1. AUGUST/SEPTEMBER  MARKETS
2. UP STARS/DOWN STARS
3. GOLDEN OPPORTUNITIES
4. QUOTES
5. ON THE WEB
6. LETTERS

World emerging from deep slump but can it last?

We continue to see MIXED SIGNALS with significant risk to both the long and short side of almost every market position!

The Bulls have market momentum, cheap money and the “Big Lie” [The recession is over or near ending] on their side.

The Bears have reality [Less than 1% growth & a double dip H1 2010] and the concept of “less bad” is good news is now old news.

Many market bulls expect a 10% pull back in markets over the next few weeks [two steps forward, one step back pattern is often typical at the end of a recession], then a rally to new highs in November and December.

We expect to see a market correction BEFORE September 22.  While I agree there are good reasons (e.g. Xmas bonus time, astrology) for a year end rally, I am not sure it will be to new highs.

Our two big end of Summer plays will be:

1.       Selling/Shorting Markets and then

2.       Buying Silver.

GUEST HYDE PARK SOAPBOX: Kass: A Summary of My Bearishness 

SEPTEMBER ASTRODATES
9/03 Full Moon 12.03 pm ET
9/07 Mercury RX
9/11 Pluto SD
9/15 Saturn opposite Uranus
9/18 New Moon 2.44 pm ET
9/22 Sun enters Libra 5.19 ET
 

 
KEY DATES:    AUGUST 25, 27 SEPT 4
DJIA:                9500 PIVOT 9600 RESISTANCE
SPX:                S1 1015 S2 1000 S3 992 S4 984 1040 RESISTANCE
NASDAQ:         2000 PIVOT
XAU:                140 PIVOT 135 SUPPORT
DEC GOLD:      940 PIVOT  930 SUPPORT  R1 950  R2 960  R3 970 R4 985
DEC SILVER:   14 PIVOT 13.25 SUPPORT 15.50 RESISTANCE
XOI:                  930 SUPPORT 1001 RESISTANCE
DEC OIL:          75 PIVOT 66 SUPPORT 79 RESISTANCE  

Market Marker Sentiment until 2010 is Less Volatility with Market Cross Currents.
Stocks Meander slightly ahead and favor defensive plays.
The US$ doesn't collapse & Commodities may not be needed as a safe haven panacea.  
7/21 PRE-ECLIPSE: DJIA   8915. SPX   954 & NASDAQ 1916
2008 CLOSE:           DJIA   8776, SPX   903 & NASDAQ 1577
2007 CLOSE:           DJIA 13264, SPX 1468 & NASDAQ 2655
2006 CLOSE:           DJIA 12463, SPX 1418 & NASDAQ 2415
2005 CLOSE:           DJIA 10717, SPX 1248 & NASDAQ 2205
DJIA:                       7 ~ FV 2 UV; 5 offer 4%+ Dividends 3 offer 5%+ Dividends.
THINK TRADITIONAL SWISS AND PRESERVE CAPITAL: FOCUS ON PROTECTING AGAINST DOWNSIDE RISK. 

2. The Dog Days of Summer are often ideal for entering and exiting stocks at extreme prices.
Given current high market valuations, we continue to prefer exiting to entering. 

The Disconnect Between Oil and Natural Gas Prices
The main exception may be a rebuy of Amex Natural Gas Index (XNG)/Companies under 400, given the wild disconnect between the price of NG and Crude Oil. 

3. Gold, stocks are more allies than enemies 

Gold or Oil: What's a Better Inflation Hedge? 

“Conservative investors are advised to have a portion of their savings allocated to physical bullion, while speculative investors are advised to own shares of carefully selected mining companies, both domestic and international.”
Carlo Besenius, CEO Creative Global Investments 

NOTE: Gold trading is currently a game of ping pong in the $930 to $990 trading range with buyers (US$ Bears) and sellers (Commodity shorts).
Note: Our current Fair value range for gold is $915-$949.
We are buying out of the money gold puts (we like the risk/reward better than the probability), but are also prepared to buy gold, and especially Silver, very late Summer on either significant weakness or a crisis breakout. 

READER: Subject: GOLD going WAY down?
Does the astrology agree with this analysis? http://www.kitco.com/ind/rosen/aug182009.html
HW:  While there is some short to medium tem negative gold astro, I don’t believe it is that extreme, nor is it all negative. On certain days, we trade short, while others long.  
While almost anything is possible in markets today, I don’t consider a break below $880-$850 a high probability.  I am still waiting to buy non-hedge allocated gold stocks. While I await the right trading signal. I am also buying some protective out of the money October gold puts below the strong support level December gold at 930.
Potential Targets are P1 915 P2 900 P3 880 P4 850.   

4. "The consumer confidence and retail issues are huge in the U.S. and markets are very worried about it However I see this retrenchment as long overdue and very necessary for the long-term health of the market place. You cannot rally by between 40-45% without some sort of decent pull back!"
David Buik, senior partner, BCG Partners
HW: One can with serious market interference, but this is neither healthy nor long lasting! 

“We can start to say the worst is over for banks, thanks to inexpensive money from the central banks.
Lionel Heurtin, fund manager, Ofi Asset Management
HW: As long as fantasy accounting is in vogue, that is true. Should market to market or any ”real” accounting standards be re-instituted, e.g. No Enron style off balance sheet games allowed. then that would NOT be true. 

“Markets globally were getting on for 60 percent up from their low so you shouldn’t really be too surprised if you see some pullback [in stocks]. I’m extremely wary about equity markets at this point.”
Richard Cookson, head of global asset-allocation research, HSBC Holdings
HW: Very sensible indeed.  

5. Six Companies with Sustainable Dividends 

Historic Opportunity in Small-Caps 

The next meltdown will come in 2012 

6. READER: What do you think about foreign currency?
HW: I believe it VERY important to consider how much currency risk your portfolio contains; some currency diversification to reduce risk makes sense to me.
There are several ways to do this: US stocks with large international sales or foreign stocks e.g. Canada, Europe and Asia, foreign currency as an asset class and/or gold. 

READER: What do you think of lithium now?
HW: What do YOU think of the state of the world economy now is the question.
I like lithium medium term, but before that we remain a stock market and commodity bear.  September CAN be VERY brutal for commodities. We are buying some very speculative $900 and $920 October gold puts “just in case.”
Silver could drop below current support at $13.25 to $12. 50, or even lower. 

READER: It looks like we've reached a new high on the SPX. The housing data was very +. Any thoughts?
HW: 1) [Mid] September is STILL coming.
2) July housing numbers are due to lower prices thanks to record delinquency rates and auction sales. Also, if you give $8000 to people to buy a first home, and if you force banks to give mortgages that will default later, and if you refinance delinquent mortgages at 140%, yes there will be some short term buying.

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