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
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
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).
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):
5/19 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,
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.
+/- 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!