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Jan 1, 2007 - Issue #039

Get Ready to Rumble!

DJ-30: 12463.15 +119.93 +0.97%. In the Real World: 51.86 +0.50 +0.97%.

UP: 23 (+13), Down: 7 (-13).

Trends (weekly): This is the subjective part.

Rising 15 (n/c):

+*BA, C, DIS, HON, HPQ, +*IBM, JPM, KO, MCD, MO, +*MSFT, PG, T, VZ, XOM.

Consolidating 10 (n/c):

AIG, AXP, -*DD, -*GE, GM, HD, -*JNJ, MRK, UTX, WMT.

Declining 5 (n/c):

AA, CAT, INTC, MMM, PFE.

* denotes change of category.

+/- denotes change of direction.

Things are about to get "interesting!"

It appears that whatever year-end "tax selling" operations needed to be done was, for the most part, accomplished the Friday before Christmas and then "everyone" took off for the holidays. Makes sense.

Notice, although some Dow components changed places, the net trend change was zero. Happy Holidays!

The markets (and control of Congress) will delay one day, in honor of the late President Gerald Ford, before we begin to find out what it has in store for us for '07.

A review of the weekly charts shows an increase in new "significant" upward support trend lines (see MSFT, for instance). Caution would dictate a discreet upward adjustment of sell stop orders accordingly, in my opinion.

Option volatility cannot be expected to remain at current low levels, if history is any guide.

CNBC-TV's Kudlow & Company announced that the Chicago Board Options Exchange (CBOE) and the New York Stock Exchange (NYSE) received permission from the Securities and Exchange Commission (SEC) to initiate new streamlined portfolio margin rules starting this April.

The purpose of the new margin rule changes is to enable market participants to more efficiently utilize capital. Apparently, Europe is way ahead of us in that regard and we need to catch up.