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Mar 16, 2009 - Issue #154

Drugs?

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.

Heads Up

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):

None.

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%:

None.

+/- denotes change of direction.

* denotes change of category.