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1. THE BIG PICTURE
2. TECH SECTOR
3. LETTERS
1. I hope you all enjoyed Friday as much as I did. However, it was rare feeling for me to be a raging BULL when the market touched 7755 until its close one hundred points higher. Rather than micro managing the market next week, I want to present my broad market views once again. There is a 69% chance the market top this past summer is a MULTI-YEAR high. Even if breached again, this is an aging and TIRED bull market - stock selection and timing will increasingly be MORE profitable than "buy and hold". New investments should be limited to VERY special situations. Take profits on any rallies - CASH is NOT trash. The DIJA is building serious resistance circa 8000 once again. Despite persistent bullishness, buyers are using less firepower than before cf. Asian markets. Watch the 6.50 level in the bonds; if rates go above that, then we will see DIJA 7600 next week. Otherwise the markets will range between Friday's lows - 7755 and a weak test of 8000 where I will gladly join the opposition (go short). Patience will be rewarded.
BONDS: 6.50% Yield
DIJA: P1 7760 P2 7600 P3 6950 R1 8000
Since I know everyone is looking for something to buy, here is the Astrologers Fund Hot play next week: Enzo Biochem (ENZ) buy 19 OB - 10 day target 21-24.
2. Now that Uranus went SD on October 14 (the start of the Intel bloodletting), it is time to me to review the Technology sector (Uranus rules Technology). Intel, as we pointed out weeks ago, is a SELL until 80 and NOT a BUY for us until this Summer or 65-68. Compaq (CPQ) news last week provided the opportunity for an easy and profitable short from 77-78, although CPQ Bulls are happy to buy ~ 68 where it has decent support. I will be issuing a review of 12 of the Tech stocks I follow next issue. Until then, watch IBM and MSFT earnings Monday to provide short term direction to this sector. While this week's trading kept me too busy to investigate astrologically, I expect them both to be on the weak side. Note: Oracle (ORCL) is coming in range of our 30 target where we will consider a first buy. Oracle should be a great January play.
3. I notice that in WSNW alert, you often said sell the market. Do you mean to short blue chips like those consist of the DJIA? Or it can also mean to buy put options for index like S&P 500?
HW: As I am forecasting at least a 100 down move in an alert, the choice of instrument is yours. Alerts can be played any number of ways depending on your risk/reward parameters. Just remember to book your profits and cut your losses if you wish to survive and prosper in the game of Wall Street.
I see a BIG move happening between one of the time periods or possibly both with 10/27+/- 2 days as the pivot point: 10/15 +/- 1 day to 10/27 +/- 2days and 10/27+/- 2 days to 11/10 +/- 1day. It looks like the first time period may explode lower since I'm seeing bearish divergences in several momentum indicators and we're approaching extreme overbought conditions. This wave lower could also be wave 3 down based on Elliott. The odds are increasing we will see a "crash" in one of the two time frames above. The pivot date also happens to correspond to a Bradley low of 10/29 +/- two days.
HW: Well I won't bet against you on those days! :)
Thank you Henry for sharing your newsletter with me. Don’t you think the Uranus station has some effect this week? Those financial astrologers interviewed in the Mountain Astrologer Arch Crawford, Bill Meridian etc. see stocks going down Feb 98.
HW: I see a bigger problem next summer. But after the January effect, there is usually an opportunity to worry about the markets. We will give our opinion about this in our Annual December 7 report.
Oct. 16 1997, the market drops. Question: Is this another buying opportunity?
HW: As day traders yes, but as investors generally NOT. The risk/reward is far better on the short side these days than on the buy side.
Tuesday & Friday, listen to our ABS radio program TRADING BY THE STARS
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