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Feb 5, 2007 - Issue #044
MMM - Now We Know Why!
Dow score card for the week ending 2/2/07.
DJ-30: 12653.49 +166.47 +1.33%. In the Real World: 52.65 +0.69 +1.33%.
UP: 25 (+13), Down: 5 (-13).
Trends (weekly): This is the subjective part.
Rising 14 (+2):
AA, +*BA, +*CAT, DIS, HON, JPM, KO, MO, PG, T, UTX, VZ, WMT, +*XOM.
Consolidating 15 (-2):
AIG, AXP, C, DD, GE, GM, HD, HPQ, IBM, INTC, JNJ, MCD, -*MRK, MSFT, PFE.
Declining 1 (n/c):
+/- denotes change of direction.
* denotes change of category.
MMM - Now We Know Why!
Back in the December 10 issue of this e-zine, Insiders Selling Out In Droves, (check out
the past issues in the archives), I mentioned MMM had just put in a new "significant"
declining trend line and to be warned.
Even CNBC-TV, without mentioning any company in particular, headlined reports of heavy
Now we know why the insiders were in such a hurry to sell out!
On Tuesday, January 30, in response to the company's quarterly earnings announcement that
not only would earnings for Q4 be less than Wall Street anticipated but that expectations
were for a softening demand for the companies products worldwide in '07, MMM stock tanked.
Previously, after the close of business on Wednesday, December 6, I determined that a significant
declining trend line, on the daily chart, from the Thursday, November 30, peak had
revealed that a failing rally in MMM stock had just taken place.
MMM had not experienced a failing rally for quite some time, so I interpreted this as an
event of some importance and, that weekend, notified my subscribers to be warned.
The point of all this is that, in my opinion, the insiders knew as soon as the November
results were in that the 4th Quarter would not make very good reading. They sold.
To those who were interested, the daily chart revealed their selling activity.
Did their activity constitute illegal insider trading? That is for the SEC to decide.
However, basing trading decisions on technical analysis of charts is certainly not only
legal, it is admired in some quarters.
The greatest trader that ever lived, Jesse Livermore, was strictly a reader of the ticker
tape. No one that ever lived could read the market better.
Do yourself a favor: Go to my book store, Hot Stuff, and buy youself a copy of Trade
Like Jesse Livermore. You could do worse.
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!