Apr 5, 2010 - Issue #209

Q1 Earnings Season 2010 Begins

Q1 Earnings Season 2010 begins now.

Except for the NASDAQ, do you get the feeling that the markets are compressing? Although the NASDAQ is above its 200ma on the weekly chart, the 200ma is rolling over underneath it. Even for the NASDAQ, the the 2/5 low is critical (lowest low of the last 3 mos).

The DJ-30 is bumping up against its own 200ma which is also rolling over. I believe the warning sign would be if the DJ-30 penetrated the significant line of support drawn from the 7/8/09 low to the 2/5/10 low. The same goes for the SP-500.

Potential Down Swing: AA previous upside swing target is 17.97. Whenever a target is missed, especially when other stocks are hitting theirs, it builds up the opposite case. If AA gives it up from here, potential downside target = 9.48, as follows symmetrically:

3/18 high 14.82 + 1/28 low 12.26 - 1/11 high 17.60 = 9.48 target.

That's a 35.51% potential drop from the 4/1 close of 14.70 (Weekly MACD does not look strong).

MarketClub currently rates AA +100, providing it doesn't penetrate 12.60 (on the monthly chart).

At 39 implied volatility (basis May), AA Put Options are not cheap.

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?

4/14 Wednesday - New Moon.

4/28 Wednesday - 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):

4/12 AA.

4/13 INTC.

4/14 JPM.

4/16 BAC, GE.

Dow score card for the week ending 4/1/10.

DJ-30: 10927.07 +76.71 +0.71%. The Real World (arithmetical) DJ-30: 48.13 +0.27 +0.56%.

UP: 17, Down: 13.

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

Rising (Generally Higher Highs/Higher Lows) 9 (-10) 30%:

BA, CAT, +*CVX, DIS, +*JNJ, MCD, +*MMM, UTX, +*VZ.

Consolidating (Generally Lower Highs/Higher Lows) 21 (+10) 70%:

AA, -*BA, -*BAC, -*CSCO, -*DD, -*GE, -*HD, -*HPQ, -*IBM, -*INTC, -*JPM, -*KFT, KO, MRK, -*MSFT, PFE, PG, -*T, -*TRV, WMT, XOM.

Declining (Generally Lower Highs/Lower Lows) 0 (N/C) 0%:


+/- 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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