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

1. QUESTIONS, QUESTIONS, QUESTIONS 

1. TO N OR NOT TO N? 
2. WILL SIGNIFICANT TOP LINE GROWTH RETURN IN 2010?
3. TO FASB OR NOT TO FASB?
4. HIGHER TAXES & A LOWER US STANDARD OF LIVING AHEAD?
5. WILL THERE BE A SIGNIFICANT CORRECTION OR JUST A RALLY PAUSE IN NOVEMBER? 

ANSWERS 

1. Choose any letter you like (L, U, V, W) except V.  The fat lady hasn’t sung and the US economy will remain highly challenged and US stocks will reflect that in H1 2010.
2. After slashing costs to make up for falling volume, sales increases will remain modest for most companies. Note: Such projections are already factored in and suggest a 10,500 DOW ceiling.
3. Imagine Wall Street with more honest accounting (some version of market to market and no ENRON-style off balance sheets). If the new (old) FASB rules are re-instated January 1, expect a great reduction in the profits of bank stocks. Honest accounting- what a concept; I wonder if it will catch on J.
4. You betcha.
5. Either way, the bottom line is: REMAIN PATIENT, THE RISK/REWARD SHORT TERM FAVORS THE BEARS.

 
KEY DATES:     OCTOBER 27, 29
DJIA:                11000 PIVOT S1 9900 S1 9600 S3 9500 RESISTANCE  10200
SPX:                 1100 PIVOT
NASDAQ:         2150 PIVOT 2100 SUPPORT?  2250 RESISTANCE
XAU:                 170 PIVOT1 188 RESISTANCE
DEC GOLD       1050 PIVOT 1030 SUPPORT  1080 RESISTANCE
DEC SILVER:    PIVOT 17.50 SUPPORT 15.50-16 RESISTANCE 19
XOI:                  1060 SUPPORT 1060 RESISTANCE
DEC OIL:          80 PIVOT 74 SUPPORT 84 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 1 UV; 5 offer 4%+ Dividends 3 offer 5%+ Dividends.
THINK TRADITIONAL SWISS AND PRESERVE CAPITAL: FOCUS ON PROTECTING AGAINST DOWNSIDE RISK. 

2. BUSINESS & BANQUETS
After the SRA Growth Stock conference last week, I added these microcaps to our watch list:
Answers (ANSW), Capital Gold (CGLD), INX (INXI), Napco Security Technologies (NSSC), Solar Power (SOPW) and Points International (PTS).
However, outside of special situations, we are waiting for markets to be (well) below 9747, before any Christmas/January effect microcap buying. 

3. High Gold Prices Here To Stay

“When gold hit $700 people said it would fall. Wrong. And wrong again at $1000.” 

READER: Re: CME to allow Gold as Collateral For All Exchange Products: http://www.nasdaq.com/aspx/stockmarketnewsstoryprint.aspx?storyid=200910190749dowjonesdjonline000184
Is this good (gold finally another currency?) or BAD (JPM custodian?)
HW: Yes. 

READER: 1.You say gold should go down from 10/27 to Mid-November 2. Up the last 2 weeks of December. Is it me, or does the buy time on gold/silver keep changing? I am having a hard time keeping up with all the changes.
HW:  My goal is to find a LOW risk price entry to buy and hold.  That time/price entry does keep changing.  For me, buying gold or anything is a function of whether buying as a trade, medium or long term investment and/or hedge.  If the latter, you already own some gold.  If the former, I am still waiting for better pre-XMAS buy signals. 

4. "Our sensitivity to earnings is very high. How the market interprets the earnings announcement over the next couple of weeks will determine the direction that we trade."
Gina Martin, equity strategist, Wells Fargo Securities
HW: Duh! 

“We’re getting to the point in this market where we’re going to have to see revenues come through. Though they’re not declining as much as they were, to continue this move up, we have to start to see the evidence of revenues following, because we can’t cut our way to prosperity in earnings management.”
Warren Koontz, head of large-company value stocks, Loomis Sayles
HW: I strongly agree. 

"We're not quite at this final stage, but by the end of the week or next week at the latest, traders should be looking for a 5% pullback."
 Marc Pado, U.S. market strategist, Cantor Fitzgerald
HW:  It SHOULD be at least that much. 

5. Betting on Natural Gas, Part II: Investing Ideas

Energy $70 a Barrel: A New Floor for the Oil Industry?

Site Lets Investors See and Copy Experts’ Trades
On KaChing, model investors’ trades and track records are public, and for a fee, clients can make the same trades that a successful trader makes. 

6. READER: Good info on the TIPS.  My models suggest 106-107 possible if 104 roundly taken out.  104 was my lower end retracement.  Correlations are almost 1.00 with gold, so also possible some $$ exits gold and flows into TIPS and longer term Treasuries. 
HW: 104 was my 2009 target. I agree 106-107 is possible in 2010.  However, TIPS and gold do NOT always correlate 100%, only in certain markets. 

READER: My immediate worry is not US $ 1.40 trillion Budget Deficit of US Govt for FY 2009 but the US Bonds. The next bubble to burst in the US Economy is US Bonds. Which sane person will lend money to US Govt for 30 years at interest rates below 4.00 %??
Please note November 2009 is a tricky month for global equities with a 15+ % correction possibility in ^DJIA from current level of 9960.00+.
HW:  If not in November, then H1 2010. 
PS. Who ever said investors were sane, aka rational? :) 

Reader: Both gold and silver are up, again. Should I buy silver now or wait a little bit?
HW: I am close to acting but have not yet.  The risk/reward is far from ideal at current prices at this point in time.  However, IF gold breaks out above 1085, we may join the party. Until that, I prefer to buy value, i.e. under $1000.