Mar 16, 2009 - Issue #154
Drugs? Specifically, MRK & PFE, the two standout performers in the Dow this week.
Given the strong rebounds, in the same industries, confirming strength, each making
strong acquisitions is impressive. Get out the fibonacci tool and start calculating
the retracement targets.
If, as, and when the pullbacks take place, consider buying Call options (if
attractively priced) for limited downside risk and leveraged upside potential with the
additional advantage in flexibility of being able to morph (if need be) into a
synthetic Put position by shorting stock. Also consider the attractiveness of selling
bullish Put spreads for credits. The combination of 'long Calls/short Put credit spreads'
can be potent. And the all important risk factor is limited. Use money management
principles to determine proper position size.
CNBC, no doubt, will be seeking out guest commentaries.
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?
3/26 Thursday - New Moon.
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):
Dow score card for the week ending 3/13/09.
DJ-30: 7223.98 +597.04 +9.01%. The Real World (arithmetical) DJ-30: 30.23 +2.50 +9.01%.
UP: 30, Down: 0.
Trends (weekly charts): This is the subjective part.
Rising (Generally Higher Highs/Higher Lows) 3 (+3) 10%:
+*BAC, +*GM, +*INTC.
Consolidating (Generally Lower Highs/Higher Lows) 27 (+22) 90%:
+*AA, +*AXP, +*BA, +*C, +*CAT, +*CVX, +*DD, +*DIS, +*GE, +*HD, +*HPQ, IBM, +*JNJ, +*JPM,
+*KFT, +*KO, +*MCD, +*MMM, +*MRK, +*MSFT, PFE, +*PG, +*T, +*UTX, +*VZ, WMT, +*XOM.
Declining (Generally Lower Highs/Lower Lows) 0 (-25) 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!