Subscribe

May 11, 2009 - Issue #162

Sooner or Later

Sooner or later, this rally has to pull back. Why not now?

The question then becomes: Should the pullback, whenever it comes, be bought? That depends upon whether the March low holds?

CNBCs Kudlow & Company frequent guest, Dougie Kass, has called the March low a 'generational' low. I have great respect for his opinions.

MarketClub algorithms for determining stock trends trigger buy signals when, after a decline on the monthly chart, the stock takes out the highest high of the previous three months. Many 'green triangles' are appearing lately. Note, especially, their call on oil and USO.

Notice, also, the weakness in the US$. Washington is printing a lot of greenbacks. That's a danger signal, if there ever was one. That's what happens when the world no longer wants to buy our Treasury bonds. Can you blame them? They're afraid of the size of our debt. The world notices how our government treats bondholders of Chrysler and GM. Not a confidence builder.

The government has also just announced major tax increase plans to fund their monsterous 'National Health Insurance' program. We've been down this road before. Would you expect anything less from 'Tax and Spend' Democrats?

The market, IMO, appears to be displaying strength in spite of the 'stimulus', rather than because of it. The volatility indexes are at a low ebb. Therefore, one should attempt to buy undervalued Options, if they can be found (not always easy to do).

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?

5/9 Saturday - Full Moon (Observe Friday 5/8 & Monday 5/11 market price action).

5/24 Sunday - New Moon (Observe Friday 5/22 & Monday 5/25 market price action).

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):

5/14 WMT.

5/19 HPQ, HD.

Dow score card for the week ending 5/8/09.

DJ-30: 8574.65 +362.24 +4.41%. The Real World (arithmetical) DJ-30: 35.89 +1.52 +4.41%.

UP: 22, Down: 8.

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

Rising (Generally Higher Highs/Higher Lows) 17 (+7) 57%:

AA, +*AXP, BA, +*BAC, CAT, +*CVX, +*DD, DIS, GE, +*JNJ, +*JPM, KFT, MMM, +*PFE, +*PG, UTX, +*XOM.

Consolidating (Generally Lower Highs/Higher Lows) 9 (-8) 30%:

C, -*IBM, INTC, +*KO, +*MCD, MRK, MSFT, T, WMT.

Declining (Generally Lower Highs/Lower Lows) 4 (+1) 13%:

-*GM, -*HD, -*HPQ, VZ.