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

1. MORE MIXED EARNINGS – IS THE CUP HALF EMPTY OR HALF FULL?

My intermediate term bearishness is largely a fundamental/valuation decision based on my H1 2010 views of the jobs market, housing and corporate profits, in that order.

Companies in the S&P 500 index are projected to report a ninth straight quarter of declining profits, the longest streak since the Great Depression, before returning to earnings growth in the final three months of the year, Bulls seem happy that compared to last year, many companies have better bottom lines, but few have a better top line (revenues).  Next Quarter we expect more of the same or more likely worse. As for “generous” Uncle Sam, Deficit Hits $1.4 Trillion, Complicating Stimulus Plans.  Additionally, I believe today’s economic news is mostly positive only if you are wearing government supplied rose coloured glasses. :) 

IS THE GLOBAL RECESSION ENDING?
Recession may be over, but recovery is painful: Whether this is true, (and it is NOT my belief, see for example Foreclosures: 'Worst three months of all time), the next questions involve stock valuation and market timing. 

First, are US equities fairly priced, over priced or a mixture of both? While I see most US stocks over priced based on my perception of Q4 2009 and Q1 2010 earnings, even analysts far more generous than I believe more than half of US stocks are overvalued today.
Have markets topped now before Dow 10200, or will we see a rally to 11,000 and beyond WITHOUT a significant correction due to the abundance of cheap money and the lack of AWFUL news?

While the later is possible, it is not my bet.  If I am wrong, swift trading of small and microcaps should save (most of) the day. Small capitalized stocks are bastions of greed and usually follow bull markets. Should they be bought now, or November or December? That is what I am currently trying to decide. Astrologically, the next strong market negatives come in late November and Q1 2010.  Hence I continue to wait.
 

GUEST HYDE PARK SOAPBOX: The Dominance of the Financial Sector Has Become a Mortal Danger to Our Economic Security

HW: You betcha!

 
KEY DATES:     OCTOBER 20, 23
DJIA:                 9747 SUPPORT 10200 RESISTANCE
SPX:                 1100 PIVOT
NASDAQ:         2050 SUPPORT 2200 RESISTANCE
XAU:                 175 PIVOT  185 RESISTANCE
DEC GOLD       950 PIVOT 920 SUPPORT  980 RESISTANCE
DEC SILVER:    17 PIVOT 15.50 SUPPORT 18.50 RESISTANCE
XOI:                  1100 PIVOT
DEC OIL:          78 PIVOT S1 76  S2 72 S3 68 S4 62  

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:                       6 ~ FV 1 UV; 5 offer 4%+ Dividends 2 offer 5%+ Dividends.
THINK TRADITIONAL SWISS AND PRESERVE CAPITAL: FOCUS ON PROTECTING AGAINST DOWNSIDE RISK. 

2. Must-Have TIPS Show Bernanke Isn't Whipping BlackRock's Inflation Concern
Portfolio Building with TIPS ETFs: Is Now the Time? 
HW: While we are close to our 2009 trading target of 104, the risk/reward for continuing to hold TIPS as a portfolio hedge is appropriate. 

3. SILVER/GOLD US$ TIME/PRICE CONUMDRUM
Technically ripe for a rally vs. Dollar May Decline to 50 Yen, Lose Reserve-Currency Status
HW: As for the US$ risk, I don’t (yet) see the $US breaking .74 in 2009. It may even hold .75 short term, so I am unclear about the wisdom of NEW precious metal investments at this time.  I also have slightly negative astrological view for gold short term. However, from midOctober on, astrologically Silver is BUY and Hold into Q4 2010 -  Hence our conundrum. 

Gold: IF markets continue to rally, then so should gold. If I had to choose between buying stocks and buying precious metals, I would feel much more comfortable doing the later.
However, I am concerned that my current Fair Value gold price is still UNDER $1000.  Hence I would be buying, to my view, an over valued commodity. That I don’t mind as a hedge or trade, but I do as a timed investment.
Additionally, I see the probability for gold to first move to 1020 (970) as greater than to 1200 first! Yet should gold hold 970, which has a high probability, then the downside risk of not buying now is $85 vs. a potential long term reward of 150+ 

Silver is close to 18.50 resistance.  I would like to see a retest of 15-16 before fresh buying. I am not sure whether I will have the opportunity given 2010 is YEAR OF SILVER PART II.
The probability of Silver going to $21 or $15.50 is roughly equal. This gives a downside move of $2 vs. upside of $3.50, i.e. while the risk is roughly equal; the reward is more favorable to silver bulls
BOTTOM LINE: IF GOLD RUNS PAST 1080 RESISTANCE AND/OR DJIA IS ABOVE 10200, WE WILL BUY PRECIOUS METALS- Otherwise, we patiently wait for lower prices. 

4. "The market is evaluating each bellwether as it comes through and showing its elation or disappointment."
Philip Orlando, chief equity market strategist, Federated Investors
HW: This lack of conviction could be due to the fact that not only is reality bifocal, but also many believe shorts have been unfairly treated by the plunge team as otherwise markets would be well below 9500 (9000). 

“Inflation remains muted. There is still much excess capacity to absorb, retailers are still fighting for their share of consumers’ shrinking wallets.”
Jennifer Lee, economist, BMO Capital Markets
HW: It depends on where you look e.g. true for clothing, computers and telecom, less true for food and energy. Over time, the risk of a devaluing US dollar will result in more inflation for US consumers in  today’s global world.

“It doesn't take as much of a shock to spook a bond investor because they're already more conservative by nature. They don't expect to lose any money.”
Dan Hallett, president of Dan Hallett & Associates
HW: Interest rates WILL rise intermediate and/or longer term is a foregone conclusion. 

5. Stock Rally Is `Way Ahead' of Economic Recovery, Allianz's Achleitner Says 

Why U.S. Stocks Are Going to Kill Your Portfolio 

If You're a Bull, What Do You Buy?

6. READER: Prechter says USD will soon go up. At the same time Gold down.
HW: That is technically very possible short term. 

READER: I have been studying different people’s newsletters for some investment ideas. Problem is, everything sounds amazing, which it isn’t. Been reading, Doug Casey, Harry Dent, Marc Faber, Gerald Calente, just signed up for The Dines Report, etc. and others.
Gold keeps going up and up. Silver is not doing much. When should I get in to buy the ETF’s? I do not want to miss out!
HW: If you prefer to buy gold over silver, long term it doesn’t matter. What I am suggesting and now many agree, is that intermediate term Silver will out perform gold. In 2010 we see the Silver/Gold Ratio dropping from 60 to 55 to 58.
Until gold is over 1080, I would not worry about missing out - You could always place a buy stop above 1080.   Alternately, you could buy some more gold now if you are worried about missing out as a hedge, as long as you won’t be upset if it goes to 1020, 1000 or 970 or lower first. 

READER: Will gold dip to $1,020 or lower in the next few weeks?  Do you still expect a Dec buying opportunity or is that washed out?
HW: I think it is highly possible, but it may not. Right now, I don’t see $US breaking .74 in 2009 and may not break .75. 
FYI Our next big play will be SELL markets for the NEW YEAR (Q1 2010). 

READER: I have followed you for about 5 years. You are best to predict gold. Your major gold predictions have all been correct. 
Around 8 predictions I would guess. You said recently that we may stay out of this gold market. 
That would say your gold pred. for the time being are not major pred. I will ask: 
1.You say gold should go down from 10/27 to Mid-November: How strong astro? 
HW: Reasonably strong.
2. Up the last 2 weeks of December: How strong astro?
HW: All of December is normally seasonally strong and the astro will assist. 
3. Astro January?
HW: We plan to release this publicly in December.