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Jun 18, 2007 - Issue #063



Rebound?



Dow score card for the week ending 6/15/07.

DJ-30: 13639.48 +215.09 +1.60%. In the Real World: 55.93 +0.87 +1.58%.

UP: 22, Down: 7, N/C: 1.

Trends (weekly): This is the subjective part.

Rising 19 (+6) 63%:

+*AA, AXP, +*CAT, GE, +*GM, +*HD, HON, HPQ, IBM, +*INTC, JPM, KO, +*MCD, MMM, PFE, UTX, VZ, WMT, XOM.

Consolidating 9 (-6) 30%:

AIG, BA, DD, DIS, MO, MRK, MSFT, PG, T.

Declining 2 (n/c) 7%:

C, JNJ.

+/- denotes change of direction.

* denotes change of category.

Rebound?

Although the Dow did not register new highs for the week, we're back to 19 Dow stocks in the rising trend camp again (at least, that's my interpretation). Still, the individual performance of some of the components is impressive.

Jesse Livermore said to never fear a normal reaction. So the question must be: Is this a normal reaction or something stronger? The volume was higher, government economic reports were favorable, but the Dow did not move into new high ground. To me, this means that there was enough selling on the good news to halt the advance. The upcoming week will be instructive.

One guest on CNBC's Kudlow & Company, Robert Froehlic, investment strategist at DWS Skudder, in a heated argument, stated "the Dow would be at 16,000 by year end and that's a slam dunk!" How many times have statements like that came back to haunt?

If the Dow does register new highs, note the price and volume action of the individual components for confirmation. At important tops, averages are at their most deceiving.







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