1. MARKETS
2. DJSTOXX 50
3 PATIENCE REWARDED
4. STOPS PART I
5. LETTERS
Is it 8400 or 9000? While only Alan knows for sure, you know our bet. Remember, next week is options expiration and must be traded one day at a time. Investors will just be marking time until Friday. Thereafter, firecrackers between an upcoming New Moon (18) , Winter Solstice (21) and FOMC Tuesday (22).
Key dates: December 18, 21, 22
2. We have just posted preliminary forecasts for the Dow Jones STOXX 50, the leading European stock index. We will be shortly updating this on a regular basis. Our P1 trading target is 233. Note next week will be posting our quarterly Dow Jones Industrial Average update.
3. Who says patience is not rewarded? Boeing hit our value target (<34) last week. We expect to see 40+ in the next 12-18 months despite a long term bearishness for the DJIA. While we miss some like Compaq, when we finally do buy (value), we are happy and much more often than not, reap a very nice profit. Over time, this strategy almost always OUTPERFORMS the mindless SP 500 buy and hold approach that buys good companies along with the bad.
4. In reference to the following email, we are re-stating our views on stops Part I:
"I appreciate the improvements tracking your recommendations on your web site, but I ask that you update them more diligently. For example, you originally had a stop of 7 1/4 on Bryo and you should have been stopped out, yet you still show a hold on the stock. You were very late in posting the change to your stop loss.
I bought it at 7 1/2 and then had it come down to stop me out at 7.
I would have had a lower stop in place or none at all had your new 6 1/2
stop point been posted timely. As a result I'm out at a loss while the
stock is now up nicely. I guess I must be confused. An explanation will
help."
HW: You are confusing a trading stop and an investing stop. Stops
are primarily decision points about whether you are wrong about the market
as much as money management. Neither was an issue with Brio.
The main point of any stop is TO STOP AND ASK THE QUESTION: Would I buy
this stock NOW? With BRYO the answer was a strong YES! Brio, we warned,
was a thinly traded stock and hence would be more volatile. I advised
clients either to sell at P1, 10, P2 12 or if holding longer term, for
a move to P3 14-15.
When trading I can be stopped out and then re-enter 1/2 point higher or lower even the same day depending on market conditions. BRIO Technologies (BRYO) was an intermediate term investment i.e. Stock of the Month club pick. Our forecast is for a minimum of 25% plus appreciation within 6 months. We often hold it beyond that price as well. However, if it declines 15-20%, we can either hold, sell or even double up depending on astro-technicals. Naturally I also often trade stock of the month club picks in addition to investing in them. The stop you saw was in our trading area i.e. Daily Market Commentary, not in our investing area i.e. Stock of the Month Club pick.
5. Q: Since the major global concerns are deflation or recession, why
are you so bullish on gold at this time? Do you see a significant
drop in gold the first week in Jan?
A: This is primarily an astrological move with underlining fundamentals,
not so much a technical buy. 1999 will be a stellar year for gold, and
we expect to see $15-$320 by the end of February. Whether you buy or sell
depends on your investing/trading objectives and what else you own in your
portfolio. One respected gold analyst expects congestion at 79-83 XAU.
As for me, it depends on the market movement. This is a win-win scenario.
Do whatever is comfortable for you.
PS Who says the major global concerns are deflation? That is
OLD NEWS: After the Saturn/Neptune (deflation) aspects in early1999, there
are Jupiter-Neptune (inflation) aspects later in the year. Are you
a general fighting the LAST war?
I am still sticking to my work which suggests additional risk in XAU
beyond what you are looking at. I will concede that if the Latin
American contagion starts again (the bad Brazil vote - impact of low crude
oil on Mexico/Venezuela) that currency traders will be quick to sell dollars.
That could benefit gold - which would fit in your s.t. scenario.
HW: Whatever the reason on earth, the reason in heaven is that
cosmically GOLD WILL SHINE IN 99.
Isn't IHI exciting to say the least. Congratulations on your BRYO pick.
HW: Agreed and thank you.
Ticketmaster Online (TMCS) just went public in the typical skyrocket
internet stock launch. What's better is that a company called
Temco Service Industries (TMCO) used to have the ticker for Ticketmaster
Online. Well there were enough online dummies which bought TMCO by
mistake so that stock went from 28.75 to 65 then (oh shit I bought the
wrong stock) and back down to 23 again. A real all-timer.
HW: You mean markets are NOT efficient and investors are not
rational? Hmm, how do you like that!
I have done a little research this weekend. I want to invest in
the PPP for the next year. The PPP is the second lowest priced stock
of the DOW 5. Are you familiar with this investment method?
It has a great track record. The stock is CAT. Do you have
an opinion of this stock for the IT?
HW: Cat is certainly a good choice, and perhaps one to buy when
the stock market is 8400. Currently it is above my P1 price target
of 42, I prefer Boeing (BA) which did reach our P1 price target. I am NOT
a momentum investor and prefer to buy cosmic value.
Q: Homestake Mining is that just for the month or do you see a major
move coming in the metals at this time ?
A: We have been talking about a BIG Gold move. Remember, our
stock of the month club picks can be held for 6 months or longer if price
objectives are being met -25% plus. Often we get 50+% or even 100
% as you know. However, you are NEVER wrong taking a profit, especially
if you are feeling uncertain. You can always buy again either higher or
lower when you are comfortable.
Okay, let me get this straight---you want to buy IHITF at .86 on a technical
breakout?
Hopefully this is not a fakeout, hey that rhymed:-)
HW: Yes our 4-8 week target is $1.10 . Of course, I won't personally
sell when it reaches $1.10 as I will hold for our P2 target is $1.50. Its
still a nice trade from .86 to 1.10, if you are so inclined.
Did you send any email alerts? I have not received anything since
before you left for Florida last week.
A: No, but as a gold subscriber you have access to our daily
thinking in the gold subscriber channel under Daily market commentary.
Do you read that? We do have global market opportunity alerts with
the platinum premium channel, such as yesterday downgrading South Korea
from a strong buy to an outperform at 554. But is that what you meant?
I know that you will be in disagreement with his S&P commentary,
but thought it might be helpful to send it anyway. This damn market
could still go either way---my bias is that it moves to the upside toward
1200-1220 (basis CASH S&P). but who knows.....
Who really knows...........
From: fortcast@lisco.com (Fortucast) FORTUCAST FINANCIAL TIMER BY BARRY
ROSEN
WEEKLY CHART TREND: Higher into Dec. 30-31.
DAILY CHART TREND: Higher to 1240 basis March.
HW: YES I DISAGREE. WHO KNOWS? Both Alan and the
Shadow!
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