Oct 1, 2007 - Issue #078
Downward move primarily because of two factors:
(1) Current low volatility (fear) index readings.
(2) New upward significant support trend lines in place.
Let's address volatility first.
Low volatility values always coincide with market tops.
Something will trigger an increase.
We're entering "earnings" season. Disappointing 3Q results and/or "warnings"
announcements, for instance, would be enough to get the ball rolling.
Any unexpected market disturbing event will do. It's not as though there's nothing
to choose from. Just watch CNBC everyday. There will be an abundance of "riches."
As for newly upward sloping "significant" support trend lines put in place on the charts.
The best way to view these indicators is to visualze their extensions as an "electrified"
fence. As long as the "power" is on, the trend line will "control" the stock's price
direction. If the stock moves through, i.e. violates, visualize the "power" being
turned off and no longer controlling.
When this happens, the market is telling us that something has just changed and we
should be paying attention. Significant trend line extensions, therefore, tell us where
to place "stop" orders for the entering and exiting of positions.
Want to see a chart that has something to say? Check out Whole Foods Market Inc, (WFMI).
It's in the Nasdaq 100 which means it automatically has a following. That's important.
Dow score card for the week ending 9/28/07.
DJ-30: 13895.63 +75.44 +0.55%. The Real World DJ-30: 56.98 +0.31 +0.55%.
UP: 17, Down: 13.
Trends (weekly charts): This is the subjective part.
Rising (Generally Higher Highs/Higher Lows) 16 (+1) 53%:
CAT, GE, GM, HON, HPQ, IBM, INTC, JNJ, KO, MCD, MMM, PG, T, UTX, VZ, +*XOM.
Consolidating (Generally Lower Highs/Higher Lows) 10 (-2) 33%:
AA, AXP, BA, DD, DIS, JPM, MRK, MSFT, PFE, WMT.
Declining (Generally Lower Highs/Lower Lows) 4 (+1) 13%:
AIG, C, -*HD, MO.
+/- 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!