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Jun 25, 2007 - Issue #064

Low and Inside!

DJ-30: 13360.26 -279.22 -2.05%. In the Real World: 54.79 -1.14 -2.05%.

UP: 5, Down: 25.

Trends (weekly): This is the subjective part.

Rising 17 (-2) 57%:

AA, AXP, CAT, GE, GM, HD, HON, HPQ, IBM, INTC, JPM, KO, MCD, MMM, UTX, VZ, WMT.

Consolidating 10 (+1) 33%:

AIG, BA, DD, DIS, MO, MRK, MSFT, -*PFE, T, -*XOM.

Declining 3 (+1) 10%:

C, JNJ, -*PG.

+/- denotes change of direction.

* denotes change of category.

Low and Inside!

Notice a gradual deterioration of the internals of the Dow.

Although the daily charts clearly reflected weakness, the weekly chart of the Dow actually formed an "inside" bar (lower high but higher low).

Inside bars, especially on high volume, usually indicate the changing of tides in progress. In my judgement, the tides appear to have crested and are in the process of reversing and on their way out. I could be wrong, of course, but that's the way it appears to be unfolding so far. Be forewarned!

The big news was the debut of The Blackstone Group (BX). Those who bought at the open paid a heavy premium (over 24%) above the IPO price of 31 set the night before for the dubious privilage of getting in on this "hot" deal and by the close of the first day's trading were down over 9%. Too bad they didn't read my page on Initial Public Offerings first.

Fortress Investment Group (FIG) started it off back in February and, so far, the "hot" IPO chasers are down at least 30% on their money in that deal. Refer to my "What are we going to do Monday morning?" e-zine archives.