defeated. Afterwards I expect the start of a new Bull Market.

Today's Opinion: Closed @ 7,859.71 Last Signal: Sell Signal on Feb. 24th, 2003 from the closing level of 7,858.24 Current Expectations: The index should move lower and test 7,286.27. ???? Who knows how the news will effect us today.


Comments (3-12-03): The Dow Jones Industrial Average closed Tuesday at 7,524.06 down 44.12 points. In doing so the Dow Jones Industrial Average closed below support at 7,533.95 and in the process filled the gap that was created on October 11, 2002. Since the Rule of Thumb is that a stock or index will always fill in a gap created on a chart, then it is much better that we have filled this gap now, rather than 6 months from now. This current move lower is actually healthy on a technical basis because it repairs damage on the chart and allows for an eventual move higher. However the chart clearly indicates we can expect to move lower and test 7,286.27 on a closing basis.

Today's Opinion: Closed @ 7,524.06 Last Signal: Sell Signal on Feb. 24th, 2003 from the closing level of 7,858.24 Current Expectations: The index should move lower and test 7,286.27.


Comments (3-11-03): The Dow Jones Industrial Average closed Monday at 7,568.18 down 171.85 points. It's lowest level since early October of last year. I believe that one of the things the market hates the most is uncertainty. The uncertainty over the Iraq situation is taking it's toll on the US market. The fact that France opposes us is not significant in respect to our ability to defeat Iraq and create a democracy in the Arab world. I was recently at the Springsteen concernt here in Atlanta and ran into a friend of mine who works for a French owned company. He admitted to me that the salesman for his company were having a very difficult time due backlash agianst the French position regarding Iraq. A very wise man once told me that if you want to figure out the beahvior of someone you can't understand, then follow the money trail!!! France has more trade dollars with Iraq than the US!!!??????? I don't think so!!!!!!!!!!!!!! So, if France stands to loose more than it gains by Saddam Hussein being removed power, then maybe that means France will loose more trade dollars with the US & the rest of the word if Saddam Hussein is removed from power than if they oppose the US and we allow him to remain in power???!!!! What would cause this to happen??? How about this: After the US topples Saddam Hussein and it is discovered France has been violating the UN embargo and supplying Iraq with the technology to make weapons of mass destruction and other "no no" items. It's either that or the post World War II French identity is completely based upon opposing the United States what ever the cost. However, until we again take a position of leadership our markets will continue to trade like those of a second rate country such as France.

Today's Opinion: Closed @ 7,568.18 Last Signal: Sell Signal on Feb. 24th, 2003 from the closing level of 7,858.24 Current Expectations: The index should move lower and test 7,533.95 and then 7,286.27.


Comments (2-24-03): The Dow Jones Industrial Average closed yesterday @ 7,858.24 and in the process generated a "Sell Signal". While the market rally I had expected in the previous edition of the Sterliing Weekly failed to occur, it is clear that I under estimated the concerns regarding the Iraq situation. I believe the biggest risk we are currently facing, and what is continuing to cause concern for the market is our inaction and lack of a clear outcome to the current uncertainty over Iraq. Traders and investors do not like uncertainty, and once we attack or walk away the situation will be easier to evaluate, and I expect a rally to occur. But until then, I believe the uncertainty over Iraq will continue to cause the market to move lower.

Today's Opinion: Closed @ 7,858.24 Last Signal: Sell Signal on Feb. 24th, 2003 from the closing level of 7,858.24 Current Expectations: The index should move lower and test 7,749.87 and then 7,702.34. If it closes below 7,702.34 then the next level of support would be 7,286.27


Comments (2-2-03): Last week I stated that I expected the Dow Jones Industrial Average to test the 8,000 level. On Friday the Dow broke through 8,000 on an intraday basis and traded as low as 7,917.16 The Dow Jones Industrial Average closed Friday at 8,053.81 up 108.68 points on the day. The good news for the week, is that it appears there is a downward sloping trendline that is providing support at these levels. This could provide a point for the Dow to rally from. The problem is that there are several gaps on the chart of the Dow Jones Industrial Average that were created as the market moved higher from its October lows. The "Rule of Thumb" on gaps is that a stock or index will always retrace its movement and go back and fill the gaps, regardless of how long it takes. Better to do it now, than further down the road. The lowest of these gaps was on October 11, 2002 when the Dow gapped higher from its previous day's close of 7,533.95 however, with Friday's close our indicators pointed higher. I am expecting the Dow Jones to move higher from these levels. If it is up again Monday, then a "Buy Signal" should be generated. The Bottom Line: The Dow Jones Industrial Average should move higher.

Today's Opinion: Closed @ 8,053.81 Last Signal: Called Higher on Feb. 2, 2003 from January 31st's closing level of 8,053.81 Current Expectations: The index should continue to move higher and test 8,303.78 and then 8,697.87


Comments (1-26-03): The Dow Jones Industrial Average closed Friday at 8,131.01 down 238.46 points. The Dow Jones Industrial Average broke through a couple of levels of support since the Sell Signal was generated on January 16th. The Dow Jones should continue to move lower and test 8,043.63 In looking at the chart of the Dow Jones Industrial Average, the is not a pattern of mutliple points of support established to provide a clear indication as to where the current downward trend will find support. There are a couple of minor points of support near the 8,000 level. Otherwise there is not a clear connection between the couple points of support at lower levels. The Bottom Line: I expect the Dow to test the 8,000 level.

Today's Opinion: Closed @ 8,131.01 Last Signal: Sell Signal on 1-16 with a close of 8,698.15 The index should move lower and test 8,303.78 and then 8,043.63


Comments (1-21-03): The Dow Jones Industrial Average closed Friday at 8,586.40 down 111.14 points. With Friday's activity the Dow Jones Industrial Average closed below the support level of 8,602.61 I am expecting the Dow to continue to move lower and test 8,538.24 If it closes below that level of support then I'm expecting it to continue to move lower and test 8,303.78

Today's Opinion: Closed @ 8,586.40 Last Signal: Sell Signal on 1-16 with a close of 8,698.15 The index should move lower and test 8,538.24 and then 8,303.78


Comments (1-17-03): The Dow Jones Industrial Average closed Thursday at 8,698.15 down 25.03 points. In the process the Dow Jones Industrial Average generated a "Sell Signal". As a result of this I am expecting the Dow Jones to continue to move lower. The good news is that since the Dow has been trading in this area since last July it has now built a trading history that has created substantial near term support, so our risk of a major move lower is limited. I am expecting the Dow to test previous upside resistance levels at 8,602.61 and then 8,538.24 If the Dow closes below that level then I would expect it to test a previous support level of 8,303.78

Today's Opinion: Closed @ 8,698.15 Last Signal: Sell Signal on 1-16 with a close of 8,698.15 The index should move lower and test 8,602.61 and then 8,538.24


Comments (1-12-03): The Dow Jones Industrial Average closed Friday at 8,784.89 up 8.71 points. On Monday of last week the Dow reached our initial target of 8,771.01 and encountered resistance as expected. The good news is that the market did not turn lower and retest previous support levels. Currently this week I am expecting the Dow Jones Industrial Average to continue to move higher and test 8,931.68

Today's Opinion: Closed @ 8,776.18 Last Signal: Buy Signal on 1-2 with a close of 8,607.52 The index should move higher and test 8,931.68


Comments (1-5-03): The Dow Jones Industrial Average closed Friday at 8,601.69 down 5.83 points. With Thursday's strong move to the upside, the Dow defiantly broke it's downward trend line. To be honest the 265.89 points the Dow moved to the upside on Thursday came as quite a surprise. With Friday's lackluster activity, and combined with the fact that most of investment professionals I deal with still were not back from the New Years' Holiday, I am not sure to what to make of Thursday's move. Was it short covering done in 2003 to avoid having to pay taxes until April of 2004 vs. April of this year? Was it a sudden change in the view of the US economy? Politics? Or something else? To be perfectly honest, I'm not sure, but the real question is will the market continue to move higher or reverse the new trend & move back lower? I feel that the answer to this question will be found within the 1st few days of trading this week. As a result I am enter the week with a cautious stance.

Today's Opinion: Closed @ 8,8,601.69 Last Signal: Buy Signal on 1-2 with a close of 8,607.52 The index should move higher and test 8,931.68


Comments (12-27-02): The Dow Jones Industrial Average closed today at 8,303.78 down 128.83 points. The Dow Jones is clearly in a downward trend that I believe will continue until it test the 8,283.70 level, which is not that far away. If the Dow breaks the level 8,283.70 level, then I expect that it will continue to move lower and test 7,997.12

Today's Opinion: Closed @ 8,303.78 Last Signal: Sell Signal on 12-3 with a closed of 8,742.93 The index should move lower and test 8,283.70 and then 7,997.12


Today's Comments (11-4-02): The Dow Jones Industrial Average closed today at 8,571.60 up 53.96 points. With today's close the Dow broke through a short term resistance level at 8,538.24 There is upward resistance on the chart at 8,602.32. It is possible that a reversal of the upward trend could occur near that level, but a break through would allow the Dow to move towards 9,000

Today's Opinion: Closed @ 8,571.60 Last Signal: Buy Signal on 10-10 with the close of 7,533.95 Current Expections: Higher. I am expecting the Dow Jones Industrial Average to continute to move higher and test 8,602.32 and then 9,053.64 on a closing basis


Comments (10-21-02): The Dow Jones Industrial Average closed today at 8.538.24 up 215.84 points. The index looks over extended, and the risk of pullback is increased.

Today's Opinion: Closed @ 8,538.24 Last Signal: Buy Signal on 10-10 with the close of 7,533.95 Current Expections: Higher. The index should test 8,581.17 and then 9,053.64 on a closing basis

The Diamonds: The Diamonds 'DIA' are an exchange traded closed ended fund that consists of the 30 components of the Dow Jones Industrial Average.
Description of the Dow Jones Industrial Average (INDU): The Dow Jones Industrial Average is designed to track the overall performance of the US economy, not the stock market. It is composed of 30 equally weighted companies from a variety of US Industries.
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