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Sep 11, 2006 - Issue #023



Compression!



Dow score card for the week ending 9/8/06.

DJ-30: 11392.11 -72.04 -0.63%.

UP: 8 (-18), Down: 22 (+18).

Trends (weekly): This is the subjective part.

Rising 11 (-3):

DIS, GM, HON, HPQ, INTC, JNJ, KO, MCD, MO, T, VZ.

Consolidating 13 (+6):

AIG, C, CAT, +*DD, GE, JPM, +*MMM, MRK, -*PFE, -*PG, +*WMT, UTX, -*XOM.

Declining 6 (-3):

AA, AXP, BA, HD, IBM, MSFT.

* denotes change of category.

+/- denotes change of direction.

If my analysis is correct, the Dow components compressed this past week. The consolidating category picked up three from each of the other two categories giving us fewer rising, fewer declining, and a bulging in the middle.

This is usually a preparatory move for something bigger, like a spring compressing before it releases. It could also mean, internally, the Dow is in the process of reversing gears.

All we can do is observe and let the market tell its' own story.

Herb Greenberg, editor of CBS Market Watch, appeared on Kudlow & Company this past week. The subject: INTC. Mr. Greenberg was bearish. His opinion carries great weight.

My opinion is the opposite, based on technical analysis. We both can't be right.

If the stock collapses, we'll know he's right. If, instead, the stock finds support, in spite of the negativity, we'll know someone with clout is buying the stock.

Also in the news, HD. The news regarding real estate is negative, yet the stock is holding up well so far. If it doesn't collapse, I would consider that strength.





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