WALL STREET, NEXT WEEK

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WALL STREET, NEXT WEEK: DECEMBER 15, 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. IM OF THE WEEK
7. LETTERS
8. AFUND LETTERS

HIGHER HIGHS?
"It'll be interesting to see how we end the year. The news should be good.... It’s possible we could see new highs this year."
Akber Khan, Deutsche Bank European Equities
HW: Wednesday December 17th, Mercury (thinking) changes direction. It will be Retrograde until January 6, followed by a Full Moon on the 7, preceding our next Market Marker day of January 8.

There is nothing wrong in buying the stock market, as long as you realize you are buying momentum and NOT value.  "We are getting to a point now where so many stocks are so overvalued.” However, if you believe the US economy is really turning a corner, and there are solid forward-looking fundamentals past the January reporting period, think again. Only if you expect solid double digit profit growth H1 2004 can you justify a stock market above Dow 10224. According to Standard & Poor’s, U.S. companies' credit quality will not recover significantly in 2004, even though the pace of rating downgrades is slowing. "Although the pace of decline has certainly improved, we remain skeptical of sustained high growth in the economy, especially as credit fundamentals of companies are not materially improving."

GEORGE BUSH VS SADDAM AS CURRENCY HOT SHOT TRADERS
Saddam, whose capture will dominate Monday’s markets, knew to sell his Oil in Euros at the very beginning of its rally run. President George W. Bush said on Friday that he favors a strong U.S. dollar.  "My answer to that question about the dollar is that this government is for a strong dollar and that the dollar's value ought to be set by the market and by the conditions inherent in our respective economies, and our economy is very strong and is getting stronger." All this while the US dollar was at an all time low against the Euro. Then Saddam was captured two days later. Coincidence or is GW just as good a currency trader as his current arch nemesis?

Last week the Commodity market was flying, e.g. Platinum hit a new 23-year high, while gold reached a 7-year high of $412.  Short term, we issued a rare WSNW general subscriber alert:
“ TODAY [12/10] MAY BE THE TOP IN GOLD FOR THE YEAR (2003).
IF YOU ARE LONG GOLD PROTECT/OR TAKE SOME PROFITS TODAY!!!”

This does not mean that I am not a true blue Leo. I fully intend to rebuy gold on any reasonable pullback below $400.  As for the US dollar, buyers beware. Last week, Barclays said the dollar would weaken against the 12- nation European currency to $1.23 in a month and $1.30 in three months. Earlier, Goldman Sachs predicted the dollar would weaken to $1.30 per euro and 95 yen in six months.

According to Italian Deputy Finance Minister Mario Baldassarri an exchange rate of $1.21 or $1.22 per dollar is too high. “Why do the two main economic regions of the world leave their currencies to fluctuate freely without attempting to defend a parity of between 0.9 and 1.1 against the dollar, a level that would adequately guarantee the stability of the international system?'' he said in the interview with France's Le Figaro. Regrettably, in my opinion, it is too good an idea to be acted upon.

TRADERS: Saddam’s capture can translate to a 174 DOW rally.
INVESTORS: Santa Claus Rally or lock in profits before 2004? Either way, it is time to do a Year-End Portfolio Review. We have selected several dates for buying weakness and selling strength for our portfolios rebalancing. These include:
Potential Sells: Monday & Tuesday
Potential Buys: Wednesday MOC and December 22 New Moon.
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FORBES has just sent me a holiday renewal offer: “Renew your subscription today – and well throw in another subscription at no extra cost for a friend. It’s like getting two for the price of one!”
I like that and am offering the same to all new and current WSNW subscribers. Subscribe or renew before 12/28, mention “Two for One” and your friend’s subscription is our holiday present to you.
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KEYDATES:       December 17
DJIA:                   Support 9826 PIVOT 10000 Resistance 10224
NASDAQ:           S1 1880 S2 1900 S3 1925 PIVOT 1950 R1 1980 R2 2000 R3 2025
EURO:                 Second Distribution

December Market Marker: The "Good" News is known: Light 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 385
DIJA FV 8200        4 DJ Stocks offer 4%+ Dividends.     
Trading targets:        SPX   970 DJIA 9328 NASDAQ 1725.
12/31/2002 EOD:    SPX   879 DJIA 8341 NASDAQ 1335.

2. “Since the new tax law went into effect, more and more investors are seeking ways to add dividend-paying stocks to their portfolios.  In previous years, we have recommended such conservative strategies as buying Euro bonds or Japanese bonds. These have returned 25-50% thanks to currency appreciation. We have also enjoyed a multi-year run up in REITs. But tax laws enacted in 2003 have made their income streams ineligible for the new 15% (or 5% if you are in the lowest ordinary income tax bracket) rate on dividends paid effective Jan. 1, 2003….

On November 7, 2003 the iShares Dow Jones Select Dividend Index Fund (DVY) listed on the NYSE. The DVY Index offers the 50 highest dividend-yielding, non-REIT companies in the Dow Jones U.S. Total Market Index. High yields dividends are very attractive today, given very high-priced stocks and low-yielding bonds. I believe (pending a study of its first trade horoscope) with Morningstar that the new iShares Dow Jones Select Dividend Index Fund (DVY) seems well timed.
We believe the DVYs belongs in almost all conservatively goaled portfolios in 2004….”
WSNW subscribers may visit our premium post S: 11 Stocks for Dividends and Income 2004-2005 for more information.

Note: This month we are replacing Citibank ( C ) with SBC (HBC) and NOKIA (NOK) with AEGON (AEG).
WSNW subscribers may visit our premium post S: AFUND GLOBAL 12 for more.

It is almost time for annual AFUND Microcap 5 2004 picks. These special-situation opportunities, even if with high risk, offer returns that can be high, even in a down market. Our five selections will sector diversified among Biotech, Entertainment, Gold, Successor Energy and Technology.

Trading, as opposed to investing in microcaps, is a risk akin to trading the futures and currency markets. Recall Will Rogers: “I’M NOT CONCENRED ABOUT THE RETURN ON MY MONEY, AS THE RETURN OF MY MONEY.” Don’t ignore the maxim wise race goers and others gamblers try to follow: Never bet more than you can afford to lose. In the micro-cap world, stock screens, newsletter writers and word of mouth are prime sources.  Of course, newsletter writers, including yours truly, may or may not be wholly disinterested parties.  However, some are as objective and more reliable than senior brokerage analysts, while others obviously are not. Traders track HOT trends for the source of the best microcap buys. Long term investors look to strong fundamentals, management, financial strength and/or having a better mousetrap invention for their best microcap buys. If you are not experienced with small cap investing and trading, you might wish to read our Microcap2004 trading and investing primer to help decide whether buying the AFUND 5 2004 portfolio is appropriate in your portfolio. TO BE CONTINUED NEXT ISSUE

3. Liquor sales are reaching record levels according to the Distilled Spirits Council.  The rollback of some Prohibition-era laws is helping. In 2003, five states passed laws allowing for Sunday sales of spirits. An increase in advertising -- most cable networks and more than 500 local television stations now accept commercials from liquor companies -- also contributed to growth.  "It is a coming of age," Distilled Spirits Council President Peter Cressy said. "We are in the 21st century. There is a broad acceptance that beer, wine and spirits are all beverage alcohol and you can't differentiate them." Vodka, with forecast sales of $2.97 billion, was the best seller in the spirits industry. Cognac sales are expected to score the biggest gain, rising 15.3%. I’ll drink to that.  When sober, I might advise accumulating, after a decent pullback, either two of our favorite beverage stocks: US Constellation Brands (STZ) or Australian Fosters (FBRWY). Both are currently slightly under pressure due to the world wide wine glut.

4. "One argument as to why the market should go up farther is that there is a wall of money that is sitting in cash, just waiting to rush into stocks. This may be true, but it is perhaps far from reassuring if that wall of money rushes into the market and pushes stock valuations to unrealistic extremes.
Gordon Fowler, chief investment officer, Glenmede Trust Co.
HW: This is always how the Bigger Fool theory works.

“Selling into strength is the trend we have seen the past several weeks. We are seeing those who have a nice profit starting to trim positions on strength as year end nears.''
Jeffrey Swensen, trader, John Hancock Advisers
HW: That is what the smart money is doing, along side continuous record insider selling.

“Psychologically, the Dow above 10,000 is good news.”
Hugh Walsh, VP Foreign Exchange, Fortis Bank
HW: Yes, for it allows insiders and smart money to distribute stock even faster to the less sophisticated investing public

5. Seven Reasons to Sell a Fund
Some situations almost demand that you hit the sell button.

Morningstar's Moats
"What's the difference between a good company and a great one?" asks Mark Sellers, editor-in-chief of Morningstar StockInvestor. "Any firm that hopes to protect shareholder capital over the long term needs to build an ‘economic moat’ around itself in order to shield its core business from competitors." Here, Sellers highlights ten stocks with "super-wide" moats.

Steer clear of icebergs and market swells

6. G: Next year Dow at 12 k
Henry: NO way unless the euro is 130.
G: Keep that in your archives: NQ at cash at 2800 and SP at 1150-1200. All property money will come into the stock market - hot money that is. Markets will fly and even if Greenspan raises rates, even more money will come in.
AFTER WORD: 15 US stock market strategists this week in the latest Reuters quarterly equity poll said that the Dow would rise to 10,750 by the end of 2004, but gone are the calls for Dow 12,000. You are a lone voice crying in the wilderness at this moment in time.

7. READER: I read that gold will rise some more, but what happens with silver. Is that that also an investing worth? Will it follow the price of gold close?
HW: Silver is a speculation, not an investment. Gold can be either. Furthermore, Silver is more the playground of small American investors, while the BIG BOYS trade Gold.  I personally prefer to look for opportunities to sell Silver, while as an investor; I look to (re) accumulate Gold intermediate term.

Ex-Subscriber: Bought my gold stocks back yesterday at A.M. lows... Think US$ in collapse mode...........  Today [12/12] is 9 months back March lows... possible that 9 mo cycle has flipped . . . could it be as simple as this mkt waiting for Mars to leave Pisces and enter Aries to peak along with Merc Rx as trigger? Certainly divergences and losing momentum.
HW: Thank you for your comment. Unfortunately due to the volume of mail we receive, we are now forced to be more selective in answering questions.  The simplest way seemed to be to answer appropriate questions of our paid subscribers to Wall Street, Next Week. 

READER: I was just reading my newly received Wall Street, Next week and wondered if it is too much to ask for astrological dates for International Hi-Tech Industries and Gallery?  For that matter, it would be so good to get that kind of data for stocks you consistently talk about in your newsletter. I know, "what a pain!"
HW: If you look on our website, www.afund.com you will find that information for IHI and Gallery on our front page. As for other stocks, some are listed in our resource data section. Most are not.

8. HERE WE TALK ABOUT AFUND CLIENTS
NOTES: We intend to buy Gallery Resources, after the next pullback on Gold expected shortly.
We will be accumulating more IHITF on current weakness into year’s end, ahead of January’s seasonal positive for microcaps.

READER: I know you are in up to your elbows too but what the hell is going on. Are these people ever going to get an order or get into production? Even a blind squirrel finds a nut once in a while. These people have found NOTHING that is public.  I know there has not been much volume but something is fishy. I have been stung by this kind of stuff before. Can't you be candid with us? Time to get out?
HW: I am buying. How candid is that! The insiders I know are BUYERS. I am as well.

READER: What do the insiders know that we peons don't?
HW: That IHI selling well below book offers substantial value, given their (and my) view that its long term prospects are brighter than ever.

READER: IHI is getting killed again with year-end tax selling.  My philosophy with IHI is to sell early, then buy back early thus beating the rush.  I took my tax loss on IHI in November and got a good bid of $0.25 (today's bid is $0.19).  It looks like I can buy back after 30 days in December, when tax-loss selling is at its greatest, at an asking price (currently $0.22) equal to or lower than the November bid!  We'll see - but it did work for me last year too. Even though I only had to sell 10% of my IHI holdings (last of my early purchases) to get the $3000 capital loss write-off for the year, I am hesitant to re-establish a larger position given the snail-like performance of the company.  My patience is wearing thin and it is apparent that other investors feel the same given the downward pressure on price.  I am wondering when you will have an update on IHI, both fundamentally and astrologically?
HW:  I had expected to complete my update this week. However, the currency markets have been keeping me up for almost 24 hours on several trading days in order to protect my 100%+ annual ROI. This may not end until December 23rd’s New Moon. My update should be next week. As you know, the January effect is based on year-end tax selling. Accordingly, I am a buyer of IHITF at what seems to me, to be an incredible once in a lifetime opportunity.
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(c) 2003 All rights  reserved.  The Astrologers Fund  "Always a Stellar Performance"
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Author: INVESTING BY THE STARS, THE STUDY OF ASTROLOGY,TRADING BY THE STARS (01)
May 14-17, 2004 Eleventh Astrology & Stock MarketConference   NYC
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