Wall Street Next Week MARCH 22, 2004

WALL STREET, NEXT WEEK

Financial Astrology for successful investors and traders"

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WALL STREET, NEXT WEEK: MARCH 22, 2003
FINANCIAL ASTROLOGY FOR THE SUCCESSFUL INVESTOR AND TRADER

1. MARCH MARKETS
2. UP STARS/DOWN STARS
3. ASTRONUT
4. QUOTES
5. ON THE WEB
6. LETTERS
7. AFUND LETTERS

DIP OR NO, TAX RALLY DEAD AHEAD
If I wasn’t taught EMT (Efficient Market Theory), I would believe FEAR and GREED ruled markets, instead of rational analysis. Not surprisingly, a recent Morningstar survey showed investor confidence in global stock markets falling to its lowest level in nearly two years. Many investors expect less than 10% returns, and even 3% of fund managers now expect negative returns from stock markets. This was before last week’s Madrid train bombings! Now assuming markets hold DOW 10,000 this week and next, it may be wise to further reduce market exposure in the US tax season rally. I don’t expect corporate profits or the job market to radically improve any time soon. Do you?

HYDE PARK SOAPBOX: HOW LOW IS INFLATION?
Crude Oil Surges to 13-Year High as Gasoline Inventories in U.S. Decline but given that food and energy prices are volatile, the US government downplays their inflationary impact. Still, north of the border, Air Canada said Friday that it will raise its fares because of escalating jet fuel prices. Meanwhile last week south of the border, Venezuelan President Hugo Chavez warned that any attempt to remove him by force would send international oil prices above US$50 a barrel, in published comments directed at U.S. officials and Venezuelan opponents demanding a recall referendum on his rule.
Bottomline: Some U.S. Federal Reserve officials share my concerns, minutes of a recent Fed meeting indicate. Some appear to agree with the contention that the low rates are boosting stock, bond and housing prices to unsustainable levels [Wall Street Journal, 3/19/2004]. So, you can fool some of the people all of the time, and all of the people some of the time, but you can’t fool ALL of the people, ALL of the time.
PS The “good news” is that most of the 2004 job growth will be with lower paying jobs replacing higher paying ones with good benefits. The bad news is that a living wage is good for the longer term health of the economy.

TRADERS: Would you believe Choppy? Despite being a bear, I don’t believe markets are yet ready for reality and covered our shorts Friday. Of course, if they are, I will be happy to go short again on a dime!
INVESTORS: Short term [H1 April 2004], the probability favors the bulls; intermediate term the bears.

KEYDATES:    March 26, 29
DJIA:               Dual pivots: 10210 and10347
NASDAQ:       2020 Strong Resistance
OIL:                --> $35

MARKET SENTIMENT WILL BE CHANGING END OF THE MONTH.
DON’T BUY AND HOLD: BE HIGHLY LIQUID WITH A BALANCED AND DIVERSIFIED PORTFOLIO!
12/31/2003 EOD:    SPX   1111 DJIA 10453 NASDAQ 2003.
FAIR VALUE:        DJIA <10,000,    NASDAQ <1900, GOLD ~ 400

2. Gold shares are reaching an important time/price pivot H2 March 2004. Except for special situations, it is time to protect/stop gold stock profits circa XAU 98 beginning of the week and XAU 102 by the end.

3. According to the NYT 3/20/04, the Russian government will delay selling the state’s share in Lukoil [LUKOY] until 2005, rather than sometime this year. In January Lukoil vice president Leonid Fedun said that market conditions were favorable for a sale this year, but at a news conference last Thursday, Lukoil’s president Vagit Y Alekperov said that a draft of the proposal share sale would “more than likely” be submitted to the government for 2005. While we have been avoiding Russian oil companies for some time, we find this announcement of interest beyond its political implications. Does this imply that global oil shares will be higher in 2005? We have been wrong this year both in expecting Halliburton [HAL] not to exceed $25 and Oil $37 a barrel. However, we were right in favoring BP over RD. We now are recommending distribution of BP and a watchful accumulation upon further scandal weakness of Royal Dutch [RD]. We also may be selling Oil futures ahead of the next OPEC meeting end of this month. We like both the time and price of this futures play, only we are unsure if we wish to take on the high risk. Still, we do strongly recommend locking in the current high Oil prices with forward selling now to any WSNW readers who own their own wells.

4. "Over the last month, the rally has stalled and it needs a catalyst through what we think is resistance to get people excited again about the prospects for the balance of the year. That catalyst will come in the form of stronger job growth and/or continuing hikes in the estimates of corporate earnings. I think both those things are fairly likely to occur. "
Joe Liro, equity strategist, Stone, McCarthy Research Associates
HW: I disagree.

“Expectations for earnings in 2004 and valuations for a growing list of companies simply got out of hand. We're looking at a tepid market for the balance of the year.''
David Rolfe, chief investment officer, Wedgewood
HW: I agree.

“Economic growth is likely to slow and profit growth is likely to decelerate as the year goes on. All these factors may come together and create more headwinds' for stocks.”
Michael Sheldon, chief market strategist, Spencer Clarke
HW: I agree.

5. Which stocks respond best to Dem, GOP president?

Mining Gains from Down Under
“A correction in mining and commodities is looming, Don’t be scared; be ready to buy.”
HW: Agreed.

Greenspan Shifts View on Deficits
Alan Greenspan, arguably the most powerful and influential economist, is not so concerned about consumer debt.
HW: Well I am!

6. READER: As I understand, another horoscope is the first day investors actually invested monies into the company. This is a better horoscope day than the first day of public trading.
HW: I have never checked this out so I can’t comment if it is a better horoscope to chart the financial fortunes of a company beyond those of the original investors.

7. HERE WE TALK ABOUT AFUND CLIENTS.

READER; I see that GARGF is now on pink sheets but doesn't seem to serve an useful purpose considering that there is no volume.
HW: It currently has low volume, not no volume on the US Side. There are two advantages to its new US listing: First, one can now get a bid/ask on the US markets. Second, while in the first 30 days of a listing, there is only one market maker and a wide bid/ask spread, after 30 days when other market makers can participate, bid/ask spreads usually narrow.

READER: When will IHI finish and completed in its construction of the Canadian Delta factory?
HW: I don’t understand your question, as the Delta factory is complete. Are you referring to their current planning for expansion to double the size of the factory next year?

READER: It does seem unusual that IHI keeps failing even though it has all these chances. Something must be in its natal chart showing that it has butterfingers for dropping the ball all the time.
HW: Yes, astrologically I believe this is because IHI does not operate enough out its super Bermuda chart. This should change after the factory is in full production. They would then be operating more from the Bermuda horoscope, as after the Delta factory is in operation, other factories are licensed via Bermuda (except Canada).
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