WALL STREET, NEXT WEEK

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WALL STREET, NEXT WEEK: DECEMBER 8, 2003
FINANCIAL ASTROLOGY FOR THE SUCCESSFUL INVESTOR AND TRADER

1. DECEMBER MARKET PULSE
2. UP STARS/DOWN STARS
3. ASTRONUT
4. QUOTES
5. ON THE WEB
6. LETTERS
7. AFUND LETTERS

WHAT’S GOING ON OUT THERE?
WILL THERE BE A SANTA CLAUS RALLY OR LOCK IN PROFITS BEFORE 2004?
Be prepared either way by starting last minute tax selling of losers and/or over-extended gainers BEFORE December 16th.
   
IS IT DIFFERENT THIS TIME?
US presidential election year trade and economic policy decisions are likely to have long term negative consequences. Fears abound about the US current account deficient and Washington’s (mis) handling of postwar Iraq. With all eyes on the holiday cash registers, there has been an unrealistic hope that consumers will spend America out of it economic doldrums. With what money? From new Mortgage refinancing?  From higher paying jobs? Yo no comprendo! If anything, 2004 will bring a rise in interest rates that will dampen consumer willingness to spend and borrow.

U.S. Stocks Rise: Nasdaq at One Point Tops 2000 for First Time Since 2002
U.S. stocks rose, lifting the Nasdaq Composite Index above 2000 for the first time in almost two years amid optimism that earnings at computer-related and telecommunications companies are growing fast. Sure, and did you hear? The Moon is made of green cheese!

Another one of our post-IRAQ invasion visions is coming true: Saudi Arabian Oil Minister Ali al-Naimi says an OPEC output cut early next year is very likely because the fall of the U.S. dollar was curbing the purchasing power of OPEC producers. Market translation: They now want $30 instead of $22-$28.

HYDE PARK SOAPBOX
Productivity Makes Best Gains in 20 Years - Translation: Workers are working harder for less money!
The self-employed to the rescue? The rise in self-employment is a bright spot?  I don’t believe most outside consulting work is a positive work choice, but rather a forced necessity due to the inability to obtain outside employment or receive unemployment benefits. 

“Our debt ridden society has long lived beyond its means, and gotten away with it, because foreigners are eager to stash their money here. American currently needs roughly $50billion a month in capital inflows to make ends meet. This situation cannot be sustained forever, and a lack of confidence in Washington’s economic policy making could hasten the day of reckoning.”  NYT editorial 12/6/2003.
HW: I consider it very sad that we are becoming more like Mexico with a high Index (DJIA/IPC) and a weak currency (US$/Peso).

FACTOID: US November inside stock sales hit 2 year high.
HW:  Given that the US consumer is going to slow down, many bulls believe stocks will reach their 2004 highs in February, March or April, while most bears believe it will be in January or never, i.e. December 2004.

KEYDATES:       DECEMBER 8, 9, 17
DJIA:                   9500 Support 9750 Pivot Tuesday to Friday, 10K Resistance
NASDAQ:          1925 Pivot Tuesday to Friday
EURO:                SECOND DISTRIBUTION
GOLD:                S1 387 S2 390 S3 395 R1 400 R2 409 R3 420
AUSSIE $:          Continue Buying to .75

Current Market Marker: The "Good" News is known: Light Selling/Profit Taking, then some Buying.
DON’T BUY AND HOLD. THE STOCK MARKET IS ON BORROWED TIME. ELIMINATE MARGIN DEBT, BE HIGHLY LIQUID, AND KEEP A BALANCED AND DIVERSIFIED PORTFOLIO!    Gold FV 380
DIJA FV 8200         2 DJ Stocks offer 5%+ Dividends; 4 offer 4%+.     
Trading targets:         SPX   970 DJIA 9221 NASDAQ 1725.
12/31/2002 EOD:    SPX   879 DJIA 8341 NASDAQ 1335.

2. “It is no secret that European stocks are selling at greater discount to valuations than stocks in the United States. Today, with the Euro at record levels, some exporting companies' sales are being hurt by the dollar's drop. Despite this, on a global basis, Europe is still selectively undervalued. Fears about the U.S. trade and budget deficits may send the euro above 122 in February. However, the ECB is threatening intervention should the Euro reach 125-130. Note AFUND Fair Value is....” 
WSNW Subscribers may visit our newly updated 2004 S: 2004 DJ STOXX 50 post for more details on our current favorite European blue chips.      

Is the recent GOLD rally about to run out of steam ahead of 409 or test 420 and above? Barrick (ABX) Chief Executive Greg Wilkins is betting on the latter by saying that their hedge book, one of the industry's largest, would be reduced to zero over time, signaling a reversal of its strategy of actively managing its reserves to lock in prices with forward sales and options.  This is a positive music for gold bulls.  Still, I remained unconvinced that we will see more than $409 before year-end.
WSNW subscribers please note we have again updated our S: Mining Stocks 2004 post with our latest 2004 price targets, and our final selection for our 5 AFUND GOLD microcap Basket for 2004. Remember, historical cycles show that a strong rally in gold ignites the major producers. This is then followed by soaring microcap gold exploration plays.

3. As reported in the November 24 WSJ, Pupso Wardoyo, who made a fortune setting up a chain of grilled chickens restaurants, believes men are polygamous by nature. He says “Muslim men should live according to true Islamic teachings, by taking at least a second wife, and preferably four- as he has.”  His first wife adds: “There are a lot of things that happen in life-prostitution, affairs, Polygamy helps us avoid this.”  He writes prolifically on the delights of having many wives and offers helpful tips for men considering the idea. Some suggestions: “Keep up physical stamina by eating lots of fresh fruits and vegetables and never, ever compliment one wife in front of another.” 

What could this portend? Will Indonesian grilled chicken franchises become the next Wendy’s, Starbucks or Cheesecake Factory?  I would make a first hand visit to Indonesia to find out, but for some unknown reason, my wife is refusing to join me for a vacation to this island paradise! Speaking of Indonesia, Lehman says that Freeport-McMoRan (FCX) remains their top pick in metals. Currently FCX sports a low gold major P/e of 30. However, Morningstar says FCX does business in a risky place. So if you must buy gold stocks now, and already own NEM and PDG, and you wish to add currency risk for some portfolio excitement, you could do worse than FCX: You might add a hedge book risk and buy ABX!

4. “The external deficit is, by far, the driving force behind the dollar's decline. We are in a long-term downtrend for the dollar.''
C. Fred Bergsten, director, Institute for International Economics
HW: Yes, although THIS week AFUND traders are buying the US dollar.

“If you're going to have a stronger currency, you need higher yields. Yield appetite is big, and the U.S. doesn't have it.''
Su-Lin Ong, economist, RBC Capital Markets.
HW: That is the major reason I am buying the Aussie dollar with its 5 ¼% yield.

“Investors are extremely cautious towards U.S. assets.”
Ian Gunner, head of foreign-exchange research, Mellon Financial Corp
HW; I wonder why?

6. Global Torn Fabric
“The odds of a hard landing in the dollar are rising, in my view.”

Morningstar.com - A Low-Cost Way to Own Dividend-Paying Stocks

The New Inflation Hedges
“If you think the CPI is rising, here are several ways to protect your portfolio.”

7. READER: I was curious to know if there's any advantage, or 'edge' to investing in gold in euros rather than in USD, and why or why not. Although in retrospect if gold increases, it should increase in value in all currencies? But I just saw some charts of the appreciation of gold price over the past three years; in USD, the price of gold ($US per ounce) has risen somewhat dramatically, from 280 to 400, while in euros the price of gold has been relatively stable and mostly sideways in the same time period, rising only from Euro 280 to 335.
HW: Yes and No. A rise in the price of gold is the same, whatever the currency. However, when you buy Euros, you are adding a second dimension to the equation. If Euros rise in value vs. the US$, as they just have, you will make more. However, if you freshly buy Euros, you could also lose, as they are slightly overvalued as of today.

7. HERE WE TALK ABOUT AFUND CLIENTS
We consider AFUND clients International Hi-Tech Industries and Gallery Resources, two good candidates for January effect microcap portfolios. We plan to update both of their AFUND web posts within the next 10 days.
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Author: INVESTING BY THE STARS, THE STUDY OF ASTROLOGY,TRADING BY THE STARS (01)
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