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A Wall Above 11,000
www.my-broker.com www.investmentvalues.biz
In our last market comment letter we warned about resistance
above a Dow of 11,000. Instead of the market “climbing a wall of worry”
it hit a wall. Our 62% upside projection for the 14,198 – 6,470 Dow
decline was 11,261 (the actual high was 11,258). Our upside projection for
the 1,576 – 666 S&P 500 decline was 1,266 (the actual high was 1,220).
Pretty close. It appears to us that as we said in our #570 Investment Strategy
Letter “Just like a spring can only spring up so far (after being pushed
down) so it is with a market that seems to be running out of energy”.
We continue to believe there is more downward risk, than upside potential.
We believe the Intermediate Trend of the market has now turned
to Down. That means that instead of buying setbacks, use rallies to sell or
buy short ETFs. Continue this strategy until the market either breaks above
the April 2010 highs or reaches support as follows: Our downside projection
for the Dow (before it reaches support) is 8,900 to 8,225. For the S&P
500 is 966 to 894 and for the NASDAQ is 1,900 to 1,750
We expect continued volatile markets causing “Buy and
Hold” philosophies to be replaced with “Buy Low, Sell High”
or Sell High, Buy Low strategies. We believe properselection and market timing
are the better investment strategies. For many, more flexible ETFs (Exchange
Traded Funds), long or short, have replaced mutual funds.
| Current Value | Dow |
NASDAQ |
S&P
500 |
10,734 |
2,358 |
1.152 |
|
| Current Trends |
DJIA |
NASDAQ |
S&P 500 |
| Short Term |
Up |
Up |
Up |
| Int. Term |
Sideways |
Sideways |
Sideways |
| Long Term |
Sideways |
Sideways |
Sideways |
| Forecasted Trends |
DJIA |
NASDAQ |
S&P 500 |
| Short Term |
Up |
Up |
Up |
| Int. Term |
Down |
Down |
Down |
| Long Term |
Sideways |
Sideways |
Sideways |
| Breakout Points |
DJIA |
NASDAQ |
S&P 500 |
| Short Term Up (Resistance) |
11,258 |
2,535 |
1,220 |
| Short Term Down (Support)
|
10,000/9,684 |
2,316/2,140/2,040 |
1,149/1,072/1,029 |
| Int. Term Up (Resistance) |
11,258 |
2,535 |
1,220 |
| Int. Term Down (Support)
|
9,262/8,087 50% 8,900 62% 8,225 |
1,727/1,598 50% 1,900 62% 1,750 |
878/832 50% 966 62% 894 |
| Long Term Up (Resistance) |
12,896/14,198 |
2,861/4,256 |
1,256/1,576 |
| Long Term Down (Support) |
6,470 |
1,268/1,108 |
666 |
May 10, 2010
-- Carl Birkelbach
ADDITIONAL INFORMATION
IS AVAILABLE UPON REQUEST
This report has been prepared from original sources and data we believe reliable
but make no representations as to the accuracy or completeness. Birkelbach Investment
Securities, Inc., its affiliates and subsidiaries and/or their officers and
employees may from time to time acquire, hold or sell a position in the securities
discussed in this report, we may act as principal for our own account or as
agent for both the buyer and the seller.
Past performance is no guarantee of future success. Also, while the above suggested
prices are as listed on our reports and the sell dates and prices are as issued
by our research department, our brokers operate independently and as each individual
client has a unique risk tolerance level, the above list should not be deemed
as a representation of our clients purchases and sales. Some of our suggestions
are volatile and speculative. Therefore, these stocks are only for those investors
willing to assume risk. In addition, there may not be enough information available
in these reports to make an informed decision. Upon request, we will supply
additional information. Purchases should not be made until enough information
is obtained and risks understood.
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