Jul 26, 2010 - Issue #225



Make Them Prove It!



Make them prove it!

CNBC applauds the markets' rally, even as technical indicators deteriorate. MACD showing negative divergence. Fibonacci retracement reaching upper limits. Gann's Square of Nine indicates approaching a 'cardinal' number on the SP-500. CBOE Market Volatility is significantly off its highs.

Notice how many moving averages are compressing in a narrowing band range. Where have we seen this before? Usually, right before a 'tsunami' hits.

Is this really when we should be wildly enthusiastic or cautious? Unless, and until, the market takes out the highest high of the last three months, the major trend must be considered 'down'.

When Put Options become cheap, buy them. Take whatever gifts the market provides. They are an extremely versatile tool in a traders arsenal. They are the perfect protection for stocks in rising markets and are better than 'short selling' in falling markets. Could you ask for anything more?

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?

7/11 Sunday - New Moon (Observe market action Friday & Monday).

7/25 Sunday - Full Moon (Observe market action Friday & Monday).

During the next two weeks, the following DJ-30 components report earnings. Keep a sharp eye out for possible price swings leading up to 'earnings day' (Subject to revision):

7/27 DD.

7/28 BA.

7/29 XOM.

7/30 CVX, MRK.

8/3 PFE, PG.

8/5 PG.

Dow score card for the week ending 7/23/10.

DJ-30: 10424.62 +326.72 +3.24%. The Real World (arithmetical) DJ-30: 45.91 +1.43 +3.21%.

UP: 24, Down: 6.

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

Rising (Generally Higher Highs/Higher Lows) 12 (+8) 40%:

+*AXP, +*CAT, +*CVX, +*DD, +*GE, +*KFT, +*KO, +*MMM, +*MSFT, +*T, +*UTX, +*WMT.

Consolidating (Generally Lower Highs/Higher Lows) 16 (-9) 53%:

AA, BA, CSCO, DIS, +*HD, HPQ, IBM, -*INTC, -*JPM, -*MCD, MRK, PFE, -*PG, TRV, VZ, XOM.

Declining (Generally Lower Highs/Lower Lows) 2 (+1) 7%:

-*BAC, -*JNJ.

+/- 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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