Sep 20, 2010 - Issue #233



Walking on Eggshells



Walking on eggshells would be an apt description of current market price action. To say the market mood is cautious would be an understatement. Plainly, it's entirely political. It's coming down to the wire.

Obama is reduced to appealing to the only constituency he has left: The Democratic Black Caucus. Will it be enough? Not bloody likely. Obama, Pelosi, Reid and the 'Progressives' are finished.

If the Delaware primary revolt has Democrats thinking the 'Tea Party' has caused a 'civil war' within the Republican Party, they are correct. But they shouldn't cheer. Rather, they should fear. Voters are purging 'Rino's' in favor of true conservatives. They may not like the Republican 'establishment' but they absolutely hate the Democrats. Voters would choose John Gotti over any candidate endorsed by Obama.

Fox News: Stop asking who will be the Republican choice to run against Obama in 2012. If the Republicans don't win in November, it won't matter. If they win, it won't matter. Whoever they choose will beat Obama. Got it?

Market observation: Implied volatility is low. History tells us it won't stay that way. Something now unforseen will kick it up. Load up on cheap Puts while they're available either for protecting long stock positions or substitutes for short positions.

Countdown till November 2nd elections: 43 days.

Heads Up

W. D. Gann, a keen market observer, although not an astronomer, nevertheless, was fascinated by the apparent coincidence of important market 'pivot points' and astronomical dates. Theories exist for estimating time and price of important market turning points but astronomical occurrences are computed with mathematical certainty.

There is no logical reason why these occurrences should coincide yet, empirically, they have.

The 'Full Moon' and 'New Moon', among others, have been cited. Therefore, one might be well advised to be aware of their occurrence. Note: The first 5 business days of 2008 concluded on a 'New Moon' and we all know how that worked out. Coincidence?

9/8 Wednesday - New Moon.

9/23 Thursday - Full Moon.

During the next two weeks, the following DJ-30 components report earnings. Keep a sharp eye out for possible price swings leading up to 'earnings day' (Subject to revision):

None.

Dow score card for the week ending 9/17/10.

DJ-30: 10607.85 +145.08 +1.39%. The Real World (arithmetical) DJ-30: 46.72 +0.64 +1.39%.

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

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

Rising (Generally Higher Highs/Higher Lows) 17 (+4) 57%:

CAT, +*DD, +*DIS, GE, +*IBM, +*INTC, JNJ, KFT, +*MMM, +*MSFT, PFE, +*PG, T, +*TRV, +*UTX, VZ, +*WMT.

Consolidating (Generally Lower Highs/Higher Lows) 13 (-4) 43%:

-*AA, AXP, BA, -*BAC, CSCO, -*CVX, HD, HPQ, -*JPM, -*KO, MCD, -*MRK, XOM.

Declining (Generally Lower Highs/Lower Lows) 0 (N/C) 0%:

None.

+/- denotes change of direction.

* denotes change of category.





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!

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