Aug 11, 2008 - Issue #123
Bottoms up? Our friends at CNBC should be pleased to know that, definitely, a significant
low pivot point on the Dow was put in on 7/15 on both the daily and weekly charts. It was
successfuly tested on the daily chart on 7/28. It remains to be tested on the weekly chart.
If it does not hold, it will resolve into a continuation of the downward move (perhaps,
2,000 points). If it holds, it would probably resolve into a broad sideways consolidation
building a base to support a new future upward move.
An important measure is the highest high of the last three months, 5/19, in this case.
As each month goes by, that criteria will keep moving lower until the market eventually
takes it out. When that event happens, the assumption will be that the long term trend
will have changed to an upward bias. Until then, the major trend (monthly chart) remains
Down. Bullish strategies, therefore, must be entered into more cautiously.
What would cause a major decline in the market, you might ask? Well, for openers, the
Israeli Air Force attacking Iran just before the November elections might do it? Put
That being said, take a look at T. Notice, on the weekly chart, that this stock closed
lower than it opened every week for nine weeks. Finally, at the end of the tenth week, the
stock closed higher. This is known as 'the changing of the guard'. There has been an
incredible amount of 'pain' experienced by those on the long side of this stock all
the way down from over 40 to under 30 for ten weeks. This presents a low risk buying
This 'reversal' bar is flashing an entry signal with a stop-loss point one tick below the
bar's low at 29.71. The upside target is when it runs into it's declining 20ma (currently
at 36). That's an excellent risk/reward ratio. Your welcome.
During the next two weeks, the following Dow components will report earnings. Keep a
sharp eye for 'surprises'. You might be able to catch a nice swing in the week or two
leading up to 'Earnings Day'.
8/12 - HD.
8/14 - HPQ, WMT.
Dow score card for the week ending 8/8/08.
DJ-30: 11734.32 +408.00 +3.60%. The Real World (arithmetical) DJ-30: 48.04 +1.67 +3.60%.
UP: 25, Down: 5.
Trends (weekly charts): This is the subjective part.
Rising (Generally Higher Highs/Higher Lows) 13 (+10) 43%:
+*DIS, +*HD, HPQ, +*INTC, +*JNJ, KO, +*MCD, +*MMM, +*MSFT, +*PFE, +*PG, +*UTX, +*WMT.
Consolidating (Generally Lower Highs/Higher Lows) 15 (-9) 50%:
AIG, AXP, +*BA, -*BAC, C, CAT, CVX, DD, GE, GM, IBM, JPM, MRK, +*T, +*VZ.
Declining (Generally Lower Highs/Lower Lows) 2 (-1) 7%:
+/- 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!