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Nov 24, 2008 - Issue #138

Reaffirmation

CNBC guests of the opinion that customers won't buy cars from a company in bankruptcy because the warranty contracts won't be honored are in error.

In bankruptcy proceedings, all existing obligations are first cancelled but then those obligations that the company wishes to honor are 'reaffirmed'.

Therefore, what emerges is a company that keeps only those obligations it wishes to honor. The rest are dumped. Life goes on.

It is not the obligation, nor desire, of the taxpayers to bailout the United Auto Workers union with their jobs bank, unaffordable health plans that no one else has, and Democrat politicians in their hip pockets.

Auto manufacturers in 'Detroit South', Toyota, Nissan, and Honda, are thriving and plan expansions. The only question is whether GM, Chrysler, and Ford will be allowed to emerge as 'lean, mean, fighting machines', or become history.

Heads Up

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):

11/24 HPQ.

Dow score card for the week ending 11/21/08.

DJ-30: 8046.42 -450.89 -5.31%. The Real World (arithmetical) DJ-30: 33.68 -1.88 -5.31%.

UP: 5, Down: 25.

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

Rising (Generally Higher Highs/Higher Lows) 0 (n/c) 0%:

None.

Consolidating (Generally Lower Highs/Higher Lows) 10 (-5) 33%:

+*AXP, CAT, CVX, +*DIS, +*GM, +*HPQ, PG, VZ, WMT, XOM.

Declining (Generally Lower Highs/Lower Lows) 20 (+5) 67%:

-*AA, BA, BAC, C, DD, GE, -*HD, IBM, INTC, JNJ, -*JPM, KFT, -*KO, -*MCD, -*MMM, -*MRK, MSFT, PFE, -*T, -*UTX.

+/- denotes change of direction.

* denotes change of category.