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DECEMBER 3, 2001
ASTROLOGY FOR THE SUCCESSFUL INVESTOR AND TRADER
1. DECEMBER MARKETS
2. UP STARS/DOWN STARS
5. ON THE WEB
: US GDP 3Q 2001 DROP ONLY -1.1%?
Some believe THAT if/when Osama Bin Laden is caught or killed, markets will
rally 5% to 10% on the news. It definitely should help consumer confidence
and partially counteract the effects of rising unemployment and continuing
layoff announcements. Still, I do not expect much holiday cheer from retailers.
We are still far from May 2002, the final pass of Saturn opposite Pluto.
The U.S. economy contracted 1.1%, revised down from -0.4%. While this was
the largest drop in ten years, we believe the truth is closer to our forecast:
–2.4%. This OVER estimation of economic growth in Q3 2001 will result
in an UNDER estimate of Q4 growth, i.e., an official recession, even though
this may not be true. Some analysts believe the current quarter will prove
even weaker than the Q3. AFUND forecasts are +0.74. But by overstating
3Q by 1.3%, government reports may show Q4 as -0.6%, which will still be UP,
not down from Q3 2001. Then again, who really cares about such fine
distinctions? We all know the old saw about God creating economists
so that meteorologists wouldn’t feel so bad….
BETTER LATE THAN NEVER
The Bush administration now expects the fed government to run budget deficits
for at least the next three years. Hmm, we knew that. And remember
last year’s labor shortage? Now the Conference Board says its measure of help-wanted
advertising, a key barometer of America's job market, fell to its lowest
level in 19 years. "March 2001 was the peak, which is when it (the recession)
began," Ben Bernanke, a member of the Business Cycle Dating Committee at
the National Bureau of Economic Research. True to our trading motto: “Be
there first”, we said THAT in April. Bernanke added that according
to information on previous post-war recessions, the U.S. economy is likely
to recover by July next year. True, May comes before July.
ENRON, THE FIRST OF MANY?
If filed, Enron's bankruptcy would be the largest in history. “The reality
is Enron's going bankrupt,'' said Michael Willingham, a risk manager at Itochu.“
Enron touted themselves as the king of risk management, but it doesn't look
like they've managed their risk very well.''
HW: My advice is for Dynegy (DYN) to buy ENE at $2, an 80% discount. It
could practically pay for itself in saved legal fees and make them a hero
to all. That possibility is one reason we recommended institutional buying
of DYN Friday close under $31.
DECEMBER MARKETS: PROFIT TAKING, TAX LOSS SELLING, WAR RALLY & XMAS
KEYDATES: December 3, 6
9800 S1, 9605 S2 9409 S3 9950 R1 10,000 R2 10124 R3
NASDAQ: 1900 PIVOT
Continue long term accumulation
Now THERE IS LIGHT AT END OF THE TUNNEL as Saturn-Opposition Pluto ends
Investors: REDUCE Technology Exposure even though FALL 2002 markets will
be HIGHER than today.
2. One possible choice for our
December Stock of the Month
pick will be Cable & Wireless (CWP). We like their proposed purchase
of Exodus. "This acquisition meets our key investment criteria of value, strategic
fit, strong management and high-quality products, service and customer base.
We are being selective about which of Exodus' assets we are aiming to acquire,
something the Chapter 11 procedure facilitates," said Graham Wallace, CEO
of Cable & Wireless. I agree. Given its low P/e and dividend yield,
we are likely to buy Monday/ Tuesday upon further weakness. This is
also a possible Telecom swap candidate choice with Lucent (LU) circa 8 to
8.50. Stay tuned.
- Golden Food off the Menu
This week we have many food reports. South Korea authorities have banned
gold covered food, but will allow drinks containing the metal. Various dishes
wrapped or sprinkled with gold leaf are popular in Korea, where many believe
it clears toxins from the body. However, the US Food and Drug administration
says the practice breaches food hygiene laws. Yet in Germany you can eat gold-covered,
curry-flavored sausage. Chiquita [CQB] bankruptcy news lifted its stock
almost double, while S&P revised MRS. FIELDS ORIGINAL COOKIES outlook
to negative. What should investors do? Obviously buy more Gold stocks
and begin selling non-organic food holdings
4. "This is not the time. We're about ready to roll over. The market was
oversold in mid-September, and now it's overbought."
Fred Hickey, publisher, The High-Tech Strategist stock newsletter
HW: It is almost time to start selling upon strength, not buying on
“The markets are in a short-term overbought condition [as] many stocks have
made good moves to the upside. Many stocks are starting to stall and are [to
start] a resting period that will last several weeks [as] key resistance levels
will take some time and volume to work through. A pullback in the 5 to 10
percent neighborhood is likely."
Robert Dickey, technical strategist, RBC Dain Rauscher
HW: Yes, either before and/or after XMAS.
“`We have some doubts about the strength and sustainability of the recovery,
but we do think it will happen.”
Charles Plowden, head U.K. equities, Baillie Gifford
HW: The question as always is “When”? We recommend looking to the heavens
5. Q: Why did the Trader go to Pamplona?
A: He heard they had the greatest Bull run.
The Need to Weed Out The Portfolio
6. READER: I do appreciate your final edition of the
especially the "thoughtful action" paragraph. In fact, my interpretation
of the upper Jupiter/Pluto transiting quincunx involving the US Sun is essentially
in your words. Thank you and... how IBM is doing?
HW: I am happy you appreciate our latest additions. IBM we will sell in
December above 117.
READER: What amount of point correction will occur in the markets before
and after Osama event?
HW: In our Gold AFGAHN WAR PROGRESS section, we give the following war scores:
Kandahar = 100 points; Mullah Omar = 150 points, Ben Laden = 300-500 points.
Post Ben Laden, between 5-10% profit taking can be expected depending on its
time position to XMAS it comes. We foresee as market non-events, i.e. less
than 25 points each for the take out of his top three lieutenants: Ayman Zl-Zawahiri,
Rifa’l Taha Musa and Abu Zubayda. What markets will react to in a BIG
way is the next phase of the war.
For another view, read
What's he worth to the market?
READER: Beginning to think this Saturn-Pluto opposition period is really
extraordinary - 9/11 of course. Enron collapse. What next? Was there another
period like this historically?
HW: The panic of 1907. See
NY Times A Big Fall Evoking Nasty Old Memories of a Run on a Bank
READER: I bought Meristar Hospitality at $9.94. Currently the stock is up
19.24%. When should I sell? Or should I hold until later in 2002?
HW: Either choice is good. Are you a positional trader or longer term
investor? $12.50 was our trading target; $14 and $17 are our intermediate/long
term investing price targets. Use a trailing stop if you don’t sell it now.
Except for trading accounts, I plan on holding it as I like its 15% dividend
READER: I noticed you have a price target of 62 for UTX. This has almost
been reached [61.75], are you a seller here?
HW: I believe in portfolio management, not individual buying and selling
of stocks. Whether I would sell depends if trading or investing
and what else is owned. Still, I am likely to sell circa 64-65 in December.
READER: Hey Henry what do you think of NXCD here [.88]?
HW: I like it and this is the price we bought. However, Friday-Monday the
markets will be down. This, however, is very aggressive speculation as a double
is possible, but so also is it going to 0!
READER: Obviously you aren't unduly worried about IHI*. I don't know why
I am loosing so much sleep. It is just there is delay after delay and Roger's
personal problems won't have helped. They said definitely commercial production
in December. If not, can you imagine the reaction in share price?... Do you
think they will raise enough funds to be on target to go into commercial production
HW: No, I am not worried and IHI weekly volume is up. I attended several
meetings with developers and Bay Street houses. I think after they do their
due diligence, which can take from two to six weeks, some will step up to
the plate…. How do you define commercial production? Will SOME project(s)
begin in December as long promised? Yes! But how many orders will be
in accepted in December? How many in January-March?
IHI certainly hurt my portfolio performance in 2000 and 2001. I more than
expect IHI share pricing to make it up to me in 2002. Time will tell,
but in the meantime, I continue to strongly bet they will succeed BIG time.
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BY THE STARS.
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May 17-19, 2001 Tenth Annual
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