1. MARKETS
2. UP STARS/DOWN STARS
3. ASTRONUT
4. QUOTES
5. ON THE WEB
6. WSNW PRICE INCREASE
7. LETTERS
Traditionally, the people who are hardest hit by a bear market are
the ones who keep buying prematurely all the way down. Please remember
this come our 2001 sell recommendations. In the meantime, the questions
du jour concerns last week’s Bush rally: How far? and How long?
PROTECT Trading profits and investment capital with appropriate
stop placements.
THE ONLY FREE LUNCH ON WALL STREET
“…Many depressed issues sell at “bargain” levels near the close
of each year as investors rid their portfolios of these “losers” for tax
purposes.”… Remember this is a trader-not an investing-strategy… There
is some risk as these companies are down for a reason. They do tend to
bounce back after tax-selling season is over.” Yale Hirsch,
Stock Trader’s Almanac
JUNK IS JUNK
Tracking the 4 e's: election, energy, employment and the economy,
one can view the cup as either half empty or half full: the election is
almost over and employment numbers are “good”, oil prices are tame but
remain high and the economy weak. This is no cause to become too bullish
intermediate term. Standard & Poor's projects that corporate defaults
will reach a record high in 2000. Junk bonds, also known as high-yield
bonds, are performing worse than they did in 1990, when the market collapsed.
They have been crushed by bad corporate earnings and sales, falling credit
quality, a rise in defaults, disappearing investor cash, banks' reluctance
to lend and bond dealers' unwillingness to commit their own capital.
Like Jupiter and Saturn said last May: avoid Junk whether in Stocks
or Bonds.
KEY DATES: December 11, 12
DJIA:
R1 10950, R2 11,000, R3 11,200
NASDAQ: R1 2940, R2 3000 R3 3200
2. Lucent has been living off past glories for too long. We debated overly whether to sell it last month at 25, after buying it at 21 (hindsight is 20-20 for me too). We believe it is a Strong trading buy at 17 or better. However, when it hits 25 again, we are likely to downgrade it to market perform with a Stop Loss 23/Sell 26.
According to the NY Times, the Happiest Place on Earth recently became a little happier, but also a little more expensive. On Nov 6, Anaheim Disney Anaheim raised its admission fee by $2; this follows a $2 increase in January. Since this is real inflation pricing, this bodes well for Disney. Yet with a dividend yield of 0.7%, a Morningstar business appraisal of $19.58 and a goofy P/E valuation of 55, we rate Disney a market perform for investors until its stock price retreats to lower 20’s, or unless its changes industry membership from media to technology.
3. "The presidential election of last spring did away with the political risk to Russian economy." Prime Minister Mikhail Kasyanov keeps reminding western businessmen and bankers. If true, foreign investors just have the economic risks associated with a near basket case economy. We maintain our usual Russian hedge: Buy Vodka, Sell Tax collections in 2001. Thereafter, selective attractive opportunities are anticipated in 3 R-currency economies: India, Indonesia and Russia.
Doctors at the Mayo Clinic say the long-held belief that 15 percent
of depressed patients will commit suicide is wrong. "The point here is
that whatever causes people to be hospitalized causes them to commit suicide.
If you've recently been in the hospital, in a certain sort of way, it starts
the clock ticking again." Similarly, investors who were burned
both in the spring AND November “forget” that is NOT different this time
when they re-invest in many Nasdaq stocks in December and January.
Our advice: ONLY invest in “new” new economy stocks, i.e. those
that can, do and will continue to make money in 2001.
4. “A bear market is the process of restoring reasonably priced stocks
to their rightful owners. I'm afraid we're still in the process of doing
that, and it will probably go on into early next year. It's not going to
go straight down, but it's going to be a choppy downward move."
John Maack, Equity Investment Director, Crabbe Huson
HW: I agree. I see more traders delight, and investor, despair
ahead.
“The party may be over. It is not yet clear whether the present economic
slowdown will ultimately lead to a recession or is simply the “soft landing”
Alan Greenspan has been plotting so carefully.
NY Times Editorial December 2, 2000
HW: We forecast 1.2% first quarter, 0.2-045% second qtr 2001, but
the BIG question yet to be answered is what will 3rd quarter be like- that
is yet to be determined. In the meantime the US$ continues to weaken from
its May/November twin peaks.
"Reading the Fed tea leaves tells us they're probably soon going
to switch to neutrality on interest rates and even lower interest rates
by the first quarter of 2001."
Michael Strauss, senior economist, Commonfund Asset Management
HW: That is true only if you open Lipton tea bags. The Celestial
Seasoning tea leaves I use still caution more inflation data.
5. Share Your Pain with the IRS
“The two biggest sources of losing money as a trader have little
to do with forecasting markets:
They are money management and choice of instruments.
Not being able to afford to take several losses (due to an "oversized"
bet) and not understanding the time and price dynamics of your instrument
of choice, e.g. holding OEX out of the money options positionally instead
of stock options.”
All WSNW gold subscribers are recommended to re-read annually our
Trading
with our Daily Market Commentary.
6. Please note: in two weeks we are raising the price of Gold/Trading subscriptions to Wall Street, Next Week. Current Subscribers who wish to save money can extend their subscriptions; potential new subscribers should note it may never be a better time to “go for the gold”. For two weeks more, our rates remain $300 quarterly, $1000 for one year or $1500 for two years. In 2001, our prices will be $500 per quarter, $1500 for one year and $2500 for two years.
7. READER: I was also wondering when you think this bear market may
end? 2001? 2002?
HW: Which bear market? The one that started in 1998? 1999? or 2000?
It all depends on what stocks/indices you track. However, we feel
confident all will be over by 2003 when the next election cycle begins!
PS The key will be third quarter 2001 GDP.
READER: Do you think today's blast off [12/5] is the beginning
of a new bull market, or do you believe its only temporary? I have the
option of switching my 401k from a money market back into an S&P 500
Index Fund. If I do, I can't make another change until January. Do you
think the S&P will be appreciably higher on Jan 1 than it is now?
HW: Hard to say. Last week was a better time to ask. Did you not
READ our early edition of WSNW last Friday with our recommendation to BUY
Nasdaq/ BUY SP? From current levels, it is much harder to say: we
are likely to be BOTH higher and lower. As soon as the marker is
much higher, we will be short. As soon as the market is much lower,
we will buy.
READER: Please tell me your thoughts on Lucent and AT&T… Do
you see something out there that we do not see? Do you expect them
to do something wonderful? Since I live in an area where ATT used
to live and now the same for Lucent, we don't see great things for these
two.
HW: To date they have been VERY poorly run companies. We were very
bearish on them for most of 2000, and we did buy early on both. However,
we expect a change in the spring of next year. We like Dorman and
there is always the hope Lucent will get a “GE” like president. Notwithstanding,
on a relative basis, most, if not all of the damage should be behind it.
IF not, we will change our minds. We don’t see “Great” Things, but “better
things” ahead for both.
READER: Can you be more specific on your Mild Xmas/January effect
Rally as it pertains to the NASDAQ?
HW: We do expect to see tests of 3000/3200+
READER: Do you think DELL dropped today because CPQ agreed to buy
back a billion dollars worth of their shares, and investors sold their
DELL and bought CPQ? Do you still recommend buying DELL?
HW: I prefer Cpq as a trading vehicle better: Buy under 22
and Sell 30+. On a Big happy note, we bought Cpq options on Thursday as
per our WSNW Alert 48B. J
Dell seems very reasonable buy priced under 20.
READER: In the daily market commentary under the Market watch section,
do your #'s refer typically to: a week ahead, a month ahead? For instance,
the resistance levels for the NASDAQ of 2800, 2940 and 3000, are they within
next week or next 30 days etc?
HW: The next trading period, usually a week, but it can be one day
or two weeks or longer. Their trading numbers are reviewed daily
and updated frequently.
READER: What happened to your missing (undershooting) the bottom
by about 10 days and about additional 14% NASDAQ fall?
HW: We were so excited to find relative value close to real value
that we jumped. While it is true we did not wait for under valuation as
occurred November 30, as traders we did jump. Up until mid-2000, I never
bothered with Nasdaq charts, as I traded off the SPX/DJIA charts.
I was hoping the two markets would go back to traditional balance.
While this is slowly happening, it was too expensive to ignore Nasdaq.
I would have to say our Nasdaq forecasting work, while good, e.g. October
12,13, 18th, is not yet consistently “stellar”.
READER: [Re: XRX] what now my love?
HW: Wish I had waited until this week to buy.
1) Know the company situation 2) Simply wait for more (not the first)
terrible news and then 3) Buy
This seems to be right way to invest in 2001.
READER: Subject: Re: WSNW December 4, 2000-Earthly Edition why is
this file printed in computer language?
HW: This is a problem with AOL. 6.0 please use early edition of
5.0 (and complain to AOL).
In the meantime you can access from our silver premium area.
10 minutes after you receive such mailings. Wall
Street Next Week December 4, 2000
READER: I went for the GUSTO and bought a whole slew of QQQ JAN.
CALL OPTIONS: QUEAM (JAN 65'S) at 4 3/4. They stayed up all day,
even in the sell off, and they closed well above where I bought them.
What does that tell you? I SAY I'M GOING TO BE RICH! Happy
Trading!
HW: It tells me you are smart to be a gold WSNW subscriber and to
have listened to WSNW Alert 48B!
READER: I'm with you. By the way, I followed your take on the market
and cleaned up on the QQQs Tuesday. Easy pickins once one builds
a formula and listens to a good financial astrologer!
HW: Couldn’t have said it better myself!
Beginning 1/1/2001: Gold will be $1500 one year, $2500 two years
and $500 quarterly.
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