September 13, 2009
Sep 14, 2009 - Issue #180
DJ-20 Explodes!
DJ-20 explodes to the upside as Transportations appear to be showing improvement across the board. Are carriers benefiting from wholesalers replenishing inventories from manufacturers? What would that mean for retailers? Some companies are reporting an increase in international orders.
CNBC's Larry Kudlow (Kudlow & Company) thinks the DJ-30 hasn't moved since 9-11. Not true. The market has greatly fluctuated. It just happens to currently be where it was then. The 'buy & holders' may have nothing to cheer about but trader/speculators have had plenty of opportunities (and will have plenty more). The biggest factor (IMO) is political.
Case in point: OSG 36.88 (DJ Transportations). A case can be made, IMO, that if the nearest ITM Puts (Oct 40p) can be purchased advantageously (this is key) the stock can then be bought with the position fully protected on the downside except for the time value of the Put Option which can be offset with the sale of the Jan 45 Calls. The resulting position would be a favorable risk/reward 'collar'. Throw that into your Option model and see the possibilities. If the Puts cannot be bought at a favorable price, pass on the trade.
Heads Up
W. D. Gann, a keen market observer, although not an astronomer, nevertheless, was fascinated by the apparent coincidence of important market 'pivot points' and astronomical dates. Theories exist for estimating time and price of important market turning points but astronomical occurrences are computed with mathematical certainty.
There is no logical reason why these occurrences should coincide yet, empirically, they have. The 'Full Moon' and 'New Moon', among others, have been cited. Therefore, one might be well advised to be aware of their occurrence. Note: The first 5 business days of 2008 concluded on a 'New Moon' and we all know how that worked out. Coincidence?
9/18 Friday - New Moon.
During the next two weeks, the following Dow components report earnings. Keep a sharp eye out for possible price swings leading up to 'earnings day' (Subject to revision):
9/17 FDX.
Dow score card for the week ending 9/11/09.
DJ-30: 9605.41 +164.14 +1.74%. The Real World (arithmetical) DJ-30: 42.37 +0.73 +1.74%.
UP: 23, Down: 7.
Trends (weekly charts): This is the subjective part.
Rising (Generally Higher Highs/Higher Lows) 11 (+8) 37%:
+*AXP, +*CAT, +*CSCO, +*CVX, +*DIS, +*GE, +*HPQ, KO, +*MMM, +*PG, UTX.
Consolidating (Generally Lower Highs/Higher Lows) 17 (-4) 57%:
+*AA, BA, BAC, +*DD, HD, +*IBM, INTC, JNJ, JPM, MRK, MSFT, PFE, T, -*TRV, VZ, WMT, XOM.
Declining (Generally Lower Highs/Lower Lows) 2 (-4) 7%:
KFT, -*MCD.
+/- denotes change of direction.
* denotes change of category.
Comments? Ideas? Feedback? Let me have it, right between the eyes! I'd love to hear from you. Just reply to this zine and tell me what you think!