A review of our 1997 Forecast and 1997 Mid Year Forecast is a rewrite of my biography from our March 11 top call 6 months in advance to the day to the Asian market crisis, Blue Monday and Happy Tuesday to the minute.
Revealing somewhat less, broadly speaking, among the many astronomical phenomena affecting world events and the markets, 3 primary planetary events are especially noteworthy in 1998:
The first eclipse pair will most likely demark a big market drop or another market top. While the Sun is in late Aquarius and Pisces, we are also on alert for a major MidEast political crisis to ignite.
The Summer Eclipses may trigger at least one mini-crash. See our 1998 Mid Year Forecast for details.
The third celestially marks a "rock (Saturn) on a cloud (Neptune)" and will contribute to ending the speculative bubble of current markets. The press will talk about both recession and deflation. However, we also have minor Jupiter/Neptune and Jupiter/Uranus aspects so the press will also talk about inflation and more high-tech mania. That is to say, despite some price decreases, we will continue to have quality of life inflation. To quote our communication director, Susan Hahn: "Today you have to be rich to live a middle class lifestyle." Specific industry sectors to avoid include drug stocks, airlines, many REITS, glamour stocks, high end retailers and some entertainment stocks which will mostly fall out of bed by this Summer to Fall.
P.S. Don't be surprised when a few more fairy tale emerging market dreams (Neptune) crash back to earth (Saturn).
1998 Market pivots 7611 and 7722
Major Technical Support areas are 7230, 6950 and 6390; Resistance at 8000,8260 and 8500.
[For a preview of the next MAJOR market paradigm (Jupiter/Saturn conjunction in 5/28/00) see my book INVESTING BY THE STARS].
IN 1998, INVESTORS HAVE YET TO LEARN
1. TO SELL ON RALLIES, INSTEAD OF BUYING ON DIPS. MARKETS CAN GO DOWN -- and 1998 may end lower than it began.
2. Sharp money managers don't only buy and hold. They also rotate stock holdings. LAST YEAR'S WINNERS OFTEN BECOME DOGS IN THE FUTURE AND VICE VERSA. INDEX FUNDS, HIGH TECH MOMENTUM STOCKS AND ESPECIALLY THE NEW NIFTY FIFTY MAY UNDER PERFORM IN 1998.
COSMIC VALUE STOCK SELECTION
Begin with one or more of the following four criteria:
1. NEAR OR UNDER 52 WEEK LOW e.g. BUS (Greyhound)
2. 5%+ YIELD e.g. WRI (Weingarten Realty)
3. STRONG HOROSCOPE e.g. GM (General Motors)
4. IN UPCOMING COSMIC SECTOR THEME e.g. CAT (Caterpillar)
So here are FOUR potentially winning investment strategies for 1998:
Naturally the SEC, NASD, CFTC and I advise you to do your own research and/or to check with your licensed financial advisor or broker before enacting any of them.
I am recommending 35% or MORE cash allocation for much of 1998 as well as reducing maximum allocation exposure to US Bonds that we recommended in our 1997 Midyear report to 20% or less. Traditional practices like buying quality - the so called new nifty 50 stocks, won't work as they are still SOOOO overpriced. I think it better to wait out the 1998 decline and buy value whenever it reappears as it did with OXHP (Oxford Health Care). In general this means at least a 50-75% decline in prices, and requires patience, not crowd joining momentum mania.
MAKE UP YOUR WISH LIST OF GREAT STOCKS TO OWN. It could happen! There are MANY good companies out there (unfortunately without good stock values). For example, Lucent Technologies (LU) is a great company with stellar future sales and earnings etc. But buying it at current pricing is just plain crazy IMHO. Others like Compaq (CPQ) or SONY (SNE) don't have as far to fall to reach decent value. Agricultural and Natural Resource Sector stocks will generally do well by late 1999 with continuing world wide demand whether or not there is a recession.Other potential winning strategy examples beyond trading the obvious January small cap rally, M & A plays, stock splits and buy backs:
*** MARKET MISTEAKS: Just as markets OVER value stock prices, they will just as surely UNDER value them, as they did in Hong Kong and Japan this Fall.
*** SPECIAL SITUATIONS
Some stocks are not overly affected by overall market conditions. We have said it before and we say it again: BUY IHTIF (International Hi-Tech Industries).
DO YOU KNOW WHEN TO SELL STOCKS? When you would no longer buy the same stock at the price it is being currently being offered. Also not selling a stock because you will pay too much tax is NOT advisable IF you believe the stock will seriously decline in the near future. However you can use a strategy of writing covering calls on stocks such Johnson and Johnson (JNJ) or Sun (SUNW) which we consider holds.
Other recommended defensive actions include buying into the Gold sector. We agree that it hasn't done so well recently. Gold is no longer a crisis metal since the Gulf war and the US government claims there is no inflation. Still we believe it will outperform over the next 18-24 months. Our Gold choices are the blue chips ABX (Barrick Gold), NEM (Newmont Mining) and potential January effect small caps: ECO (Echo Bay Mines) and PGU (Pegasus Gold). Our Silver choices are HL (Hecla Mining) and SSC (Sunshine Mining and Refining).
I consider Oil and GOLD commodities that will go up long term because of strong demand, as well as a patriotic way (for US citizens) TO SHORT THE $US DOLLAR, which is something cosmic traders are looking to do in the not so distant future. While the Oil/Gas sectors may do well first quarter 98, especially if there is a Mideast crisis at that time, many stocks in the bullish energy sector will most likely be negatively affected by the Saturn/Neptune aspects later this year. Therefore some profit taking First Qtr is recommended.
Diversify internationally. All the world's markets have different horoscopes. Also, you may benefit from a carefully chosen currency hedge. Clearly Europe is increasingly attractive for long term investments. Our favorite country once again is Italy. We also recommend buying on dips the Asian markets we cover, Hong Kong, Japan, and Korea. Many of their multinational blue chips are long term investment options with the added benefit of increased short and intermediate term trading volatility.
Before you go for the gusto, KNOW THE DANGERS OF SHORT SELLING (SHORT SQUEEZES) BEFORE you do it for real. For timing favorite shorts or when to buy put options, read our weekly email/fax newsletter: WALL STREET, NEXT WEEK.
ONE LOOMING DISASTER: CANADA - AVOID IN 98/99. Its horoscope promises a large probability of country wide political/economic crisis over the next 12-24 months. See our 11/24 CANADA report for details.
We don't give stock, futures or options trading advice here. See our weekly email/fax newsletter WALL STREET, NEXT WEEK for short term critical TIMING advice. However, numerous traders will again make or lose fortunes next year, as traders did in October 1997. One suggestion is to consult a local astrologer and have your 1998 horoscope potential checked to find out your personal best and worst time periods.
MISCELLANEOUS RECOMMENDATIONS
7 DIJA FORECASTS
TECHNOLOGY WATCH
MICROSOFT - When you try to rule the world, you create many enemies as IBM did in the past and Microsoft does today. As industry observers, we are betting against WINTEL and for the "Alliance against Microsoft": IBM, NSCP, NOVL, ORCL and SUN. Microsoft stock is WAY overpriced but industry analysts don't seem to care. It has run out of positive momentum and plenty of anti trust activity is on the horizon. Beginning 1998 the N/C will begin to take away some of their multi-terminal licensing fees. As one sharp industry analyst told me: " Better not buy MSFT: I would add " Better still, sell it or short it!"
INTEL- We repeat our Intel Forecast written 8/27/97 for November Worth Magazine: "Sell over 80 and on rallies into the Spring, BEFORE April. Buy to accumulate next summer, and/or 55-65 next year. However do NOT expect it to reach 1997 highs in 1998. Intel this year was under Saturnine influences. They made a serious mistake in doling out technology (not delivering 300MH) this past spring and keeping prices too high. This allowed their competitors to gain a PERMANENT foothold among computer manufacturers. Because of this profit margins WILL CONTINUE to deteriorate into 1998 (although from high levels).
Starting next Summer, Intel is under Jupiter aspects and should offer new and better products, albeit with less generous profit margins. This should begin to reverse Intel’s price decline even as its deals with more earnings disappointments and less lofty P/Es."
SIX JANUARY EFFECT STOCK PLAYS
Echo Bay Mines (ECO), Greyhound, ImClone Systems (IMCL), International Hi-Tech Industries (IHTIF), Novell (NOVL)and Oracle (ORCL). Remember however, that in the last few years, most of the "January Effect" has occurred in December.
Remember however, that in the last few years, most of the "January Effect" has occurred in December.
*Our initial bio-tech choice was Enzo Biochem (ENZ), that we would sell 19-21 and then buy IMCL, a stock we just discovered and have not fully researched yet, but "feel" that in 12-18 months may be 15-20.
Since May 2, 1988 I have established a superior forecasting record, primarily due to my knowledge of financial astrology. As more of our forecasting is now private and contracted to money managers and institutional investors, it is my intention to have other financial astrologers and money managers contribute more on my web site in the coming year as compensation.
Henry Weingarten
PS. Can you afford NOT to have a financial astrologer in your future?
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