Mar 31, 2008 - Issue #104


Crossroads, defined as a critical or crucial time or state of affairs, would seem to be an apt description of the current market, at least, according to the individual Dow stocks.

Notice how all but four of the components have bunched together into the consolidation or congestion category. This is typical behavior of markets when participants are unsure of what's coming next. Markets can only go three ways: up, down, or sideways. This market is moving sideways. It will keep doing so until one side or the other takes control. The only question is when and in which direction will it breakout.

One can try to handicap all the socio/political/economic factors the market has to deal with and position ones' finances accordingly or simply allow the market to tell its own story and jump aboard when the breakout comes.

If option volatility were low, that would dictate the purchase of cheap straddles in anticipation. Good luck with that, under current conditions.

One thing though, the above discussion pertains to the weekly charts. Monthly charts, on the other hand, have (except for CAT, IBM, and WMT) already broken to the downside. Not good.

Dow score card for the week ending 3/28/08.

DJ-30: 12216.40 -144.92 -1.17%. The Real World (arithmetical) DJ-30: 50.02 -.59 -1.17%.

UP: 9, Down: 21.

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

Rising (Generally Higher Highs/Higher Lows) 4 (-10) 13%:

+*CAT, +*MCD, +*MRK, T.

Consolidating (Generally Lower Highs/Higher Lows) 26 (+15) 87%:

+*AA, AIG, -*AXP, +*BA, -*BAC, -*C, +*CVX, +*DD, -*DIS, -*GE, GM, -*HD, HPQ, -*IBM, -*INTC, -*JNJ, -*JPM, -*KO, MMM, MSFT, +*PFE, -*PG, UTX, VZ, -*WMT, XOM.

Declining (Generally Lower Highs/Lower Lows) 0 (-5) 0%:

+/- 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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