Week's Edition of the Sterling Weekly
Weekly for January 16th, 2006
market continues to look strong.
I think the overall economy
is performing very well and
unless we experience a "shock
to the system" I don't
see anything that will interrupt
our current strong economic
growth. The Bottom Line:
I am expecting the overall market
to remain strong and the Dow
Jones Industrial Average to
set new record highs later this
I have decided
to take a look at the price
of Oil & the Amex Oil Index
'XOI' this week. I have inserted
charts of both below and included
separate discussions of each.
While I haven't generally tried
to make predictions for the
upcoming year, I do think that
the price of oil will have an
impact upon the economy and
our lives in 2006.
close look at the chart of the
'XOI' I've inserted below shows
that the 'XOI' reached a closing
high of 1,091.02 on September
29th of last year and then pulled
back to a low of 912.63 Since
late December the XOI has rallied
sharply higher and closed last
week at 1,078.40 This has helped
the XOI create a "cup pattern"
and if the 'XOI' closes above
1,091.02 then it will complete
this pattern which forecasts the
XOI continuing to move higher
towards the 1,269.41 level, or
an approximate 16% increase. By
the way, I would like to point
out that if the price of Oil rises
the same percentage above its
previous closing high, then the
price of oil would move to $81.25/barrel.
This is reasonably close to what
my analysis of the chart of Oil
indicates it could reach. Current
prices for Oil can be found (here.)
Our most recent analysis of the
Amex Oil Index 'XOI' can be found
I have inserted
below a daily chart on the price
of oil. The price of Oil reached
a closing high of $69.82/barrel
on August 30th following Hurricane
Katrina, and then trended lower
until it reached $56.15/barrel
on November 18th. Since roughly
mid-December the price of Oil
has been trending higher. This
is where it becomes important
to remember the 1st rule of
trends, they remain in place
until they are broken. My analysis
of this chart indicates that
the price of crude oil is going
to continue to move higher and
test $69.82/barrel. If the price
of Oil closes above this level,
then it will have completed
the cup pattern I have outlined
below, which then forecasts
a continued move higher to approximately
$83.50/barrel. While there is
no guarantee that the price
of Oil will close above its
old highs, if it does, look
for it to continue to move higher
to the mid $80/barrel price
In case you are wondering about
my track record with the price
of oil in the past. In the March
7th, 2005 edition of the
Sterling Weekly with oil in
the mid $40/barrel range I forecast
that oil would move to $64-$69/barrel.
In the August
29th edition of the Sterling
Weekly following Hurricane Katrina
I wrote that the price of Oil
might "hit $70 barrel,
but that should be about it."
I stand by what I've wrote and
there it is for you to read.
Calendars for the Week of January
||NY Empire State
||Net Foreign Purchases
||Fed's Beige Book
stock market is closed in observance
of Martin Luther King Day.
Airlines 'CAL' reports earnings before
the open. Est. ($1.63)
Corp. 'INTC' reports earnings. Time
n/a. Est. $0.43/share.
reports earnings after the close.
Holdings 'MDC' reports earnings before
the open. Est. $4.01/share.
Fargo 'WFC' reports earnings before
the open. Est. $1.15/share.
Inc. 'YHOO' reports earnings. Time
n/a. Est. $0.17
Corporation 'AMR' reports earnings.
Time n/a. Est. ($2.45)
Computer 'AAPL' reports earnings after
the close. Est. $0.55
'EBAY' reports earnings. Time n/a.
Morgan Chase 'JPM' reports earnings
before the open. Est. $0.72
One Financial 'COF' reports earnings
after the close. Est. $0.93
Horton 'DHI' reports earnings before
the open. Est. $0.94
Lynch 'MER' reports earnings. Time
N/A. Est. $1.30
'C' reports earnings before the open.
Electric 'GE' reports earnings. Time
N/A. Est. $0.55
'SLB' reports earnings before the
open. Est. $0.96
full earnings calendar for this
week can be found (here)
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Close or Exit Price
||$37.46 January 12th
||$89.14 January 11th
to move higher.
per share PROFIT is a theoretical
calculation based upon the opening
price the day the recommendation is
published and the intra day high (or
low for short sales) on the exit day.
The exit day is determined based upon
the application of our "Rules
for Trading", the implementation
of "stops" within our stated
policy, and may not reflect the complete
or full movement of the underlying
Dow Jones Industrial
Closed @ 10,959.87 Last Signal:
Called Higher with the close of 10,823.72
on December 13th.
Current Expectations: I think the
end of the year weakness is over for
the market. I am expecting the Dow Jones
Industrial Average to move higher and
test 10,940.55 on a closing basis.
@ 1,287.61 Last Signal: Called
higher with the close of 1,267.43 on December
13th. Current Expectation: I am
expecting the S&P 500 to continue
to move higher and test
1,312.54 on a closing basis.
NASDAQ 100 (NDX)
Closed @ 1,746.78 Last Signal:
Called Higher with the close of 1,679.93
on January 3rd. Current Expectations:
This index was hit harder by the end of
the year selling, declining more than
the other major indices. I am now expecting
the NDX to continue to move higher and
test 1,751.45 on a closing basis.
Ten Year Treasury Index (TNX)
@ 4.350% Last Signal:
Called Lower after the close of trading
on January 13th with a close of 4.350%
This index should move lower and test
then 4.176% on a closing basis.
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