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Aug 14, 2006 - Issue #019
After selling substantially down, the week closed as though it wanted to see if there
actually was going to be a cease-fire in Lebanon, not to mention the many economic
reports due out in the upcoming week.
As of right now, it doesn't look like a cease-fire is going to happen anytime soon.
It's obvious there's a lot of confusion going on out there right now.
Dow score card for the week: 7 up (-10), 23 down (+6).
Trends (weekly): This is the subjective part.
Rising 11 (0):
GM, JNJ, JPM, KO, MO, MRK, PFE, PG, T, VZ, XOM.
Consolidating 4 (-3):
CAT, DIS, HON, MCD.
Declining 15 (+3):
-*AA, AIG, AXP, -*BA, -*C, DD, GE, HD, HPQ, IBM, INTC, MMM, MSFT, UTX, WMT.
* denotes change of category.
+/- denotes change of direction.
The above indicates that, in my opinion, three Dow components (AA, BA, and C) shifted
from the Consolidating category to Declining.
The daily charts are indicating to me that the best candidate for new money is still INTC.
It has stopped declining and leveled off to consolidating. If this keeps up, it's only
a matter of time until the weekly chart indicates the same. Things could change, of
course, but right now it seems to be moving in that direction.
What are we trying to accomplish here anyway? Have you ever noticed how often some
guest "expert" that appears on CNBC, when asked for their best buy recommendation, always
seems to mention a stock that has already gone up 50 - 100% during the past year? They
always say, "it has a great-looking chart, buy the stock!"
I don't want to hear about a stock that's already gone up 50 - 100%. I want to hear about
it before it goes up 50 - 100%. Don't you?
That's what we are trying to accomplish here.
In our very 1st issue, we chose to start off with GM. It went up over 50% in a matter of
months. Everyone was against it. Nobody wanted to touch it. That's one of the clues, by the
way, an out of favor stock. It's classic. Obviously, someone wanted it.
Does INTC qualify as an out of favor stock, right now? It's price is depressed, isn't it?
Is INTC going to go out of business? If not, can the stock go up a significant amount over
the next 6 to 12 months?
What I'm saying is, when INTC is up 50 - 100% next year and some "expert" on CNBC says
"it's got a great looking chart, buy the stock!", I want my subscribers to be able to say,
"since you like it so much, you can have mine!"
By then, we'll be interested in the next "out of favor" Dow blue chip. Does that sound like
a plan? Works for me.
Speaking of "out of favor" Dow components that may be making a turn for the better: AIG.
And here's one from the S&P 500: MMC.
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!