Wall Street Next Week FEBRUARY 9, 2004

WALL STREET, NEXT WEEK

Financial Astrology for successful investors and traders"

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WALL STREET, NEXT WEEK: FEBRUARY 9, 2003
FINANCIAL ASTROLOGY FOR THE SUCCESSFUL INVESTOR AND TRADER

1. FEBRUARY MARKETS
2. UP STARS/DOWN STARS
3. ASTRONUT
4. QUOTES
5. WSNW SUBSCRIBER CHAT
6. LETTERS
7. AFUND LETTERS

TRADING AND INVESTING WITH THE HEADLESS HORSEMAN
Dow 10453 and Nasdaq 2003 were the December 31st close. Then how low or high after that do we see it in February and in May? I believe it takes a great dose of faith or drugs to be fully invested. Barring fresh news, the DOW may trade within a 250 point range for some time. Nasdaq is building strong overhead resistance and 2200 seems very less likely then it did a week ago. Shortly, investors may realize that even Nasdaq can’t grow to the sky forever! An important lesson to remember is that not all Nasdaq stocks are equal. Some profitable and growing companies will retain their lofty premium, while others will lose them in a BIG way. No matter what, choppy markets will be a fact of life for some time to come.

HYDE PARK SOAPBOX
Job Growth Picks Up but Misses Forecasts. The bottom line is that Job growth is slower than medium expectations. What is missing, but rarely mentioned is that quality job growth is almost nil. The longer term consequences to the US economy are frightening. Be that as it may, the emperor continues to fiddle as Rome burns. I wonder whether it will be global warming or an incredibly cold Winter 2005….

TRADERS: Wednesday Pivot.
INVESTORS: Gold and export oriented US Industries are potential buys.

KEYDATES:    FEBRUARY 11
DJIA:               10380 Support 10680 Resistance
NASDAQ:       2050 Pivot
GOLD:            400 Pivot

MARKET SENTIMENT: OPTIMISM, RETHINK AND THEN SKY’S THE LIMIT!
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!
12/31/2003 EOD:    SPX   1111 DJIA 10453 NASDAQ 2003.
FAIR VALUE:        DJIA <10,000,    NASDAQ <2000, GOLD >400

2. Ahead of March, we will be recommending reducing exposure to most banks (outside of M&A acquisitions plays. We are at the end of the mortgage refinancing boom and one or more interest rate hikes could be on the horizon. Two insurance companies we prefer and have been watching are Allstate (ALL) and Renaissance Re (RNJ), both of which should outperform intermediate term.

3. Today's Ten Tallest Towers
“North America once dominated the world's skyline with many of the tallest buildings in the world, including the Empire State Building, Sears Tower and the World Trade Center. Now the list of the ten tallest buildings in existence is dominated by Asia, with seven of the ten tallest structures located in China and Malaysia.” Since it may be until 2008-2010 that the World Trade Center is rebuilt, it suggests that the increasing focus on Asia will not abate any time soon. The question is: Whether countries with the tallest towers should be bought or sold. We know what happened to East Asia in 1997. China has a similar potential and the US financial conditions are increasingly precarious. Just as it is safer to work in shorter builders, it is safer and better to invest more today outside of China and the US.

4. “We’ll have three or four good months, but then it’s going to get pretty choppy.”
Mario Gabelli, CEO, Gabelli Asset Management.
HW: It may get pretty choppy even ahead of tax time. Trader's paradise, while investor’s stomachs are churned and churned.

"There were some solid gains in the report. You can no longer characterize the current recovery as a jobless recovery. It's a job-creating recovery."
Hugh Johnson, chief investment officer at First Albany Corp
HW: I don’t agree. Also the quality of job growth is increasingly poor.

“If you look at the daily chart of the Dow Industrials you might spot a bearish head and shoulders pattern forming. This would only be negated should we post new record highs over 10,700 (which cannot be discounted). The more likely outcome is that we rally short of the high and fail and retest the 10,400 level. If that level holds on a retest, the bulls will again be in charge.”
Mark Leibovit, editor, VR Silver Newsletter
HW: D’accord. I couldn’t have said it better myself.

5. A few brief excerpts from this week’s WSNW subscriber chat:

SATURN RX: The big thing to me here is March when it goes direct. It is likely to depress the stock of home builders and many sector related stocks such as Loews and Home Depot. Saturn in Cancer astrological slows Real Estate. Imagine if the Fed raises rates next month. That of course could send markets down in a big way. In any case, I would argue that Real Estate will have turned or be turning more clearly in March for the reason you mentioned.

TOP IN THE STOCK MARKET WITH SATURN DIRECT: A top may be due to a lack of buyers. Any thoughts, given this rally was based on false optimism (Jupiter /Neptune). Very possible, although there will be a fresh influx of fresh into April 15.

GOLD: Gold is a BUY now, primarily because the US dollar is going DOWN. However, in about a month and half it will be a sell. There are 3 gold cycles this year – it is not a straight buy and hold. February is the second up cycle, but we will be reducing/exiting in March. The problem is gold stocks, unlike Gold, are overvalued. They are basically momentum plays. Today gold is worth $410 and is likely to trade in a $395 to $425 range for a while unless the dollar drops below 85. THEN gold can move up to 450. I believe after Monday and the G7, gold will move back to 413, and the XAU could be 110+.

WHAT WOULD YOU BUY NOW: A BIG market shift comes in March after everyone talks to his or her tax accountants: Dividend stocks will begin then to outperform. At that time, I will consider an intermediate term Buy and Hold of the DYV, which are the 50 top dividend stocks in the SP500. Some other things we are looking at now (but not yet buying) are: ALL, ED, EWY, JNJ, PCL, RNR, SSDOY, T and TWX.

NANO TECHNOLOGY. It is great hype like the Internet. Obviously the majority of companies won’t make money or survive longer term. But if you are early enough in the game [and exit], you make money. There is a ton of VC money pushing it now. It will be important like the Internet, but also like the net, perhaps just a dozen companies out of hundreds will make it. It is the usual story. As long as market is speculative and risky as it is now, it is ok. However, as soon as valuations begin to matter, perhaps as early as April/May, these stocks will under perform.

6. READER: I do not see any Shorts in 2004?
HW: Nasdaq and the QQQ are good general shorts for February. However, you have to take profits every 50-75 points, otherwise you can give back too much profit as would have been the case on Friday, had you been short.

READER: I am not seeing a top. I'm still in the "market is showing amazing strength" camp. I've been buying pharma stocks (pfe, bmy, and pph) and biotech (as usual). Willing to change on a moment's notice, but not yet. I would like to have a discussion sometime with you about what you would be buying right now if you were to go long on stocks (even though I know you do not share my perspective.)
HW: I would be looking to the themes we mention in our AFUND 2004 Stock Market Forecast and as we get to later in March, the Dividend paying stocks should outperform in that cycle. I plan to update our premium subscriber post S: Stocks for Dividends and Income 2004-2005 midmonth.

7. HERE WE TALK ABOUT AFUND CLIENTS.
We believe Gold will do well over the next few weeks. Non-US investors may wish to begin accumulating GYR.V at .08 C$ OB for Spring. US Investors may wish to begin as soon as their BB listing is completed.
We continue to recommend patient stock accumulation of IHITF.

READER: You stated we should wait until [IHI] March/April news release. As we are February already and no specific news out and/or share price action happening, I still wonder if anything will happen next month(s).
HW: How can I answer that? IHI share price is undervalued, but obviously need fundamental announced NEW progress to have a sustained more up more than 25% from here. Future sales seem likely, given what is in the bid pipelines. I’m not sure if February. I do believe by March/April.
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FRIDAY 11 am listen to our Internet radio program TRADING BY THE STARS. (c) 2003 All rights reserved. The Astrologers Fund "Always a Stellar Performance"
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