Nov 15, 2010 - Issue #241

Class Warfare!

Class Warfare!

CNBC will report on the 'lame duck' corruptocrats attempt to hang on to power thru the exercise of class warfare via the tax code. The progressive liberal democrats still control the White House and Senate and would love to split America, as they always do, going into the 2012 elections.

The conservatives will not compromise on anything, if they know what's good for them. The American voters will not stand for it. The unmistakable message was, "You work for us. Not the other way around!"

Obamacare will be repealed, "lock, stock, and barrel", in the words of possible Presidential candidate, Congressman Mike Pence (R) IND.

At the very least, Obamacare will be defunded while it works its way thru the Judicial system on its way to the Supreme Court. The lynch pin is the 'Commerce' clause. If that goes, the whole thing falls apart.

Where does that leave the economy for the next two years? Between a rock and a hard place.

Note how the market deals with unexpected bad news, in this environment: BA, CSCO.

Don't fall for those 'risk reversal' Option strategies recommended on OptionAction. They always say, "You must to be 'comfortable' owning the stock at the lower level" but when the 'lower level' actually arrives, they 'puke'.

Do you really want to be owning stocks in declining markets?

The only sensible way to speculate is to buy Puts to protect long positions and buy Calls to protect short positions. If you can't find suitably-priced Options available, don't speculate.

When 'implied volatility' is high, look to initiate Option premium selling strategies. Never sell 'cheap'.

Common sense: Have the discipline to wait for the right conditions before putting on positions. Cash is a strategic position.

Countdown till 2012 elections: 103 weeks.

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?

11/6 Saturday - New Moon (Observe Friday & Monday market activity).

11/21 Sunday - Full Moon (Observe Friday & Monday market activity).

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):

11/16 HD, WMT.

11/22 HPQ.

Dow score card for the week ending 11/12/10.

DJ-30: 11192.58 -251.50 -2.20%. The Real World (arithmetical) DJ-30: 49.30 -1.10 -2.20%.

UP: 5, Down: 25.

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

Rising (Generally Higher Highs/Higher Lows) 5 (-16) 17%:


Consolidating (Generally Lower Highs/Higher Lows) 20 (+14) 67%:

-*AA, -*AXP, BAC, -*CAT, -*DD, GE, -*HD, -*HPQ, -*IBM, -*JNJ, -*JPM, MCD, MMM, -*MSFT, -*PG, -*T, -*TRV, -*UTX, -*VZ, -*WMT.

Declining (Generally Lower Highs/Lower Lows) 5 (+2) 17%:


+/- 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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