1. MARKET FACTS

• There will be plenty of negative news and market volatility ahead as the Fed/Treasury serve more gruel and lawmakers pass another economic stimulus.
• Record Hedge Fund redemptions will continue into Q1 2009.
• Dividend Yields will continue to fall.
• Stock Buybacks will become increasingly rare in 2009.
• There will be abundant M &A activity from companies with cash or access to cheap cash.
• Many stocks today are cheap but CAN be cheaper still. 

INVESTORS:     The ideal is always to buy stocks with a history of increasing sales and profits.

Hold stocks with 1) with Manageable Debt & Dependable Cash Flow and 2) profitable business models in both a RECESSIONARLY/DEFLATIONARY and INFLATION LADEN ENVIRONMENT.

TRADERS:        Keep perspective. With 5-10% a weekly profits possible, trade less frequently and take longer vacations.

Many analysts are currently forecasting at least one more test to the 2008 lows in H1 2009, followed by a higher stock market in H2 2009.
Whether the 2009 market rally is to Dow 10K, 12K or 14K is likely to depend on
1) How low and when the bottom is reached in 2009 and
2) Whether the Dow is denominated in the US Dollars or the new American PESO!
BOTTOM LINE: It is rational for investors to be scared, VERY VERY SCARED. GOT GOLD? 

HYPE PARK SOAPBOX: Cheap oil: short-term good, long-term dangerous 

TRADERS: Don’t be surprised by a Christmas Rally; don’t be surprised if there isn’t one.

Buy/Accumulate Dow 7800-8100; Sell/Distribute 8800-9200. 

INVESTORS: My long term view is well known. Focus on protecting against downside risk and only buy and hold Deeply Discounted Value.
Invest only in stocks at bargain basement price that you are willing to hold until 2010-2011.  
LONG/SHORT PORTFOLIO:  L1/S1.
 

KEY DATES:    DECEMBER 15, 16, 17, 30
DJIA:                8476 PIVOT 7800 SUPPORT 9200 RESISTANCE
SPX:                 866 PIVOT
NASDAQ:        1513 PIVOT
XAU:                110 PIVOT
FEB GOLD:       $912 FAIR VALUE SUPPORT 780 R1 840 R2 880 R3 912
MAR SILVER    --> $12 $10 SUPPORT?
XOI:                  900 PIVOT
FEB OIL:           $50 PIVOT $40 SUPPORT $55 RESISTANCE  

The New Market Marker Sentiment [New MM 12/30]:
Bleak Recession News is well known but is it built in? No...Yes...No... Yes...Who cares? I want a Xmas bonus!

DON’T BUY AND HOLD: BE LIQUID WITH A BALANCED AND DIVERSIFIED PORTFOLIO!
2007 CLOSE:           DJIA 13264, SPX 1468 & NASDAQ 2655
2006 CLOSE:           DJIA 12463, SPX 1418 & NASDAQ 2415
2005 CLOSE:           DJIA 10717, SPX 1248 & NASDAQ 2205
DIJA:                        6 ~ FV 5 UV; 13 offer 4%+ Dividends 9 offer 5%+ Dividends.

THINK SWISS AND PRESERVE CAPITAL: FOCUS ON PROTECTING AGAINST DOWNSIDE RISK. 

2. The 15-Minute Tip: Big-name stocks under $10? Time to shop around and 11 for under 10

Swap Stocks for a Week at the Beach

Elite Island Resorts, a chain of upscale hotels — including the St. James’s Club on Antigua and the Palm Island Resort in the Grenadines — announced Friday that it would accept payments in stock for vacations booked by Jan. 31, using the value the stock was trading at on July 1. The deal, in effect, gives travelers a chance to roll back the value of currently depressed stocks to levels before the market began to really sink.
HW: A great idea, but are there tax consequences beyond losing some of your tax carry forward?  Who cares! 

While markets may rally for Christmas, we consider this more of interest to traders than LONG TERM investors.  I would rather SELL into a big rally, then BUY.
Whether a CHRISTMAS BEAR MARKET RALLY is coming or not, avoid (or short) companies that will be bankrupt and/or to become US government “owned”.
Still there are long term investor bargains galore. WSNW subscribers may check our premium posts which I am in the process of updating for 2009. 

Questions: When will GM be dropped from the DJIA?  How about Citigroup? Who will replace them? 

3. Jim Rogers Says Commodities' Fundamentals `Unimpaired,' Prices to Rebound 

Like its Currency “release” our gold forecast was:

“Once oil drops below $50 to test $40, it will largely release most of its negative effect on gold/silver as the gold/oil ratio is far from its traditional 10-1 value.”

Now that this has happened, we believe Gold should now be “free” to reach fair value [$912] by early 2009.

GOLD TRADERS: Trend follow a break out above $840.  

4.  James Tobin's Q Ratio Indicates `Horrific' Stock-Market Bottom 

Ben's Helicopters are Here! 

5. Ultra-Rich Cling to $191,000 Hermes Bags for Comfort While Wealth Shrinks
HW: Yes, but I know times are bad as sales from ultra high end jewelers are dropping - Future trophy wives and girlfriends be forewarned! 

6. “A lot of bad news is already priced in. We are in a phase where markets are trying to find a bottom.”
Andreas Nigg, fund manager, Vontobel Asset Management
HW: That is the $64,000 question:  How much bad January news is built in with the Dow above 8476? 

“The theme likely to shape markets over the next year is the extent to which an improvement in valuations can overcome further downgrades to earnings expectations. The former will be determined by how quickly the unprecedented monetary and fiscal intervention can improve credit market conditions and permit investors to apply more normal valuations to earnings.”
George Vasic, Equity Strategist & Chief Economist, UBS Securities Canada
HW: But let’s not forget unemployment, under-employment and a toxic mix of BOTH deflation AND inflation (H2 2009). 

“The economic slump is too hard for anyone to fix right away.”
Tetsushi Nagato, Schroder Investment Management
HW: What?  No more free lunch? :) 

7. Fears grow for REITs with high debt levels
Industry experts are nervously eyeing a number of real estate investment trusts whose high debt levels and upcoming debt expirations could jeopardize their future 

Worldwide Stock Rebound Next Year May Push S&P 500 Index Up 53%, UBS Says 

For first time in 50 years, stocks yielding more than bonds 

8. READER:  Your message is very insightful! You are helping a lot of investors from having to suffer significant retracement. Appreciatively,
HW: Thank you.

READER:  Obama has gotten the best names in economic advisors, all useless for this crisis, since they are inflationists.  They will make things much worse.
The state bailout is next...California, NY, NJ all getting in line, instead of cleaning their own house.
Depending on how fast the Obama Team do things badly, that is where/when gold will zoom up, otherwise about  two years , or so, for the inflation to really kick in.

HW: H2 2009: look at astrology.
READER: That could be July-December 2009 for inflation to start kicking in, but I think the deflation part of the curve will probably last longer.  The worst possible combination is deflation of assets at the same time as inflation of daily items for living.  That is what you project! Hope you are wrong.  If you are right, this crisis will last a decade or two.
HW: At least past 2010. 

READER: We are seeing really negative numbers coming out of the US - what is the sense there?
HW: The worse the news gets, the more the plunge team aka Fed, aka Treasury and “national” banks are TOLD to buy.
Explanation 2: Since a number of astrologers were VERY bearish this Friday [December 5], those brokers that hate astrology decided to “put them in their place.”
Explanation 3: We're getting to the end of the bottoming process because the market goes up on bad news.
Explanation 4:  Too much negativity on obviously the worst possible news was an easy target for short squeezing.
Take your pick  :)

READER: CPI 4%; real inflation: 16%.  Comments?
HW: I have two:
1) The “good” news is that so many workers will be laid off coupled with most of those with jobs will find their wages stagnate, be frozen or be cut. This to help bring down “real inflation” to under 6% next year.
2) Got gold?