WALL STREET, NEXT WEEK

Financial Astrology for successful investors and traders"   
 
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WALL STREET, NEXT WEEK: MARCH 8, 2003
FINANCIAL ASTROLOGY FOR THE SUCCESSFUL INVESTOR AND TRADER

1. JANUARY MARKETS
2. UP STARS/DOWN STARS
3. ASTRONUT
4. QUOTES
5. ON THE WEB
6. LETTERS
7. AFUND LETTERS
 
PROSPERITY IS JUST AROUND THE CORNER
No job growth and sky high prices for many commodities including oil. Does it matter in the Internet age?
Intel sales near the lower end of expectations. Since when do fundamentals affect Nasdaq stocks?
American wages are not growing substantially. Is this a reason not to keep spending as long as the stock market is up?
Consumer debt is at record levels. Why worry if housing prices, like trees, grow up to the sky?

Friday was the biggest bond rally in more than 2 years. Yet the Bush administration keeps insisting, “Prosperity is just around the corner”!  But given that death and taxes used to be the two certainties of life, will it be tax cuts or social security that survives the November US presidential elections? Still, even if Federal taxes are cut, state and local taxes will compensate.  So how long can US consumers continue to spend enough to fuel economic growth in 2005/2006?
 
Thinking past April 15, most better companies will show Intel-like results: at the low end of current expectations Q1 2004. Bulls rightly argue money is cheap and plentiful with tax time retirement inflows. Still, I couldn’t sleep at night being net long US markets; even if it has been the right way to bet for some time and may continue to be so.

SANE INVESTING IN AN INSANE WORLD
I personally do not feel comfortable buying ahead of a significant value correction first.
This past year has been our most significant underperformance, on what has been a historic “stellar record.”  This was largely due to my views on the Iraq war, which I saw and continue to see as devastating for the long term health of the US economy.  However, by this bearishness, I missed out on a significant bull market move. This I don’t especially mind. However, I see this climbing wall of worry as different from most previous ones.  We, for example, were quite bullish on the stock market right after 911.  Coming up is another potential bull rally, but I cannot see myself buying into it unless there were a significant market correction first. This market is a house built on sand as much as March 2000, but it MAY NOT significantly correct ahead of November 2004. For the first time, I have projections for a possible underperformance in my investments over the next quarter!

Previously when this has happened, it was almost always immediately made up. I am not so sure I will in 2004, given the US election uncertainties.  Even without a specific market crash, this market could drop slowly, slowly and then suddenly.  I myself take a very cautious stance with more short term trading, TIPS, a little gold, several small cap opportunities and some large cap value and Japan balanced or hedged with SP shorts.  However, my recommended cash levels will remain over 50% and hence will under perform should there be what many see as another leg up in the market. Yes, but I will continue to sleep soundly.

TRADERS: Markets are not yet done with support testing.  However, given record levels of cash and the current market zeitgeist, it is necessary to take short profits repeatedly, rather than “Sell and Hold”. 

INVESTORS: An April tax season rally could begin as soon as March 15/16 or not. Be prepared and stay tuned.
 
KEYDATES:    MARCH 8, 12
DJIA:               10600 PIVOT
NASDAQ:       1980 Support, 2080 Resistance
GOLD:            398 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. As investors visit their tax accountants, they will be reminded of the virtues of owning dividend paying stocks.  Therefore, if/when you decide to buy and hold US stocks, we continue to advise a portion of this money be allocated to the iShares Dow Jones Select Dividend Index Fund (DVY). The DVY invests in 50 of the highest dividend-yielding companies in the Dow Jones U.S. Total Market Index (excluding REITS) that have a proven track record for consistent dividend payout.

“We are deeply saddened by the news of Martha Stewart's conviction, and our thoughts are with her in this difficult time. The Company [MSO] believes, in spite of this disappointment, it is important to recognize the significant contributions that Martha has made to advancing the domestic arts and improving the quality of life in and around our homes.”
Given market propensity to “Buy the rumor, Sell the fact”, or in this case, “Sell the rumor, Buy the fact”, we are UPGRADING MSO from “Sell” to “Under Perform” at $8.25 or this Wednesday, whichever comes first.
Kmart bargain shoppers note: Now is an excellent time to buy Martha Steward Everyday items on sale. However we agree with Craig Johson, president of Consumer Growth Partners who noted that clicking on this link brings up the slogan “count your lucky stars.” “They may want to change that,” he said.  I agree.
 
3. Melbourne pharmaceutical group Acrux will have its female Viagra equivalent developed in the US. Managing director of Acrux, Iror Gonda, said the spray-on Testosterone MDTS is the first to address sexual dysfunction in females, and gives the company access to a market that has an estimated future worth of $A2bn a year. US pharmaceutical group Vivus will license and develop the drug, with plans to sell the new product in the US within four years.  Well 2008 is a long time away. In the meantime, this reminds me that it is quite smart to simply buy a bank deposit in Australian Dollars for the next six months. With its 5%+ interest rates and a projected currency move back to $.80US, that would return 10%+ annualized for US investors. 
 
4. “Inflation still looks very low, and it's likely to remain low'' for some time. Most of the rise was energy, and that's not likely to be repeated.''
Kevin Logan, senior economist, Dresdner, Kleinwort, Wasserstein
HW: You don’t say.
 
“The writing is on the wall,'' Disinflation is near the end, and we are in the process of turning the corner and into a reflation environment.
John Brynjolfsson,  managing director, Pimco's Real Return Bond Fund
HW: You don’t say.
 
"Market fundamentals are good and there's no reason to sell at this moment. But there's also no reason for buying."
Kazunori Jinnai, general manager, Daiwa Securities
HW: You don’t say.
 
5. Warming Up to Funds That Trade Like Stocks
 
No more buy and sell

JOBS AGAIN FAIL TO APPEAR; BONDS UP
“It was the third month running in which the number of jobs actually created fell well short of the number economists had predicted. To bond investors, that's a bullish sign: the economy isn't as strong as other indicators may signal, meaning that there's no reason for Federal Reserve policymakers to hike interest rates.
"When you get to three surprises like this in a row, you're establishing a trend and not talking about an anomaly any more," said Patrick Haskell, co-head of global dollar interest-rate trading at Credit Suisse First Boston. “
 
6. READER: Tuesdays are definitely down days..............Look at the charts. What amazes me is that the market goes down in an instant but has to work to move higher.
HW: Not all Tuesdays. It depends on the astrology of the day. As to your second comment, part of the reason is that many stocks are very overvalued and some smart money has been wisely distributed into recent strength. 
 
READER: Main question is what have you found to be the best way for clients to utilize your service.
HW: Our basic claim is that we help our clients make more money with less risk.
Different clients benefit from services in different ways.  If you are a futures trader, more than a stock trader, you might wish to have our KEY daily timing signals. Some want more- our key sp/nas levels/times intraday and end of day projections (which we usually project around 2:45-3:15 on most days. Others let us know WHAT they are trading and when we have a contrary view (time/price) we alert them via IM.  We offer this service to professional traders only.  Mostly, I have been advising the stock side, as this does not affect what I am doing most personally in trading.
 
READER: I trade essentially everything, with concentrations in SPs, currencies, gold, bonds. Did not know you provided intraday and futures advice, so question is in what areas?
HW: The S&P, NAS, currencies and gold.  We don’t do softs or bonds.
 
READER:  Check your March 1 "Wall Street Next Week".  You have re-posted Feb 23rd version by accident.
HW: Yes.  Friday’s pre-Full Moon trading was especially hectic, as was probably also obvious from my weekly radio broadcast.  Still, the fault lies “not in the stars, but in myself.” Thank you. I have just corrected this error and reposted the Wall Street Next Week MARCH 1, 2004 on my website.
 
7. HERE WE TALK ABOUT AFUND CLIENTS.
We note client Gallery (GARQF) is now officially trading on the US pink sheets in addition to the TSX venture exchange.  This plus
favorable astrological aspects in April (the time of their new drilling results), make this a very attractive gold speculation over the next 60 days for those investors who understand the risk/rewards of trading and investing in junior exploration mining companies.

READER:  Re: IHI projections 1/1/04 Although I like to see things done right too, Roger Rached's Virgo perfectionism does slow forward progress and leads to a need for more investment to keep going, which means further share dilution.  What makes you believe that he'll speed up once the first plant is in full production?  It's taken a very long time to get the first one going.  Are your projections for new factories' timing optimistic?
HW: I agree a downside of Roger’s Virgo perfectionism has been the inordinate time delay and some share dilution.  I would prefer a good job today to a “perfect” one tomorrow. It is the Company’s franchise model that doesn’t depend on HQ that will speed future factory introductions. A tremendous amount of preparation work has been accomplished during the last five years.  So while my factory timing projections are optimistic, as is natural for a Leo, I also believe they are potentially realistic from the time of full production.
Yes you may be right. My optimistic projection may be a bit too optimistic, as Full production would be required by Q1 2004 not H1 2004.  That delay means a slight adjustment is needed. I will make it as it would complete 3 factories in 2004/2005, not 4, and will reduce 2004 potential profits by .03 and 2005 and 2006 down by .20 per year, but not 2007 on. Also that was based on the old robotic model and not the new factory layout (which may be the same or more or less productive). See my February 22 update Latest IHI EPS Projections. I will do a further update in 4 months by the AGM after I analyze it.
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PAST WALL STREET NEXT WEEK REPORTS
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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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