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Feb 2, 2009 - Issue #148

Pressure!

Pressure is building. Lateral price action on increased volume indicates the battle is joined. How is the consolidation we are witnessing going to resolve? Up or down? In my opinion, events in Washington, D.C. will determine the outcome. Are we to attempt to tax and spend our way to prosperity (something which has never worked) or bite the bullet and muddle through?

CNBC has been doing a masterful job of presenting the issues. Apparently, the Republican stand has caused some re-thinking among the Legislature. The Democrats fear they will be blamed and will lose the House and Senate two years hence. They have reason to fear.

Buy Puts and be prepared to 'morph' into synthetic Calls by going long stock if the market shows strength.

Go Steelers!

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?

2/9 Monday - Full Moon.

2/24 Tuesday - New Moon.

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):

2/3 DIS, MRK, (Transportations) UPS.

2/4 KFT, (Transportations) AXB, R.

2/10 GM.

2/12 KO.

Dow score card for the week ending 1/30/09.

DJ-30: 8000.86 -76.70 -0.95%. The Real World (arithmetical) DJ-30: 33.48 -0.33 -0.95%.

UP: 13, Down: 16, N/C: 1.

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

Rising (Generally Higher Highs/Higher Lows) 1 (N/C) 3%:

IBM.

Consolidating (Generally Lower Highs/Higher Lows) 21 (+13) 70%:

+*AXP, BA, +*BAC, +*C, +*CVX, +*DIS, +*GE, +*HD, HPQ, -*INTC, +*JNJ, JPM, KFT, +*KO, +*MCD, +*MMM, MRK, T, +*UTX, VZ, XOM.