1. MARKETS
2. THIS AND THAT
3. THE ALMIGHTY DOLLAR
4. QUOTES
5. LETTERS
Some analysts believe the Dow and S&P 500 could rally back up to their old highs by election time. I think not. However, it is possible post election. Still far more important that these indices are which sectors and stocks will rally or crash and burn. Those in play include energy, drugs and tobacco. See our forthcoming Fall Investing by the Stars newsletter for timely presidential updates.
More Inflation
Stocks will go Higher, if and only if, Inflation fears ease.
Yet, Procter & Gamble (PG) is increasing prices by 5 to 8 percent at
its laundry products division, which includes Tide detergent and Ivory
soaps, effective as early as September. Does this mean that only
investors who don't wash often will not be affected and continue to buy
stocks? Furthermore, if cleanliness is next to godliness, this has
disturbing moral implications for society! No matter what, be careful
of overweighing US bonds at current price levels.
Sales of new single-family homes surged 14.7 percent in July. The July
gain was the largest monthly improvement in more than seven years. More
bad news: three of the world's top four rice-exporting countries have agreed
to pool some of their stocks in order to fix the export price of rice.
China, Thailand and Vietnam will set up a joint rice pool, which would
allow them to stop competing on price. Expect breakfast cereals to rise
if this cartel works. Finally, my local deli is raising the price of their
breakfast special on September 4.
HW: Alan, I told you so. Now you will have to raise .50 basis
points.
What if what happened to Emulex happens to the broad NASDAQ market? A scary thought, no? OIL WATCH: On Labor Day, September 4, Jupiter will be in opposition to Pluto. Remember, buying ahead of the OPEC meeting September 10th could be very risky. Know what you are buying and why!
KEY DATES: September 8/11
DJIA:
11,000 Floor/Ceiling Testing
Nasdaq:
4,000 Floor Ceiling Testing
OIL:
September 10 Countdown Watch
2. COMTEX: "There are the rules of physics: what goes up must come
down. Then there's the Athens Stock Exchange variation: what was up comes
down and just keeps falling. The steep plunge showed no sign of slowing
Wednesday on an exchange that was among the world's hottest less than a
year ago.... The general index closed at 3,429.64, down nearly 2.7 percent,
to set another low mark for the year. Last year at this time, the exchange
was roaring its way to an all-time high of 6,355.04 set on Sept. 17.
'The madness of the summer of 1999 is being repeated in reverse,' said
a commentary in the Kathimerini daily. Analysts describe the freefall as
a crisis of faith."
HW: I call it a triumph of reason. We recommended exiting the
Greek markets beginning at 5000 and ending when 6,000 was breached.
Ford probably can't wait for Saturn to leave Gemini. With its rich 8% yield, it may be our " GM" play this Fall/Winter. Ideally, we would like to buy 10-15% lower, although current pricing at 25 maybe equal to GM at 60. Another transportation stock we are watching is Honda. It will most likely be added to our Cosmic Environment (Neptune) fund after the Yen retreats back over 111. The all-new Honda Insight is an example of what is possible with clean cars of the 21st Century, e.g. 90 mpg.
3. The mighty US dollar went too far last week against the Euro with a new life high as well as seven-year highs against sterling. While it has technical momentum, and some analysts believe moderating US growth will keep the dollar at lofty levels, we don't agree. Come October and then 2001, traders are likely to change their minds. We are beginning to consider some UK companies relative bargains for transatlantic hedges, e.g. Buy BP/Sell XOM.
"The dollar, on a trade-weighted basis, is continuing to get ever stronger,
and as long as there's this 'soft-landing, US asset markets doing reasonably
well' story, there's little motivation to change one's position."
Eric Nickerson, chief currency strategist, at Bank of America in New
York
HW: For momentum players that is true, but if you are an intermediate
term value investor (buy low, sell high), there is increasingly big motivation!
4. "Currency rates should reflect economic fundamentals and move in
a stable manner. Recent forex movements do not reflect Japan's economic
fundamentals.
Japan's Vice Finance Minister Haruhiko Kuroda
HW: That is our currency bet these days.
5. READER: I think Oil prices are going higher this winter. What
are your favorite oil stocks?
HW: Intermediate term, I like trade Sun Oil and long term RD (which
will benefit from Euro appreciation into 2001). Short term plays
are the drillers, but stocks like SLB and HAL are soooo expensive.
Also you may wish to check the natural gas sector which will blow more
than hot air this winter. Intermediate term, we like Keyspan (KSE) and
ONEOK (OKE).
READER: There are no red days on your chart so far in September. Are
you expecting a significant correction later in September? The Nasdaq to
me looks so dam strong like it might have another bit of a run before the
FALL.
HW: Yes, it does, and rather scary (highly irrational). I am tracking
Oil closely and September 4 or 9/11 are yellow (possible days) that could
start a big reverse.
READER: I'm curious as to how astrologers differ so much: Raymond Merriman,
Carol Mull, Rebecca Nolan and you -- for instance...seldom give the same
recommendations [on gold].
HW: How often do you find two market analysts or technicians agreeing?
It is the nature of the beast. Also, they may be looking at different
parts of the market, which can be quite different from the DJIA or NASDAQ
100. I am currently buying gold more for hedging purposes than for speculation.
You should find the right combination of advice that makes you money more
often than not.
One thing for certain: these astrologers as well as most analysts and
traders who use financial astrology in their tool box get far better results
than they would otherwise.
READER: Do they [CCCA] have a web site? Where can I get information
like market area growth, and projected Revs?
HW: Their website* address is screenphoneworld.com
and should be live this week. As this is currently a "story" stock, it
may be some time before you find the type of information you desire.
READER: Eye care company Bausch & Lomb (BOL) slumped 20-5/8 to 35-1/8
after Goldman Sachs and Deutsche Banc Alex Brown both cut their ratings
on the company's stock. Henry, might this be too steep a drop and
be like the ATT situation?
HW: I don't know the astrology of the situation, but off hand I would
think not enough. After another 10-20% and two-four weeks, then perhaps,
but more like Honeywell (HON), then ATT, i.e. a 25% price increase rather
than a projected 50% one.
READER: I'm thinking about buying some more IHI. I got my first
two lots at an avg. of .57. Do you think it will go down with the
pre/post election market correction? What are your thoughts on buying
now vs. waiting? Do you think it will pull back anymore?
HW: It could - I don't know. I do believe that once we are in
late October and they are in a 45 day factory opening countdown, the stock
will at least double. Until then, I don't know if we will go up to
1.30 or back down to .65 or less.
Therefore you could put in a bid for the price you want and wait.
Or you could wait until mid October and then buy, at a price that is
much lower or higher than current but in the belief it will go higher short
term.
Finally, you could buy now and not care if it goes back down.
You decide. Let me know, I am curious.
READER: Will you be reporting this year on IHI day, and if so, when
should we be looking for it on your web site? Thanks, A positive-thinking
IHI investor.
PS. Any particular preferences on brand/type of the '"real stuff"
champagne?
HW: It is now up. See
The IHI Story Part XIII. Dom will be fine.
READER: I know that the stock pick of the month is HM, but I want
to know what your long-term, ultimate target for gold is. Do you
have a long-standing target and a timeframe on when it will hit that number?
I am about to make a meager purchase of a roll of 10 1 oz. Gold Eagle bullion
coins and I was wondering if this is as good a time as any to make the
purchase or is there a cycle low due in the near future. Thx, a satisfied
GOLD subscriber.
HW: I believe if/when the US dollar snaps, gold will rally.
We are still hoping to see $375 by 2000/2001 before I give up. This
is more a US dollar hedge and value play than a "gold" play. Best
times are October 2000 and later in 2001.
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