May 18, 2009 - Issue #163

Has It Begun?

Has it begun? It's looking pretty good so far.

CNBC, on Friday, interviewed a trader looking for a "strong close" to signal a continuance of the current rising trend. He didn't get it. Quite the contrary.

Notice the 'bunching up' of the Dow components in the consolidating category. Is the DJIA shifting gears preparatory to a downward test of the March low? The Q1 earnings season is almost over with 90% of the results in. The results have been 'brutal', the 'worst in history', according to Standard & Poors. It would be normal to see a test of the March low. The only question, in my mind, is: Will it pass the test?

A 50% pull back to approximately Dow 7500 would correspond to the November '08 low forming the right shoulder of an 'inverted head-and-shoulder' pattern (very bullish). A greater than 62% pull back to below Dow 7250 would, IMO, indicate a lack of desire for upward movement. In that event, I would expect a test of the March low itself. The best that could develop, again IMO, would be a 'double bottom' (also very bullish). A failure of the March low, by more than 5%, would, IMO, indicate a continuation of the bear market.

As always, let the market tell its own story. The market is always its own best 'advisor'. Play it accordingly.

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?

5/24 Sunday - New Moon (Observe Friday 5/22 & Monday 5/25 market price action).

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):

5/19 HPQ, HD.

Dow score card for the week ending 5/15/09.

DJ-30: 8268.64 -306.01 -3.57%. The Real World (arithmetical) DJ-30: 34.61 -1.28 -3.57%.

UP: 6, Down: 24.

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

Rising (Generally Higher Highs/Higher Lows) 3 (-14) 10%:

+*KO, +*MRK, PFE.

Consolidating (Generally Lower Highs/Higher Lows) 24 (+15) 80%:

-*AA, -*AXP, -*BA, -*BAC, C, -*CAT, -*CVX, -*DD, -*DIS, -*GE, +*HPQ, IBM, INTC, -*JNJ, -*JPM, -*KFT, MCD, -*MMM, MSFT, -*PG, -*UTX, +*VZ, WMT, -*XOM.

Declining (Generally Lower Highs/Lower Lows) 3 (-1) 10%:

GM, HD, -*T.

+/- 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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