I am very happy to announce that after missing the last six (6) weeks due to a severe case of pneumonia which lingered on and did not want to leave, I am back writing the Sterling Weekly and the Sterling Prime Stock Newsletter. After suffering from pneumonia, I would definitely urge everyone to get a pneumonia shot. It supposedly protects against 27 different types of pneumonia and is good for 10 years.
Since the previous edition of the Sterling Weekly, the Dow Jones Industrial Average rose 801.55 points or approximately 8.3% to finish at 10,406.96 In the September 14th edition of the Sterling Weekly I published a chart of the Dow Jones Industrial Average with a pair of trendlines showing the trading channel that the Dow Jones Industrial Average was trading within by staying within those trendlines. As I was preparing to write my 1st edition of the Sterling Weekly following coming down with pneumonia, both the Dow Jones Industrial Average and the Dow Jones Transport Average were in the process of moving lower, as a result I was planning on discussing the Dow Transport Theory; which says for a move in the Dow Jones Industrial Average to continue it must be confirmed by a similar move in the Dow Jones Transportation Average. But before I could complete the article, Warren BUffet announced that Berkshire Hathaway was purchasing Burlington Northern, send the Dow Transports sharply higher and changing the context of the market, which somewhat made the article I was working on irrelevant.
However, the Dow Jones Transportation Average has now rallied back to yearly highs, a place it has been twice before in the last couple of months. I've included a chart showing the recent history of the Dow Transports. Now the question is, can the Transports break through this apparent resistance level and move higher, or will it again turn lower upon reaching these levels?? If the Dow Transports does move higher from here, look for the Dow Jones Industrial Average (and the overall broad market) to continue to move higher. However, if the Dow Transports moves lower, then it could in turn pull the broad market and the Dow Jones Industrial Average lower.
Also, please note that this week has several major economic announcements this week including the Producer and Consumer Price Indices.