1. MARKETS
2. THIS AND THAT
3. QUOTES
4. ON THE WEB
5. LETTERS
STOCK ROTATION TIME #1
We are expecting a muted to negative reaction to the US election.
No matter who wins, the US economy will slow next year. In addition, we
are already seeing hints of wage inflation. Furthermore, the cost of imported
goods will rise due to the declining US dollar. Whether this stagflation
will be serious or mild is yet to be determined.
Ahead of the traditional Thanksgiving Day rally, we expect to be both
buying and selling stocks. Over the next 6-8 months, we see ourselves not
as market bulls, but “opportunistic” bears.
Our general advice is as follows:
A. Eliminate the use of Margin debt.
B. Raise cash levels to 10%.
C. Sell Stocks you don’t want to hold into 2001.
D. Be prepared to buy on dips November 15-20 and in December for stocks
you want to own longer term.
E. Buy stocks AFTER they have corrected. There is less chance of a
NEGATIVE surprise that way.
The rapid decline of the US Dollar since November 1 should be enough reason in itself to begin to “believe” in financial Astrology. While US bonds have outperformed many portfolios this year, and a lot of money is now buying, we think it time to begin to distribute or sell bond futures. After a future .50 rise, we would then be likely to add to Canadian (first) and US bonds holdings. Until then, another investing hedge is to buy some TIPS or inflation indexes bonds.
KEY DATES: November 8
US BONDS: Begin to Sell
2. Be prepared for heavy tax selling in stocks that have fallen significantly. Note: stocks that have fallen the farthest are most vulnerable to tax-loss selling. We are looking to add/buy upon weakness (Deutsche Telecom~32, Lucent Technologies~22 and Computer Associates ~ 25). If we don’t get them at these prices, we expect to buy other stocks at bargain prices. We are in NO RUSH. This is becoming a buyer’s market, not a seller’s market, as has been the case until recently.
As astrologically the US election was a toss up [I believe a rather
positive statement for astrology], the question is WHY did BUSH lose? I
think the answer may be found in a memo circulated on the net this past
week: It reads:
“Due to an anticipated voter turnout much larger than originally expected,
the polling facilities may not be able to handle the load all at once.
Therefore, Democrats are requested to vote on Tuesday, November 7, and
Republicans on Wednesday, November 8. Please pass this message along and
help us to make sure that nobody gets left behind.” J
3. "It's been a terrible year for a lot of investors, and you never
want to give the 'all clear' sign because I don't think everything is all
clear. But I think it looks like perhaps we put the worst behind us."
Noah Blackstein, portfolio manager, Dynamic Power American Fund
HW: No so fast, we still have another Nasdaq 3000 test ahead intermediate
term.
“It’s trick-or-treat time, and we’re seeing the treat. It’s the end
of tax selling, so we’re seeing a rebound. If this isn’t the end of declines,
we’re close to it.”
Benjamin Hock, AIM Management
HW: The market does NOT move in a straight line. There are more
declines (and advances) dead ahead.
4. Listen to my MARKET MAVVENS interview of 11/1 with Michael Pinson at: Market Mavens Radio Interview.
GREAT COMPANY,
BAD STOCK
HW: What a FOOLISH idea.
LUNAR
PHASES AND ANNUAL DJIA RISES
HW: This is one of a number of serious research papers on astrofinance
on this web site.
6. READER: Is your book, “Trading by the Stars” reprinted yet
and in stock for sell? I had been told that it would be available in October.
HW: It was reprinted on November 3rd and being shipped within 10 days.
We are currently taking orders at our Bookstore.
Thank you for your interest.
READER: Just wanted you to know that I like your new LARGER Type format.
It reads much more easily. Question: You mention KEY DATES...but
it would be a lot more meaningful to do more than identifying it as being
a KEY date.
How about telling us if that’s a key date for stocks to go UP or DOWN?
HW: We do that in our Gold daily market commentary. Investors
needn’t worry about such things, except occasionally major tops and bottoms
where we advise them, e.g. March to May and October 2000.
READER: With regard to the most recent WSNW, I took a look at GT and
Xerox and could not believe the numbers I was reading. I was wondering
if you had made an error with your 24 and 14. Sunday night GT was
at 17.6 and rose to 19.02 last I looked, and Xerox was at 8 7/16.
HW: Perhaps, I believe it is the stock market that has made the error,
not me. So far, it seems it is beginning to correct its misteak.
The one caveat is the trial lawyers hot on Goodyear.
READER: If Bush wins the election, might that not spark a rally? Most
people think (true or not) that 2% Social Security Bush wants to make available
for investment would drive prices higher. This hope, alone, justified or
not, could turn investors bullish in anticipation. What do you think would
happen?
HW: Perhaps, but it would be VERY short lived and for us a shorting
opportunity. Also, it would not seriously commence until late December.
Anyway, this is NOT our bet, as you know.
READER: If oil prices are going back down to $30 is it time to sell
our PKD?
HW: This depends on why you bought it in the first place. We DO expect
to see $30 oil shortly and we are holding PKD as an intermediate term investment
to $9 as well as a possible Bush victory hedge, in case we are wrong about
the election.
READER: I'm a new subscriber and am a bit confused by the what I've
been reading ... Is it fair that the current recommendation on NASDAQ is
to be short until 11/13?
HW: No, that is wrong. First of all you are a Silver subscriber
so we do NOT recommend going short which we do for Gold traders. Second,
we are currently long, but preparing to go short just before the election.
READER: Hey should I keep my Microsoft or give up on ole Bill? A fan
in Washington State.
HW: Short term I would sell. Next spring to summer I would be
a big buyer.
Reader: Just want to know if "ides of November" means the 13th day of
November and not the 15th of November.
HW: It is the 15th. I see significant market risk until November
20. Then, we buy for the Thanksgiving day rally. After that, we buy again
the stocks of quality companies that are being dumped for tax selling.
Then we buy the Xmas rally, however brief and small as it might be.
READER: I’m assuming that you recommend getting out at NASDAQ 3600,
25% profit, or Monday, whatever comes first. Is that correct?
HW: That would be my recommendation for traders, yes.
Beginning 1/1/2001: Gold will be $1500 one year, $2500 two years
and $500 quarterly.
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Beginning 1/1/2001: Gold will be $1500
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in YOUR future?"
Stop reading Wall Street, Next Week, last week: YES,
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