Jun 28, 2010 - Issue #221

PFE... Buy?

PFE... Buy?

Stock declined seven consecutive trading sessions (successfully testing the 6/8 low) before showing an 'up' day.

Option skew: In-the-money Calls are showing higher implied volatility than in-the-money Puts making the Puts a better value. Therefore, going long PFE stock and buying Puts out to September for protection (synthetic Call) makes more sense.

Even CNBC'S Larry Kudlow thinks the general market doesn't look all that appetizing.

However, PFE is at a historically low P/E. Maybe it's worth a shot as a swing trade. If it fails, the Puts will protect you.

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?

6/12 Saturday - New Moon (Observe market action Friday & Monday).

6/26 Saturday - 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):


Dow score card for the week ending 6/25/10.

DJ-30: 10143.81 -306.83 -2.94%. The Real World (arithmetical) DJ-30: 44.75 -1.34 -2.91%.

UP: 5, Down: 25.

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

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

+*AA, AXP, BA.

Consolidating (Generally Lower Highs/Higher Lows) 19 (+6) 63%:

BAC, -*CAT, -*CVX, -*DD, -*DIS, -*HPQ, -*IBM, INTC, JNJ, JPM, -*KFT, -*MCD, MMM, -*MRK, PFE, -*T, -*TRV, -*UTX, -*VZ.

Declining (Generally Lower Highs/Lower Lows) 8 (+8) 27%:

-*CSCO, -*GE, -*HD, -*KO, -*MSFT, -*PG, -*WMT, -*X0M.

+/- 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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