1. 10K
2. CHINA, JAPAN
3. OIL
4. GOLD
5. BARRONS' MANIA
6. QUOTE
7. LETTERS
NEXT ISSUE OF WALL STREET, NEXT WEEK WILL BE APRIL 3
I will be in Denmark next week giving a seminar on financial astrology
and offering my views of the Euro, Y2K, August 11 Eclipse and May
2000 Alignment etc. If you are in the neighborhood, please stop by and
say hello.
Remember the number 1000 and what a hard time the Dow had around that
number? This time it's different... :-)
Last week at approximately 9:50:22 Tuesday March 16, 1999, the DJIA
crossed 10,000 on my trading screen for the first time. What an easy and
profitable short that was. The Dow failing to hold the historic 10,000
mark disappointed CNBC sport-market fans no end. Yet, many professional
Wall Street veterans were unimpressed with the milestone:
"Its a non-event; it's nothing. The Dow consists
of 30 stocks; the other 25,000 aren't doing anything,"
said Alan "Ace" Greenberg, chairman of Bear Stearns & Co. in a
telephone interview.
According to Beth Piskora in the NY POST (3/18),
" Strategists said the great amount of attention paid to the Dow's
brief move above 10,00 has convinced investors that stocks are overvalued,
and that they are now selling to lock in profits."
I never would have guessed it - I thought everyone KNEW that stock
prices don't ever go down and that earnings don't matter. Isn't there
always a bigger fool watching CNBC?
Investors, no matter whether the peak was last week, March 25 or mid-Spring, it is time to increase CASH levels in ALL portfolios! Our next WSNW alert would have been scheduled for next week March 25 OCO OEX 680.
Key Dates: March 22, 25, 30
2. From our India correspondent Taran
Marwah:
As per our email of Feb 25, we suggested that China will devalue in
April. Note the Financial Times 3/12 article by James Kynege & James
Harding: CHINA REVIEWS DEVALUATION:
"The government official added that if current policies failed to curb
China' economic slowdown and raising levels of social discontent, then
arguments for a devaluation would grow.
Officials have also considered altering the basket of currencies to
which the renminbi value is fixed to give less weight to the US dollar
and more to the yen, the Korean won and the currencies of other trading
partners and competitors."
HW: The latter approach is a smart "facing saving" way for an inevitable
act.
Miyazawa sees Japan economy recovery by May.
HW: We see the reverse.
Forex traders are noting the technical picture for dollar/yen has become
ominous-looking as money is flowing from U.S. and overseas funds into Tokyo
stocks.
HW: Is this from institutions worried about having missed out on Russia,
Brazil and Indonesia?
3. Next week all eyes are on the Organization of Petroleum Exporting
Countries (OPEC) summit. Will they enforce production cuts or will
oil prices break down one last time?
Why did the US recently smash Iraq's oil's distribution capacity?
Is it, as some oil conspiracists muse, to prevent a further oil glut or
is it for "democracy"?
No matter, OIL will base at $14-$16 soon enough.
4. Reader: "Today's low level of open interest basis COMEX gold futures - 156,400 - is not comforting as any fuel for a short covering rally was expended last week. False breakouts lead to fast moves and last week's false upside breakout is why we are going down so hard right now. Gold remains vulnerable in the short term to a move to the low 270s. In the bullish case, gold MUST rally from that level. Any "weak" or "corrective" rally from the low 270 level will set up a precipitous decline for the summer months.
I advise you to warn your subscribers at least for the short term and
for the intermediate term if a substantial rally does not develop from
the low 270s level in the next 10 sessions."
HW: We bought gold futures today at 285.70 and will rebuy on weakness.
Our thinking is that we expect a real gold rush this summer.
5. From Barron's Feb 22 article by Robert Sobel:
"Remember the old story about the two traders who kept selling a case
of sardines to each other raising the price each time? A sure-fire
profit on every trade. Then one decided to sample the contents and found
them inedible" "What did you expect" said his colleague. They were for
trading, not eating.
Take Radio Corporation of America the star of the market in 1928..... When it had nothing but promise, RCA was a $573 stock. Three decades after the promise was realized, it was going for less than half it 1929 high. Think about that trying to assess the prospects for some of today's high flyers [Internet stocks]."
6 In a speech last week, Fed Chairman Alan Greenspan said the
following when discussing investor reaction to negative shocks (like the
Russian debt default in September 1998):
"I defy anyone to distinguish a speculative price pattern for 1999
from one in 1899 if the charts specify neither the dates nor the level
of the prices."
HW: Clearly, Alan is saying that without using the horoscope (dates)
AND technical (prices), one cannot make REAL money in the stock market.
I agree!
6. Q: Henry, are high tech NASDAQ stocks a "sell" by March 25th, or
is their peak later in the spring??
A: Depends on the stock. Oracle for example, was a sell on Friday
March 9. If you like to play close to the edge, you may have some
time if you are a careful stock picker. But if you are an investor,
you are simply hoping for a bigger fool to buy your stock. Will Nasdaq
take out its earlier 1999 high? I don't believe so and the risk/reward
of such a bet is unacceptable to me.
Reader: We can be assured of two things in the next month : negative
earnings surprises and new money coming in before the tax season to IRAs.
How to play the bad vs the good? The S&P will probably do better
than an undiversified portfolio simply because the impact of a surprise
will be muted. Buying the S&P and shorting a portfolio of negative
surprise candidates?
A: Good market strategy. I presume you shorted Caterpillar, IBM
and Oracle?
Reader: I'm bearish on the market and that's why we're unloading longs
accumulated at lower prices. I don't think the sell off will be severe.
In fact I think it will be very mild. Maybe in the DJIA about a 700 points
downside maximum. The longer it stays at this level the more shorts there
will be. This will fuel the punch up pass 10,000.
A: One possibility. Another is that TV market analysts will stop
taking drugs and we won't see 10,000 again.
Reader: I can't get the Monday Cadbury report.
HW: Download the eFax
viewer software from eFax VIEWER.
Q: If there is a bad period on the market i.e. your forecasted summer
crash - why wouldn't Greenspan start manipulating the interest rates again
like last year and thus prevent the forecasted 7000 range you have for
the Dow. I just feel the market is unreal and a sort of uneducated mania
is about. I am staying pretty liquid because I share your concerns. However,
I can assure you I am a voice in the wilderness!
HW: By next year, the US dollar is likely to be in a severe decline
forcing a possible increase in interest rates. Alan has only two
magic bullets left. Ditto for Rubin and Bill. I believe history's
judgement will be that they have helped make a terrible mess of the world
economy.
As to being a voice in the wilderness, remember: he/she with
the most marbles on December 31, 1999 WINS! :)
Q: I just read that IHI plans to raise both debt and EQUITY capital.
What kind of dilution is expected through fresh offerings and how does
it play into your projections for EPS and stock price? Thanks.
HW: Excellent news in my opinion. CIBC is a world class bank
and they should be able to assist IHI onto Nasdaq.
Reader: I do not understand what you mean by (M/A) reason and is BAANF
a long term play of 12- 18 months?
HW: "M & A" is merger and acquistion, one of the few remaining
"positives" in the US and European stock markets. Stock of the month picks
have a 25% targets within 6 months. They can be held longer depending on
market conditions. BAANF could be held longer as it belongs in our
Dutch 2000 portfolio.
Robert Miner's current projections for an S&P500 high are March
24-26, April 5-8, and April 23-27. Princeton Economic's mini-turning
point on their Economic Confidence Model is April 8....
HW: Besides March 25, we agree with April 5, but prefer other
dates.
Please send your comments, questions and suggestions to Letters.
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