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Jan 22, 2007 - Issue #042



Risk Premium



Dow score card for the week ending 1/19/07.

DJ-30: 12565.53 +9.45 +0.08%. In the Real World: 52.28 +0.04 +0.08%.

UP: 18 (-5), Down: 12 (+5).

Trends (weekly): This is the subjective part.

Rising 16 (n/c):

+*AA, C, DD, DIS, GE, HON, JPM, KO, MCD, MO, +*MRK, MSFT, PG, +*UTX, VZ, WMT.

Consolidating 12 (n/c):

AIG, AXP, -*BA, GM, HD, -*HPQ, -*IBM, INTC, JNJ, PFE, T, XOM.

Declining 2 (n/c):

CAT, MMM.

+/- denotes change of direction.

* denotes change of category.

Risk Premium

Despite some components changing places, on balance the trend category totals remained the same. What does it all mean?

Rising trenders outnumbering decliners would indicate strength. So far, so good.

Rising significant trend lines confirm the rising trend but this bull is aging. Therefore, also calling for caution. Adjust stops upward accordingly.

An examination of earnings return on the S&P 500 index vs. yield to maturity on 10 year AAA corporate bonds indicates, in my opinion, a positive risk premium still exists in favor of owning stocks.

Price trend action is its' own best indicator. Let the market tell its' own story.

The weekly WMT chart appears to be telling an interesting story.







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