1. MARKETS
2. THIS AND THAT
3. MICROCAP HUNTING SEASON
4. QUOTES
5. LETTERS
1. CONTRARIAN SELL SIGNAL
THE COVER OF BARRON'S SEPTEMBER 4: Can Anything Stop This Economy?
"Despite recent signs of a slowdown, expect the economy to remain robust,
with no recession in sight."
Many stock's rise in the past 20 years (Jupiter/Saturn cycle) owe more to an expansion in their P/E multiples than to their significant profit growth. Come the annual October scare, this truth will hit home for hard many momentum investors.
MORE INFLATION
Last week crude oil rose to a 10-year high, topping $35 for first time
since the Gulf War on expectations that OPEC won't agree Sunday to pump
enough oil to allay concern over low inventories.
Clearly,Bush and Cherney don't mind as much as Gore. What a campaign
issue if high prices persist until November. However, of much more
personal concern is the fact my local deli raised the price of their special
breakfast (2 eggs, potatoes, toast and coffee) to $1.99 from $1.69.
I remember not so far back (December 1998) when it was only $1.19.
If this keeps up, the price of Wall Street, Next Week is bound to rise
as well - $108 per quarter starting next year? Readers wishing to avoid
this price increase can either hedge this by buying some gold shares, e.g.
Homestake Mining (HM), and selling it around $7 or by extending their subscription
when offered the chance after the election.
KEY DATES: September 8/11, 12,13
WORLD MARKETS: Declining early (11/12) or later this week
(13-20)
OIL: TRACK CLOSELY
EURO: STRONG BUY - as good as gold! :)
2. September 9 Ecuador completed the adoption of the US dollar as it currency. Since we have Panama already under our belt, what about Mexico, Argentina, even El Salvador? More US dollars, please.
September stock of the month Club potential picks include: Stemcells (STEM), Stem, ATT Wireless (AWE), Spring (FON), Goodyear Tire (GT) and Ford (F). As to Mpicks, we will probably pass as I just want to buy CCCA* and that could be a potential conflict of interest.
3. MICROCAP HUNTING SEASON: Part I
Aggressive speculators should be prepared for another round of mini-hysteria
MidOctober to MidJanuary 2000. If you choose to play this game, study
the rules and have your game plan down pat. Remember ONLY to use
speculative capital-capital you can easily afford to lose without materially
affecting your life style.
Want to find if if this game is for you? Try the following visualization
exercise:
Put $1000 to $5000 in ten dollar bills and spread it on your lawn.
Now set fire to it and let it burn completely. If you can handle this emotionally,
use the same hypothetical money burned and put into your MICROCAP trading
account.....
4. "Given economic fundamentals, it is possible the Euro will rise sharply
from now.''
Japan's Vice Finance Minister Haruhiko Kuroda
HW: Given economic fundamentals, it would NEVER have fallen so much
in the first place.
"We've got enough data that the economy is slowing down, but is it a
soft landing or is it a hard landing? There is some trepidation."
Peter Chandler, Canaccord Capital
HW: Both. Depending on which sector your industry belongs to, it will
be mild or severe.
"Relative to any point in the last 20 years I have never seen supply
and demand as tight as it is today. You could see some significant price
surges to $40-$50 a barrel. "
Roger Plank, chief financial officer, Apache Corp
HW: I have never seen less talk on the issue of Energy Conservation.
Still, both oil drilling and fuel cell companies are licking their chops
at their current and forthcoming stock market prospects, respectively.
5. READER: I really enjoyed your WSNW this month - you have to see the
funny side of what is happening in US.
HW: From a future historical perspective, tragic-comic.
READER: Does Henry believe that the market is dangerous and will correct
in Sept.? Or in Oct.?
HW: Yes, like most financial astrologers, we see EXTREME portfolio
risk into early October 2000.
READER: I have just spoken to a friend working in Singapore. He is hearing
in the business community that Asia isn't looking very good at all again
business wise. Astrologically would you agree? I wonder if we will have
a stronger correction than forecast in Sept-October if Asia is in trouble?
HW: Given the US election, probably not here; however, we are strong
sellers until Nasdaq 3500, then sellers until 3200, then stops until? [Price
unknown, but the Date given in our Daily Market commentary.]
READER: Labor Day all I do is labor around the house. Well is oil going
up or down? Also you feel a strong down turn is coming when? Do you think
this will affect IHI DCH AND CCCA???
HW: Oil should do both, and sometime between NOW and midSeptember to
early October is our bet. As to IHI, DCH and CCCA*, they are SPECIAL
SITUATION stocks and less dependent on overall market conditions.
IHI is based on factory completion progress. This REALLY seems to be
coming soon.
DCH BTW: I sold mine the last when it reached 9-15. However,
if Gore wins, it could run up again to 6-8, and you might wish to reduce
exposure then unless you are a long term investor in the company.
Our client CCCA* is a story stock. If the story becomes "real"
the stock explodes upwards (my best efforts are being made). If it
does not, it won't have been called a "penny stock" for nothing!
As to labor day, are you looking into buying a nice house robot in
2010 as we are?
READER: By the way: I hear remarks in the Newsletter referring to "RED
OUT" days, etc. I'm a missing anything? Or, is the newsletter you
sent me the COMPLETE letter that HW puts out?
HW: Those are from Gold (trading) subscribers who have access to our
daily trading commentary.
READER: What is Stem?
HW: A hot biotech "in play", this is good for one (or more) quick buy
trade(s) (tight stops).
READER: Why did STEM rise in price from $5 to $10 last month with money
flow turning seriously negative at the same time? How can STEM double with
no revenues or growth according to Morningstar? Is it short covering
or some other technical reason driving this stock higher? If you
strongly recommend STEM, I will be a buyer.
Nice call on Wednesdays, 9/6/00, shorts. Also, loaded up on HM.
Keep up the great work and daily comments.
HW: Stem is a STORY stock. Like Internet plays last year, earnings
don't matter in biotechs. Most of the action was due to a government report
on their field and obviously either big players were unloading or market
makers were caught short. Still, I have been (successful) short term
trading with this stock and am thinking of making it my September Stock
of the month pick. Earnings? What a quaint 20th century investing idea!!!
:)
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