Mar 1, 2010 - Issue #204

Merck (MRK) 35.76 Critical?

CNBC might find a technical analyst to agree or disagree?

Stock is currently attempting to challenge the 38.18 high. Will it succeed? To be determined.

Additionally, 35.76 is now the lowest low of the last 3 months (Donchian Channel), penetration of which would trigger a red 'trade triangle' at MarketClub on the monthly chart, indicating a change in primary trend to downward. Such a signal would, under their method, suggest trading from the 'short' side only.

Measuring the downward swing from the 1/21 high (41.56) (Point A) to the 2/10 low (35.76) (Point B) = -5.80.

Measuring the upward swing from the 2/10 low (35.76) (Point B) to the 2/16 high (38.18) (Point C) = +2.42 (a 42% retracement).

Thus, the 'Trident' swing trade formula for estimating a possible swing target (32.38) (Point D): D = C + (B-A).

Where, 38.18 -5.80 = 32.38. This assummes Point C holds and the next downward swing is symmetrical (a working hypothesis).

As long as the 200ma on the DJ-30 weekly chart is definitely rolling over, it's difficult to make a bullish case. MarketClub draws attention to 9678.95 (lowest low of the last 3 months, currently) at which point their monthly 'Trade Triangle' for the DJ-30 will turn red indicating a sell signal.

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?

2/13 Saturday - New Moon (Watch market action Friday 2/12 & Monday 2/15).

2/28 Sunday - Full Moon ( Watch market action Friday 2/26 & Monday 3/1).

3/15 Monday - New Moon.

3/29 Monday - Full Moon.

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):

None.

Dow score card for the week ending 2/26/10.

DJ-30: 10325.26 -77.09 -0.74%. The Real World (arithmetical) DJ-30: 45.54 -0.42 -0.91%.

UP: 6, Down: 23, NC: 1.

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

Rising (Generally Higher Highs/Higher Lows) 4 (-8) 13%:

BAC, HD, +*JPM, +*UTX.

Consolidating (Generally Lower Highs/Higher Lows) 23 (+5) 77%:

AA, AXP, -*BA, -*CAT, -*CSCO, CVX, -*DD, -*DIS, GE, HPQ, IBM, -*INTC, -*JNJ, KFT, MCD, MMM, MRK, MSFT, -*PG, -*TRV, VZ, WMT, XOM.

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

-*KO, -*PFE, -*T.

+/- denotes change of direction.

* denotes change of category.