Aug 27, 2007 - Issue #073

Relief Rally?

Dow score card for the week ending 8/24/07.

DJ-30: 13378.87 +299.79 +2.29%. The Real World DJ-30: 54.86 +1.23 +2.29%.

UP: 26, Down: 4.

Trends (weekly): This is the subjective part.

Rising 4 (n/c) 13%:


Consolidating 21 (+12) 70%:

+*AA, AXP, +*BA, CAT, DD, GE, +*HD, +*HON, +*HPQ, IBM, INTC, +*JPM, MCD, MRK, +*MSFT, +*PFE, PG, +*T, +*VZ, +*WMT, +*XOM.

Declining 5 (-12) 17%:


+/- denotes change of direction.

* denotes change of category.

Relief Rally?

It's difficult to find reasons to buy this market and easier to find reasons to sell.

(1) 7-18-06 Dow 10813.79 low establishes significant bottom.

(2) 3-14-07 Dow 11939.61 low puts in higher significant bottom thereby forming new significant upward line of support on the weekly chart.

(3) 7-17-07 Dow 14021.95 high records all-time high.

(4) 7-18-07 Dow 13823.60 low records 1st pullback after making all-time high.

(5) 7-19-07 Dow 14015.85 high records failed rally attempt "kissing the top good bye".

(6) 8-01-07 Dow 13132.65 low records 2nd pullback.

(7) 8-08-07 Dow 13695.82 high records failed rally attempt establishing lower significant high thereby forming new significant downward line of resistance on the daily chart.

(8) 8-16-07 Dow 12517.94 low penetrating upward line of support on weekly chart but closing up smartly off low (possible future low pivot point?).

(9) 8-24-07 Dow 13381.47 high challenging the current downward line of resistance.


I believe, from the above, a case can be made that a large scale distribution of equities from "strong hands" into "weak hands" is already underway.

If true, then the line of least resistance is down.

The burden of proof, I'm afraid, is on the bulls.

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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