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Apr 16, 2007 - Issue #054
Dow score card for the week ending 4/13/07.
DJ-30: 12612.13 +5.93 +0.41%. In the Real World: 51.73 +0.21 +0.41%.
UP: 17, Down: 13.
Trends (weekly): This is the subjective part.
Rising 15 (+3) 50%:
AA, +*AXP, CAT, DIS, +*GM, HON, HPQ, IBM, +*JPM, KO, +*MCD, MO, +*MRK, T, XOM.
Consolidating 13 (-3) 43%:
-*AIG, BA, C, DD, GE, HD, MMM, MSFT, PFE, PG, -*UTX, VZ, WMT.
Declining 2 (nc) 7%:
+/- denotes change of direction.
* denotes change of category.
The above data gives a picture of improving internals. Many individual stock charts
have installed new rising significant supporting trend lines which clearly indicate
the line of least resistance has been upward (past tense).
As long as prices stay above the rising trendlines, the line of least resistance will
continue to be up.
If, however, the rising trendlines are penetrated, it should be considered a danger
signal that the character of that particular market has changed and the line of least
resistance is changing.
The 2/20 Dow high is currently under assult. The more time it takes the market to
resolve this problem the greater in magnitude will be the next price move. Such is the
nature of markets.
A number of warning signs have already appeared. The S&P 500 (SPY) and Nasdaq 100 (QQQQ)
Have already violated their lines of support and are currently engaged in an upward
The CBOE option volatility indexes are at a low ebb. The next important volatility
measure will be up (fear) which historically accompanys declining prices. Buy puts
while they are still cheap.
Interest rates are rising along with gold, oil, and other commodity prices. Not good
Leading brokerage firm technical analysts have appeared on CNBC stating that, in their
opinion, the bottom has been reached and that the worst is over.
Many guest "experts" on CNBC have also indicated confidently that the fear of falling
real estate prices has been over blown. A contrarian approach would indicate caution.
Perhaps the looming budgetary showdown between Congress and the President over Iraq will
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