Sep 27, 2010 - Issue #234



Is This Rally for Real?



Is this rally for real?

Prices are being marked up smartly but where is the commensurate volume? Lack of volume is causing the MACD to have a negative divergence indicating unsustainability.

CNBC's Fast Money panelists had a spirited debate on the subject with no apparent consensus.

Implied volatility is dropping which historically indicates complacency and lack of fear. If Option premiums are too low to be worthwhile sales then they must be worthwhile buys, according to theory.

Congress' refusal to vote for lower taxes for 2011 should cause heavier than usual selling at year end for those in the top brackets.

Many of the wealthy have already moved out of New York and California to places like Florida to escape higher state taxes. The next move is out of the United States to escape federal taxes. The rich can live anywhere they please. Switzerland, some Caribbean tax haven, it's all the same to them. Obama's utopian idea of socialism and redistribution of wealth is not selling.

You want full employment? Let corporations repatriate profits earned overseas tax free, permanently keep taxes low then watch an economic miracle take place in this country like it did in old Hong Kong.

Countdown till November 2nd elections: 36 days.

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?

9/8 Wednesday - New Moon.

9/23 Thursday - Full Moon.

During the next two weeks, the following DJ-30 components report earnings. Keep a sharp eye out for possible price swings leading up to 'earnings day' (Subject to revision):

None.

Dow score card for the week ending 9/24/10.

DJ-30: 10860.26 +252.41 +2.38%. The Real World (arithmetical) DJ-30: 47.83 +1.11 +2.38%.

UP: 27, Down: 3.

Trends (weekly charts): This is the subjective part.

Rising (Generally Higher Highs/Higher Lows) 24 (+7) 80%:

+*AA, +*AXP, CAT, +*CSCO, +*CVX, DD, GE, +*HD, +*HPQ, IBM, INTC, JNJ, KFT, +*KO, MMM, +*MRK, PFE, PG, T, TRV, UTX, VZ, WMT, +*XOM.

Consolidating (Generally Lower Highs/Higher Lows) 6 (-7) 20%:

BA, BAC, -*DIS, JPM, MCD, -*MSFT.

Declining (Generally Lower Highs/Lower Lows) 0 (N/C) 0%:

None.

+/- 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!

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