Wall Street, Next Week is a weekly Email/Fax newsletter @$300 annually.
New subscriber Intro - $99 for 3 months. To subscribe, write
1. JANUARY BAROMETER
2. AFUND JANUARY BUYS
3. AFUND JANUARY SHORTS
4. LETTERS
1. According to Yale Hirsch in his 1998 Stock Trader's Almanac, "As January goes, so goes the year! This has been true since the passage of the 20th Amendment to the Constitution. Only three major errors have occurred since 1950 - 1966, 1968 and 1982."
Obviously this is one reason why a lot of people are bearish for next week. Another is that net outflows from equity mutual funds reached an extraordinary $9.48 billion for the four days ending Tuesday, Dec. 23, according to AMG Data Services. Our work suggests it takes +12 billion a month to sustain the current bull market.
Carol Mull (Fax 317 353 6246) in her Astro Investor is very bearish Monday, mildly bearish Tuesday BUT forecasts the 7-9th as UP days. Repeated shorts from DIJA 7950 this past week was a winning strategy, but will this continue next week? If you put a gun to my head I would short, BUT not aggressively until DIJA 8050+. We have 5 BIG plays forecast for 1998 and next week is NOT part of them. If you must be unidirectional, shorting has the better risk reward, but I prefer hedges of going long January stocks and shorting stratospheric techs. Also remember to continue to lighten up intermediate term holdings circa DIJA 8000.
DIJA: P2 Sell 8060
BUY: OXHP, NOVL, ORCL
SELL: HWP, YHOO, AOL
2. If you are so inclined not to be long in January, but wish comfortable intermediate term shorts, try our Hi-tech trio: HWP, AOL and Yahoo. Fundamentals are poor here, and the latter two close to their 52 week high.
Hewlett Packard (HWP): lackluster computers, strong dollar woes vs increased Asian competition and for the first time REAL high end printer competition. Watch XEROX (XRX) take on HWP in the networking printer/copier market.
Yahoo (Yhoo): has a joke market capitalization of $2 billion and
AOL: Steve Case is no Michael Eisner and profits are as scarce as hen's teeth.
Note we closed out our 1997 year long tech short of NSCP at 56 7/8 at 23 5/16 today. While it could go still lower, it won't be easy money as before.
4. Between Monday January 5 and Wednesday, January 7, the Dow will decline between 486 and 750 points...I don't know if it is going to do it in one shot on one day or between 3 days.
HW: Maybe, but you could be two weeks early. Not sure we will even take out our first Market pivot of 7722 before more serious tests of 8000. With Friday's DIJA close of 7961, the risk reward of entering the market Monday short is favorable, but not exceptional. MY gut instinct agrees with our French correspondent's work for the 19th-21 as the first potentially serious Bear test of the year.
Wednesdays, listen to our ABS radio program TRADING BY THE STARS, Channel 12 on the Microbrowser.