Hedgehog University Stock Market Analysis

Week Ending Friday, February 22nd, 2008

The Hedgehog University (HHU) is re-opening at the Hedgehog.  I  will 
be  posting  the  HHU  weekly market commentray in the newsletter and 
building out a Hedgehog University section on the web site.  

Changes In The Dow Jones Industrial Average - 2

What sort of patterns in the DOW components do we need to  see  if  an 
ABC  correction  is  going  to be what happens in the present scenario.  
Could Walmart be one of them?  

 
Well,  if WMT climbs from this congestion zone it's presently  in,  it 
will  climb  roughly  from  $50 to $60 to reach the level it was at in 
2004.   That's  20%,   right?   What  was  Morningstar’s   FUNDAMENTAL 
analysis?  '17%  discount  to the firm's fair-value estimate' OK,  the 
technicals and the fundamentals are in accord.  

So why was Phillip Morris er Altria dropped?  Isn't it time for a  big 
wave  to end?  Whether it's a C wave or a Wave 3,  it's a big wave and 
at some point the people who bought it in April of 2003 at  about  $21 
are  going to book profits in the $75-80 range of the recent past.  As 
we have shown in various places on our website,  prices of  securities 
in  a  freely  traded  market relate to previous levels.  For instance 
Waves 3 or C relate to the previous wave by a factor of .62, 1,  1.62, 
2.62  commonly.  These  we  call  Fibonacci  extensions.  It  would be 
perfectly natural  for  MO  to  retrace  some  of  the  gain.  If  the 
corporation is doing well, the ascent could continue.  But, if we were 
going to buy a stock,  we’re looking at a pretty high level, don’t you 
think?  We would think there is more potential  for  a  pullback  than 
there  would  be  for a chance to make a big gain.  And perhaps that’s 
the thinking  behind  replacing  this  stock  in  the  DOW.  It’s  not 
discounted like some of the other stocks we will examine.  

 
So BankAmerica was added.  And where is it at the moment?  Well,  it's 
discounted,  isn't it?  It's done an impulse series up  from  the  $18 
range  in  December  of 2000 to the $55 range in November of 2006.  So 
profits were booked and a retracement  followed.  The  fundamentalists 
are  betting  on the bank’s fortunes improving.  The technicians would 
call that looking for a new impulse series  up  which  could  actually 
surpass  the  high  of  $55.  And  such  a move would pull the DOW up, 
right?  (Note December to November over a 6 year span Mr. Gann and his 
geometry.   It  wasn't  exactly  6  years,  but  it's  a  pretty  good 
approximation).  

This will be a four or five part explanation so stay tuned for more

DISCLAIMER:  The Hedgehog Website and the writers of  this  series  of 
lectures  have created this service to educate,  inform and elucidate.  
We will use accepted methods of fundamental and technical analysis  in 
our  explanations.  Investing  in securities carries with it a certain 
degree of  risk.  Neither  the  Hedgehog  Website,  nor  any  of  it's 
principals  or  employees  can  be  held accountable for any losses or 
gains made by any person following  our  methodology.  We  attempt  to 
provide  the  information in good spirit to be used in whatever manner 
the  reader  sees  fit  to  do  so.   We  use   charts   provided   by 
Equis'Metastock  (tm)  software,  e-Signal's  Advanced  GET  (tm)  and 
BigCharts (tm)