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May 19, 2008 - Issue #111

Mass Confusion?

What's with the Transports, again? Rising oil increases fuel costs yet the transports are up smartly, although on declining volume. Not a bullish sign.

Many daily charts are bumping up against their 200 day moving average (200ma) which technical analysts refer to as 'God'. We'll see.

Perhaps there's a CNBC guest expert waiting in the wings that will enlighten us!

The line of least resistance, in my judgement, appears to remain downward. Therefore, until markets demonstrate strength, rallies, in my view, should be viewed as opportunities to establish bearish positions.

Allow the market to tell its own story. The market is always its own best advisor.

Dow score card for the week ending 5/16/08.

DJ-30: 12986.80 +240.92 +1.89%. The Real World (arithmetical) DJ-30: 53.17 +0.99 +1.89%.

UP: 22, Down: 8.

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

Rising (Generally Higher Highs/Higher Lows) 11 (+6) 37%:

AA, +*BA, +*CAT, CVX, +*DD, DIS, IBM, +*INTC, +*MCD, +*T, +*UTX.

Consolidating (Generally Lower Highs/Higher Lows) 14 (-5) 47%:

AXP, GM, HD, JNJ, JPM, +*KO, +*MMM, MRK, MSFT, +*PFE, +*PG, VZ, WMT, +*XOM.

Declining (Generally Lower Highs/Lower Lows) 5 (-1) 17%:

AIG, -*BAC, -*C, -*GM, -*HPQ.

+/- denotes change of direction.

* denotes change of category.