Oct 27, 2008 - Issue #134
Deleveraging hangover, indeed.
CNBC sources informed that forced liquidation of hedge funds due to margin calls was
responsible for the worldwide deluge of selling pressure.
CNBC sources also emphasized that everyone should do nothing because, once the selling
has run its course, the ensuing recovery rally will be of unbelievable proportions.
Has anyone asked 'Doctor Bob' Froelich (Dow 13,000 by year end!) if that's also a
Contrary opinion theory states that when everyone thinks alike, everyone is likely to
After such massive liquidation, another scenario would be a prolonged sideways movement
of many months duration. That would be the 'good' news.
The 'bad' news would be a slow, drawn out resumption of a torturous decline brought on
by a world economic depression. Have not companies been lowering their earnings guidance?
Some refusing to give any guidance at all?
Add to that the likely election of a super liberal, radical leftist, tax and spend,
union dominated, administration and congress forced to deal with huge layoffs and, as if
that's not enough, being tested by some international crisis guaranteed to happen within
the first six months by the Democratic Vice-Presidential candidate, Joe Biden, no less.
Just some possibilities.
During the next two weeks, the following Dow components report earnings. Keep a sharp eye
out for possible price swings leading up to 'earnings day' (Subject to revision):
10/28 JBLU (Transportations).
11/4 PG (Election Day - US).
11/6 XOM, DIS.
Dow score card for the week ending 10/24/08.
DJ-30: 8378.95 -473.27 -5.35%. The Real World (arithmetical) DJ-30: 35.07 -1.98 -5.35%.
UP: 5, Down: 25.
Trends (weekly charts): This is the subjective part.
Rising (Generally Higher Highs/Higher Lows) 0 (n/c) 0%:
Consolidating (Generally Lower Highs/Higher Lows) 21 (-8) 70%:
AXP, BA, BAC, CVX, DIS, GM, HD, JNJ, KFT, KO, MCD, MMM, MRK, MSFT, PFE, PG, T, UTX, VZ,
Declining (Generally Lower Highs/Lower Lows) 9 (+8) 30%:
-*AA, -*C, -*CVX, -*DD, GE, -*HPQ, -*IBM, -*INTC, -*JPM.
+/- 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!