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1. I AM NOT A BEAR (YET)
2. TELECOMMS
3. FRANCE +/ -
4. ASTROLOGY '98
5. LETTERS
Last week was a good week for both bull and bear traders, wIth the latter having an easier time. This coming week we believe the reverse will be true. FULL MOON Monday 12:24pm ET - is increased market volatility possible? Expect a marked shift or acceleration of last week's trend. Personally I believe the former and repeatly sensed a bear squeeze in the making Friday. We went long Friday several times in the afternoon, most especially when our target support DIJA 7540 was attacked. However, given the huge risk this weekend, we did NOT issue a WSNW Buy alert, only an institutional trading Buy. Be prepared to go long the US market and IBM in particular Monday morning, assuming no disastrous Indonesian coup over the weekend.
I am already hearing laments of "I did not lighten up enough when the market was 8000" - Give me a break. I still believe there may be one more chance next week. However, should THE DIJA CLOSE BELOW 7540, NEXT STOP 6900! Personally I am prepared to stand aside if need be, but I do not plan on practicing my bear growls until the Sun enters Aquarius. (I am not counting our longer term shorts such as CMB, TMX, YHOO etc. )
I am NOT a Bear; I am a cosmic value player. Show me value and I will buy. Intermediate/Long term the Won is 25% undervalued. That is a major reason we put Korea in our 1998 UIT. As markets stumble and collapse, value is often created. MARKET EXAGGERATE BOTH WAYS: overvalued in Bull markets and undervalued in Bear markets. Warning: carefully discriminate and avoid junk. For example, while the Indonesian currency is down 75% against the dollar and no longer overvalued, we are NOT suggesting playing this basket case until the revolution. The same logic applies to numerous high-tech bubbles.
Last week the bonds reached yields of 5.69 on the 30-year Treasury bond, the lowest rate since the government began selling the bond in 1977. Mortgage refinancing anyone? Naturally, we are shorting from our projection of 5.72!
Key Date: 1/12
DIJA: 7540 - 8060 7722 PIVOT
BUY: IBM OPTIONS
BONDS: SELL 5.78 OB
2. In the days before WEBBS and country funds, whenever a global strategist first recommended a country, it was "buy the Telecomm". For example, Telemex (TMX) is to a large extent, a surrogate for Mexico. However, times are changing. With industry deregulation accelerating, today telecomms are more a M & A game. Here are five samples abstracted from our 1998 institutional coverage:
BUY FRO: FRONTIER remains our favorite US telecomm play. Value hold 26-28; acquisition target 31-35.
HOLD/BUY TEF: TELEFONICA DE ESPANA is both a good southern European and South American play. Intermediate term hold; Buy on 15%+ retrenchment.
HOLD T: ATT is a still a valuable franchise with real value but has poor leadership, and even poorer employee morale. Historically ATT has rarely been successful with acquisitions. Analyst forecasts of 80 year end are pie in the sky.
WATCH SGTCY: SINGAPORE TELECOMM is a major favorite of Asian investors. It is cash rich and therefore can greatly benefit from the current Asian turmoil with a longer term perspective.
SELL TMX: TELEMEX is unbelievably overpriced - continue to short.
3. FRANCE ERRATA: We immediately corrected my mistranslation in last week's WSNW on our website: "January 1997 New Record +12". Our french correspondent Jean-Francois CORRECTLY forecast to date: "NOT AT ALL, ITS THE OPPOSITE -8 TO -12%" ESPECIALLY THE FIRST WEEK OF January (5-9) AND THE END OF THE MONTH (19-27)." Note: these forecasts from his BOURSE ANTICIPATIONS (FAX 33 1 60 75 31 80) apply the same to the S & P 500 or CAC40.
4. ASTROLOGY 98 is now being published again. We are taking advantage of webness and freely publishing articles on a non-timed deadline. Please enjoy the inaugural article by Carol Mull with an excellent introductory survey of astrological tools for forecasting markets. .
5. Here is my New Years Prognostication: "Deflation, deflation, deflation, then depression and war." HW: Glad I didn't spend New Year's Eve with you! :) Are you just looking at the Saturn/Neptune aspects this year? What about the Jupiter/Pluto square March 10? I don't agree that it is deflation all the way....
With the recent turmoil in Hong Kong, would you suggest a trading buy? It looks like it's still a long way for climbing to 13000+. :)
HW: Yes it is still a long way to 13,000+. On January 28, the day of the Chinese New Year, both the Sun conjuncts Uranus and Neptune enters Aquarius! This makes me want to wait and not commit fresh funds just yet. I do NOT see a HK buy at this time as an easy (Taoist) trade.
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