1. FED TUESDAY
2. ASIA WATCH
3. LOOK TO THE SKIES
4. MERRILL LYNCH ON TIMING
5. MORE IHI
6. LETTERS
Next week is the most dangerous time period for investors until the New Year. Minor distractions like a new Gulf war and the collapse of Japan aside, what everyone is REALLY worried about is: will the Fed lower US interest rates 1/4 of a point this week? I don't believe so, but even if they do, this will be the last rate cut for some time. For institutional investors this is a good time to continue to exit US Bonds, or at least continue to hedge them e.g. Sell US Bonds/Buy British Bonds. We expect the market to be down Monday until at least Noon Tuesday. Thereafter expect more selling either after a short rally, or due to market disappointment. Of course, if you are bull headed, you might use this time to think about what to buy, when everyone else is selling....
Key dates: November 17, 18
2. ASIA WATCH
The critical numbers for Hong Kong remain 10,000 and for Japan 14,000.
Even if Japan does all the RIGHT things, it will take all of 1999 and
more to clear up their banking mess. Do not expect instant i.e. TV-like
recoveries. As for Hong Kong, they will begin to pay the piper in
early 1999, if not before - AVOID 110%. Finally, economically,
the economy is much worse in the US than reported in the press. Currently,
it is 50-50% bet that we have seen the bond bottom. If not, expect
to see 4%, but with an increasingly weaker US dollar as one result.
3. Will the Lion strike with its fangs? The answer may be known just a few hours after 2:45 PM EST on November 17, 1998. The worst Leonid meteor shower in 32 years is bound to disrupt communications. But is this what is REALLY happening? Could it not be a cover for an advanced landing party of alien invaders? Nah, couldn't be, otherwise the US military would respond by creating a diversion for the public, like preparing for a military strike on Iraq etc.
Alternately, "Wag the Dog" conspiritors believe that the Gulf buildup is just an extra insurance policy against any impeachment, however remote. But that also would be unlikely. Otherwise one would have to believe the president could bomb a puny country, say Sudan, just to take Monica Lewinsky off the front pages. That only happens in the movies, right?
Finally, while some oil traders have been buying the rumor that Saddam went long BIG TIME early last week, how could that be? In that case, the Arab nations would also benefit and would modestly support US war goals in the MidEast. Come to think of it, didn't they? :)
4. According to recent Merrill Lynch ads, TIMING IS NOTHING in the stock market. They grant Timing may be everything, but only in comedy. I can't agree. No one can time the markets perfectly, but a good market timer OUT-PERFORMS a buy and hold strategist. Their recent advertising just suggests Merrill Lynch analysts can't time the market. Is that one reason for the recent big drop in their share price?
5. You have said that Canada has a dreadful horoscope again in
1999 and to stay away. As IHI is part of this exchange how does this apply?
Do you off-load the shares if the Dow reaches 10,000?
HW: This is not a trading stock, but a long term high risk, high reward
speculative investment. I treat it like a non-expiring option.
And if you don't mind the risk, I do recommend it. Personally I buy
it, especially when it is under $1 as it is currently.
Visit the company web site International Hi-Tech Industries for more information. Its corporate mission fits well with the upcoming themes of Jupiter/Saturn. Current and future short term problems in Canada is actually to IHI's benefit. The lower CD$ is good for exporting manufacturing companies like IHI. Additionally, Canadian builders can't afford to buy as much from the US. However, IHI is a special case. When the factory is in full production and others come on line, the stock explodes. I personally continue to accumulate rather than trade - buy and sell.
Henry, I do not understand. For years, you have plugged IHI, which
has a very undistinguished chart. Could it be that you are looking
at a first trade chart? If so, those do not work.
HW: First of all, I agree with you re: IHI's chart, although Feb 16,
1987 is not the one I use.
I use IHI Canada as 9/12/1990 although that is also undistinguished.
Their first trade charts are not great either for the BB or VSE.
However, I do differ with you as to their value. I use both incorporation
AND first trade charts.
I work off of Roger Rached's Chart and IHI Bermuda, which is the future of the company. Several years ago, that was to become the operating umbrella and it is the company to which all major deals have been proposed. Once that becomes operative, IHI will take off as long ago promised in this natal chart. Obviously, since this has not yet happened, the stock has languished. I will put on my web site more details later.
6. Do you still suggest buying stocks? You seem to be predicting
some sort of major correction before the year 2000?
HW: I like stocks, I just don't LOVE them.
We like having a big cash position and we like buying key stocks in certain
sectors, but prefer to trade most others for a quick 20+% return.
All of my retirement (401(k) money is sitting in money markets, have
been since early August. Can I get a better return by switching it
to the bond fund offered Me by the plan administrator? I know you
are expecting some downside turbulence in the stock market soon.
Another flight to quality anytime soon?
HW: Soon? Technically, I like trading-buying US bonds when yields
are above 5.25% at this time. Where were you In August when US Bonds
were a screaming buy? Globally, I prefer to be a seller, as better bond
offerings in northern Europe.
Other new International subscribers may wish to know to the question
- Who is Cadbury?
HW: See Christopher
Cadbury. I believe astrological work should be backed or screened
against technicals. One excellent source is Christopher Cadbury's
newsletter.
Hi I signed up about two and half weeks after you posted your Dow stocks
for the fourth quarter. These were already pricey do these still have up
side them? Also I am assuming they are updated by the quarter. THANK
YOU
HW: Yes, we update quarterly. I find the US market quite pricey
anywhere near 9000. Our money flow numbers suggest only 8300 as "fair
value". As to "real value", well that begins under 7001.67, our December
31, 1999 target.
Is it your thought that the Fed will not lower rates next week or that
the market will drop even with a rate cut? What about the argument that
the Fed did not mean to rekindle the irrational exuberance the markets
have had before, but only to stabilize the markets at a lower level? Yet
we are now starting to get into that mode again. This would argue against
a further rate cut. If so, I believe the market will be sorely disappointed.
HW: This would represent an excellent shorting opportunity either on
Friday or Monday ahead of the FOMC. Note: If the Fed lowers rates
(not likely), that is all they can do for some time and bonds will retreat
- Any stock rally will be short lived. If they don't, the stock
market will react negatively. Therefore, we will be short ahead of
the announcement and plan to take 1/2 profits ahead of the announcement.
Q: In your Daily Market Commentary, when you refer to a High-Risk
day for shorts, do you simply mean: you are forecasting an up day?
HW: Yes and No. Either there is a high probability of an up move of
50 or more, or that the daily volatility is such that there is a strong
possibility of an intraday LARGE UP (100+) move.
"Can you afford NOT to have financial astrology in YOUR future?"
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