Wall Street, Next Week is a weekly Email/Fax newsletter @$300 annually.
New subscriber Intro - $99 for 3 months.
Note: One week delayed posting on www.afund.com and AOL.
1. FULL MOON & FOMC
2. EK/DIS
3. INFLATION
4. LETTERS
What a week for bears with lots of money made on the short side, and on the long side [intraday] due to Pluto going Stationary Direct last week.
We took trading profits Friday close due to important business meetings scheduled for early next week and an unacceptable risk/reward Monday and Tuesday for the positional trades we demonstrate here. Both days are for intraday trading ONLY. If you remained short over the weekend, don't get squeezed - trade with trailing stops. Monday is a FULL MOON and Sunday Mercury turned retrograde. Even more volatility- believe it or not. Pre-FOMC Tuesday NO intermediate market decision can be made - Not by insane bargain hunters nor panic sellers.
I will try to send a special trading alert out Tuesday post FOMC. If I find the time this weekend to fully prepare my astrological charts, I will trade:
Monday - Wednesday - Thursday till 3pm - Tuesday + Thursday 3pm+ to Friday +
My traders instinct tells me there are roaring bulls lurking ahead-- late Tuesday and Friday. In fact Friday (Thursday close) I may well trade the long side - certainly EK to 66-68 if not before as well as Novell for a quick point move to 9+. There is Big money buying possible just short of 10% correction- 7500-7600. Not sure yet if enough to 8000 again, but WHO cares after last weeks trading - I need to relax.
2. EK which closed up slightly on Friday's 247 pt drop is obviously a good candidate to go long September call options or just the stock if you are a bullish investor Friday (Thursday close) and possibly late Tuesday depending on market conditions). If I finish my negotiations early, I will try to give specific timing in a trade alert. Disney we continue to maintain will be the worst performing DIJA stock this year. If you want to maintain a hedge as effective but cheaper than the OEX, short Disney. Early Warning: The airing of "Nothing Sacred" this September may well galvanize the Disney boycott into front page news.
Cadbury: The Dow is forecast to reach the 6900-level before the end of the year. My view: First Downside target if this week's rally attempt fails is just shy of 10% of 8300 ~ 7560. P2 target 7000/6930 and P3 6640. Trading ranges: August 200+ moves; September/October 500+ two day moves!!!!
3. DJones Travel index {8/8} up 18% from year earlier:
BONDS: Intermediate Term approach: Short Bonds on rallies. However, note money starting to flow OUT of stock funds INTO bonds. Be careful of "flight to quality rallies" e.g in the mini-bonds after hours on Friday.
4. I am coming out of hibernation again (as a stock market bear). You may have already done the same analysis, but just in case, I wanted to share it:
If you compare chart patterns of the great US stock market crashes from 1929, 1937, and 1987. Their chart patterns are strikingly similar. I am sure that you have already done a similar comparison. Robert Hitt's {ASTROECON}selection of Sep 3 as the last gasp, is very evident from my chart after all 3 charts are aligned together and overlaid with the current S&P and OEX charts. My scenario while viewing the chart is that the DJIA will continue to fall with successively lower closings from now through August 19th when the FOMC will raise interest rates. I think the saying "...sell on the rumor, buy on the news..." will be the market influence and we should get a 38-50% retracement from Wednesdays intra-day high of 8299 and the intra-day low on August 19th. I think the Federal Reserve will be in adding "liquidity" to the market again since the low of 8/19 will be around the magic 10% correction (I'm sure they will have already decided what they're going to do in the market before they even announce the rate increase!) With Monday (8/18) having a "Super" full moon and Mercury retrograde, I am not sure I could come up with any other scenario. I agree that Sep 3rd is a likely secondary top (failed 5th by my count, others are saying Wave 2 of the first "A" of an A-B-C down) before the next 2-week drop of 2500 DJIA points, or 225-250 S&P points. Since there are likely many other traders watching the same historical correlations, I believe that the old "self-fulfilling prophesy" option strongly comes into play here. I think that if the above scenario plays out through Sep 3rd, then many a bear will be coming out of hibernation to ride the slide.
Another item to add: in 1929 the ticker tape was too slow to keep up with the trading activity. According to John Kenneth Galbraith in "The Great Crash" (pub. 1954) this was a primary impetus to the panic of the crash because traders had no idea of where the market was going. Today with electronic trading, it would take a satellite blackout to have a similar effect... or would it? The NYSE has conveniently set up trading curbs and planned shutdowns in the event the DJIA drops more than 350 points. They will shut down for 1/2 hour, then resume trading and if the DJIA falls another 200 points to 550, then they shut down for a full hour! Isn't this that same scenario of uncertainty that is likely to befall investors this time around? And that's not all... Mutual Funds are allowed to shut down if they deem it necessary. Mutual Funds may also conveniently unplug their phones so investors & brokers cannot get ahold of them!
Ok, Ok, I know I'm super bearish... I will stop for now. I welcome your comments.
HW: OK; SELL! Doesn't sound like you are comfortable being long in this market! However Fed raising rates this time, not sure I will agree, will give Alan a call Monday and see what I can find out :) -
Agree with you call on Novl, however, attempted to be long EK last week, purchasing at $67.50 exited at 66.00, after failure at 68. My work now projects to early $52.00 basis monthly chart. I was first hoping for a short rally squeeze back to 72.00-76 last week. >>
HW: You ignored our EK numbers ~ 60-62 range. Remember play Time AND Price or DOUBLE Time or DOUBLE Price! EK's horoscope is very good this month and next.
<< Good inflation news today. Bonds may have bottomed out and yields headed lower and Bonds higher. And You know where ever bonds go stocks will follow. Would you begin buying some bonds here. Oh, by the way gold may have run into resistance at the XAU 103 105 area. Gold has been acting weak should we take profits?
HW: Gold is a hedge for us- protect profits if a trade. Remember it is never wrong to take trading profits, ["If you ignore your profits, they will just disappear"] but if you are investing, keep a longer term horizon.
1. RE: 200+ DROP
2. THE CONTRARIAN MANAGER
3. GOLD
4. IHI
5 LETTERS
1. < 2. I Just finished reading THE CONTRARIAN MANAGER by Richard Jenrette, the retired Chairman of The Equitable and co-founder and long-term chairman of Donaldson, Lufkin & Jenrette. Noteworthy is his OPEN use of astrology as a management tool!!!! He calls himself a contrarian, which is not surprising given he has Sun in Aries, Moon in Aquarius.
One timely piece of advice he offers is: "Never get complete out of the stock market. No matter how high it is, is can always go higher. If you get totally of the market and it goes higher, you will become embittered and lose your perspective. On the other hand, even if you have only 10% of your assets in stocks, you can still enjoy the party. The Japanese have an amusing saying which I've always liked that pertains to investing, especially if you think the market too getting high:
"Enjoy the party, but dance near the exit!"
3. The XAU climbed to 102.47 Friday. Recalll our WSNW Alert #1 to buy the XAU on 5/20 at this level to outperform the broad market by December. Seasonal factors are favorable, still when 110 level is reached or momentum stops, will re-check astrology and perhaps start trading gold again soon.
4. I'm still holding on to a small number of shares of IHI. Can you tell me anything about how the Co. is doing and what I should expect in terms of gain/loss over the next few weeks/months? Will the factory open on time? >>
1. Lots of excellent news recently such from Germany and factory progress. Opening on time depends on what you are expecting. The building should be finished late this summer as projected, then in production (equipment producing) November/December best guestimate.
2. For latest progress. see www.ihiintl.com or get on their free IR press mailing list:
Call Lindsay 1-800-838-8090 or Email lmalcolm@worldtel.com.
3. Stock short term hard to say. IHI basing in 90-1.05 area not likely to fall much further and if it did, we are prepared to buy and add to our positions. Intermediate-Long Term still VERY bullish. The VSE has more less bottomed at 825 (was 1400 last year) and should be atleast 1000 by December regardless of US market.
Note: However this may be a last gasp for Canadian stocks (IHI will be on the US exchange shortly). Remember we will be Canadian stock bears in 98/99.
5. What would it take for you to turn bullish? Will you buy stocks after we pull back? Dazed & Confused
HW: I always buy cosmic value - just not here, except for rare cases like Novell, IHI, and fair value holds like FRO and GM. Otherwise prefer shorts like DIS in the Astrologers Fund portfolio. Re-read about tulip mania, 1929 etc. and you may feel better. MORE IMPORTANT to buy ALL THE TIME is wrong - sometimes you sell or hold or wait. Buddha said: imagine if someone's hand was open ALL the time or closed ALL the time, it would be deformed. To buy ALL the time is deformed!!!!!
You have taught me a new respect for Astrology. I wonder if everyone knows about the Saturn / Venus phenomenon will it still work? You know what they say about technical analysis" once everyone knows what you are doing it won't work anymore or it takes the edge off of it. Is that the way it will be with Astrology analysis too?
HW: THIS IS A PROBLEM I WOULD LOVE TO HAVE. IT MEANS I HAVE SUCCEEDED IN MY GOAL TO HELP GET ASTROLOGY ACCEPTED!
Did you not say Thursday and Friday were going to be down days in the stock market? And did not Carol Mull suggest that Monday, Tuesday, & Wednesday would also be down days in the stock market? And if your analysis works out would you be a buyer after Wednesday of next week? In the past after any pullback the market would gain it's footing and we would be off to races and the great bull market would roar back to new highs making all of us doomsayers (Bears) look foolish and a little poorer. If that is not the case then what is so different about this time?
Oh by the way, I hope your not still short "T"... You know Henry it has just not proven to be wise shorting this market. When it comes to shorting this market I have not been successful. I fill like a kid trying to stick my finger through the fan just to see if I could do it and not get cut and you know that is hard to do. Sometimes I wonder what am I trying to prove by shorting this monster bull market.
HW: GET YOUR EGO OUT OF THE MARKET and read ZEN IN THE MARKETS by Edward Toppel. Of course out of T short at 36 1/4. If more flexible would have gone long, but that type of trade not for me.
FROM A RECENT POST ON THE MTA LIST AND MY REPLY:
I recently wrote a memo that started out "In 35+ years of watching the stockmarket, I've never been scared by a rising market. ('Bull markets climb walls of worry' and all that.) But this one scares me."
The reasons are really more subjective than objective, so I've posted the complete memo on my discussion group rather then here. If you're interested, though, you can see it at: I'M SCARED [HW: Posted in the afund EZINE as well]
HW: THE REALLY SCARY PART IS NOT THAT EVERYTHING IS OVERVALUED beyond measure except perhaps to Holland tulips or the South Seas bubble and 1929 etc., but what is the market does NOT correct but goes to 10,000 in a straight line ? Then we could have an Albanian style collapse in 2000+. !!!
However this is VERY unlikely, not due to to the forthcoming (small) 200+ point correction this next week, but the Saturn/Neptune square next summer and the summer of 1999. The Saturn/Neptune aspect ("Rock on a Cloud" ended the Real Estate bubble of the 1980's and if the market does not correct by this Fall with a Fall then it will be TAKEN OUT in the summer heat of 98 and 1999.
Wall Street, Next Week August 4, 1997
1. LOOKING BACKWARDS
2. WINTEL
3. PERSONAL FINANCE
4. LETTERS
1. Friday's market breakdown helped my spirits/trading account greatly. July's 7.8% market rise, like November 1996, was a month we correctly anticipated the Volatility but not the market direction. I used to wonder how financial astrologers could predict the time of a market pivot, its extent in time and price, Yet NOT its direction. Well I don't wonder about that these days - either play volatility or lose when wrong. We have recommended covering all of Japan with the exception of Sony, which has a target of 110-125. Their stellar performance greatly benefited from the weak yen which helped them more than double its first quarter profits. July's mutual fund inflows could be as great as $30 billion, adding push to this tulip-mania market. The recent tax cut passage should put DOWNward pressure on the market as investors lock in profits at lower tax rates. However, in the intermediate term the bond market and the $US strength/weakness will have the most effect.
2. WINTEL LONDON -(Dow Jones)- Microsoft Corp. has embarked on a campaign to talk down its stock price, according to a report Monday in the Financial Times. It quoted Microsoft executive vice president Steve Ballmer as saying the software titan's current market valuation of $160 billion is "laughable." National Semi-conductor is on our potential buy list by combining with unprofitable Cyrix into a well-financed competitor to No. 1 Intel. This may make perennial also-ran National Semiconductor a mainstream player in the battle over chips that provide processing power to the personal computer industry.
3. Dr. Stephen Leeb, editor of Personal Finance warns " the two biggest threats to your wealth as we enter the second half of 1997 are:
1) The return of higher inflation and/or
2) A stock market crash of possibly historic proportions. One of the two mega-events is now guaranteed and 100% inevitable. It cannot be stopped or avoided.... It may strike at any time, but will more likely unfold in 1998."
HW: If it takes this long. Watch the Saturn/Neptune square next Summer (first pass) and WITHOUT QUESTION by the of summer 1999 (last pass). Note: The Saturn/Neptune was the major trigger for ending the 80's real estate boom.
4. << your last msg 7/28 your mentioned that Saturn/Neptune is what knocked out the real estate mkt in the 80's, do you see that happening again next year, 1998, and what part of the year? I was planning to sell some expensive real estate next spring or early summer. What do you think?
HW: We are referring to the stock market, not the real estate market, which in general we prefer as an investment over the stock market in the next three years. Of course they are related. As to your specific question, the answer depends on its location, type of property, your individual chart etc and this type of information we provide by personal consultation only.
<< Interesting action, eh? I've been using the current weakness {of IHI} to buy more, but the reaction to news lately is surprising to say the least. >>
HW: Yes I am rather surprised. Yesterday's news amounts to an interest free loan of $4,000,000 and may mean they don't need to go to the market for additional financing. That is VERY good news in my book!
I thought I was smart when I got into cash and wrote calls on stock positions and did not lock in % rates on bonds thinking that there would be another opportunity to buy bonds at lower prices and higher interest rates, oops...
HW: You MADE MONEY, just not at greedy levels. I don't see a problem.....
Again I thought gold was a good buy at 103 and 101, I'm still long, oops...
HW: That's also OK, you just should have doubled up at 86 or so, Like Warren Buffet suggests: Buy more after a 20% retrenchment if it has value. Does Gold have "value"- as our Leo fund motto says: "Only GOLD is as good as GOLD."
The general public who is naive to risk and just buys and holds stocks and bonds with their discount broker is the winner Everywhere I go everyone I talk to is interested in the stock market. The young guys who say the old rules don't work anymore it's a new era. The pressure seems to be on the guy in cash and the risk maybe being out of the market. Still I can't bring myself to buy this market at these levels. Somewhere someday there has to be a pull back. Doesn’t it?
HW: I agree. No there doesn't HAVE to be a pullback; another alternative is financial inflation. But see what I wrote above about Saturn/Neptune and BE PATIENT.
Please send your questions, comments or suggestions to Letters,
Tuesday & Friday, listen to our ABS radio program TRADING BY THE STARS
| Return To Main Menu |