Wall Street Next Week JANUARY 5, 2004
WALL STREET, NEXT WEEK
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Wall Street, Next Week,
YES, I WANT
NEXT WEEK: JANUARY 5, 2003
FOR THE SUCCESSFUL
INVESTOR AND TRADER
1. JANUARY ASTRODATES
2. JANUARY MARKETS
3. UP STARS/DOWN STARS
6. ON THE WEB
8. AFUND LETTERS
1. 1/06 Mercury SD
1/7 Full Moon 10:40 am ET
1/20 Sun enters Aquarius 12:43p ET
1/21 New Moon 4:05 pm ET
1/22 Chinese New Year - Monkey
2. WHATS AHEAD: DOW 11K or 9K?
Investors have enjoyed their renewed taste for risk post the US Iraq invasion.
Will markets continue to rise into the November election? This week
is important cosmically and economically around US dollar worries and corporate
earnings. Tuesday: Mercury [Thinking] changes direction, Wednesday: Full
Moon, Thursday: a new Market Marker Day when Alcoa reports earnings and Friday’s
job report could propel markets skyward or help define January’s ceiling.
We also have pre-announcement season before fourth-quarter profit reports
begin mid-January. Will profits rise enough to justify stock prices
doing likewise? Many analysts caution that a lot of optimism has been priced
into the market already.
Astrologically the stock market horoscope is much like 2003. Any serious
correction will come from external issues such terrorism, US dollar weakening
with more foreign selling, interest rates rises and/or real estate prices
falling. One increasingly critical question is whether the US dollar will
stabilize, weaken or strengthen in Q1 2004? Will 2004 end with a weak dollar
and a high stock market, or a weak dollar and a low stock market? From the
global investing perspective either prospect is unattractive.
Smart US investors will continue to increase their international stock holdings
in 2004. Compare the total return (Market + currency) of Japan and India,
our two favorite 2003 holdings vs. US stocks. Also, given a highly questionable
market valuation today, any fresh buying is recommended only for special
situations or as short/intermediate term trades or hedged (long/short) to
minimize potential disaster risk.
Our 2004 global stock selection themes and stock ideas can be found on our
website at: AFUND
2004 Stock Market Forecast.
HYDE PARK SOAP BOX
This holiday season, luxury stores such as Neiman Marcus have enjoyed robust
sales, while mid-priced department stores have fared the worst. Even discounters
like Wal-Mart are struggling as low-income consumers have yet to benefit
from any economic recovery.
Social commentary: The rich get richer, the middle class is being destroyed,
while the poor benefit little from trick down economics.
For not much longer will US Treasuries be strong despite the rising stock
market and sinking dollar. Will the FED hold off interest rates rising until
November 2004? That is not my bet. The structural changes of a global economy
keep the cost of manufactured items low, and increasingly put a lid on wages
in the future. The CPI recently fell, but this hardly reflects the true inflation
picture. It undercounts the top domestic expenditures such as rising health
care and soaring home prices, while its quality adjustments misrepresent
the true expenses faced by today's consumers. The CRB is near all time highs
and the price of gold holding well above $400, the classic harbinger of inflation?
Now that it is over $400, it no longer matters???
In the meantime, America’s assets will increasingly go on fire sale. M&A
boys are salivating for more deals such as HINKY buying Dial, and AXA’s takeover
bid for MNY. Saturn is in Cancer (the US birth sign) all of 2004: what has
been sewn will be reaped.
KEYDATES: January 6, 7, 8, 9
NASDAQ: Pivot 2000
Support 85 Resistance 88
Current 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 395
DIJA FV 8200 3 DJ Stocks offer
Trading targets: SPX 1001
DJIA 9668 NASDAQ 1722.
12/31/2003 EOD: SPX 1111 DJIA 10453 NASDAQ
3. Depending on market action over the next two weeks looking to accumulate
more TIPS on weakness. We will be buying more 2004 AFUND microcap5
shortly for the classic January effect markets.
We may also be hedging accounts with such conservative hedges as buy DVY/Sell
Nasdaq Investors: Beware of holding beyond February 5th Full Moon!
4. Sex fails
to sell for Abercrombie and Fitch
“Abercrombie & Fitch uses sex to sell their retail line of clothing,
expecting clothes to fly off the shelves as customers flock to stores and
order from their catalog. But despite their ever-increasing use of sexual
images, sales have now decreased for the past four years in a row. Store
traffic is slipping and competitors are taking the market share.” For
Sex not to sell is a bad economic omen similar to increasing hemlines.
We rate ANF an under perform despite the fact it is in relatively good financial
shape. In fact, with the exception of select luxury retailers likely to benefit
from Jupiter’s entry into Libra this September, we are downgrading the entire
retail sector to under perform and sell. Even Walmart (WMT), the largest
company in the world by sales, is not likely to continue to grow with double
digit profits and may under perform the way GE did for several years.
5. "I am not looking for enormous gains in 2004 after the rally we have had.
The key point in 2004 is the timing of interest rate rises, if we get them,
and that might cause volatility going through the year. I am suggesting it's
going to be a dull year, a standard year."
Richard Champion, European fund manager, Pavilion Asset Management
HW: Even if markets are single digits plus or minus until November, the ride
will NOT be dull!
“When people see something that’s up so high, they get scared because they
don’t want to lose the profit they’ve made.”
Andrew Stotz, research head, ING Financial Markets Thailand
HW: A repeat of March 2000?
“Gold bulls display an almost evangelical fervour for the yellow metal. But,
zealous enthusiasm aside, gold lacks fundamental support. Supply outstrips
demand and the market’ strength depends on speculative interest…. But without
support from a supply deficit, gold is a highly speculative investment. When
the market eventually turns down, the drop will be very swift.”
Lex Column FT 12/24/2003
HW: I agree, but gold is one of the cheapest portfolio insurance instruments.
Additionally, two new factors are adding fresh support to gold: 1) the forthcoming
US GOLD ETF and 2) more Hedge funds view gold as a foreign exchange instrument
rather than just a commodity.
Line indicator becomes yet more bearish
“The stock market in December 2007 is unlikely to be much higher than it
Stock Strategists Scale Back Forecasts for 2004 Gains
“After predicting three years of rallies that never came, Wall Street's stock-market
forecasters finally got the direction right this year. They are restraining
their optimism for 2004. “
“We could call them the Double D -- for Double Deficits. The first is the
daunting deficit in our global trading balance. The second is the great and
still growing deficit in our federal budget…. The U.S. may be able to sustain
the Double-D deficits for a while, but over the long term they will be corrosive.
Alas, they are just the sort of problems we should keep in mind as we consider
investing in this stock market.”
7. With my long-term view, I prefer to invest - outside EUROland - into Canadian
and Australian stocks. Of both those countries, I am willing to also take
the exchange rate risk.
HW: I agree with your investing view. While Euro can move higher, it is currently
overvalued. CD$ and A$ will be stronger next year at this time, both
approaching .80. Of course this move will hardly be in a straight line
given the astrological currency aspects of Q1 2004 especially.
READER: Time Now: Should we start praying?
HW: In my opinion, there was been no reason to stop since March 19, 2003.
The only question is whether the public will continue to ignore reality as
they did until March 2000, until November 2004.
November 2004 still is a long ways to go. Meanwhile, the bubble gets
bigger and bigger.
HW: From a foreign perspective, it is not as big, given the continuing US
READER: I've been watching T since you recommended it, but have noticed that
AWE seems even stronger. What is the connection between T and AWE (i.e.,
how much of it is owned by T?) and is it a possible proxy for T?
HW: They are both potential merger/take over candidates. While I have yet
to buy, I believe T a better play.
8. HERE WE TALK ABOUT AFUND CLIENTS.
We have placed our H1
2004 analysis of IHI plus updated 2004-2010 IHITF EPS Projections
up on our website.
READER: Its first trade chart is based on 10/4/1994, so I hope it does perform
well when Jupiter passes over approx. 14-15 deg. of Libra. Am I right?
HW: I am not betting against you!
S: in front of a web link indicates access is restricted to WSNW subscribers.
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