WALL STREET, NEXT WEEK
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WALL STREET, NEXT WEEK: MAY 3, 2004
FINANCIAL ASTROLOGY FOR THE SUCCESSFUL INVESTOR AND TRADER

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

FOMC ASTROLOGY
Tuesday May 4th FOMC meeting takes place during a Lunar eclipse and Jupiter SD. Exactly at 2:15pm, Jupiter is rising opposing Uranus! Accordingly, we are issuing a rare “Wear Traders Diapers” Alert. This means Traders are advised NOT to go to the bathroom during the trading day. The reason should be obvious.   

NO INFLATION WATCH
OPEC is currently discussing whether to raise its target price by 30% because the US weak dollar has reduced purchasing power and boosted inflation in member states according to the group's president.  I propose they should hire US economists in order to ignore and redefine inflation, rather than face reality and raise prices. Until then, we continue to recommend intermediate term accumulation of Gold and TIPS, despite current market disfavor due to the new China syndrome, i.e. concerns that China will slow down its overheated economy.

IS YOUR PORTFOLIO PREPARED FOR POST D-DAY 2004?
As is now well known, May-October is traditionally a time of seasonal market weakness.
IF the economy is believed to be improving, we see it range bound below Dow 10680 in May.
IF the economy is believed to have peaked in H1 2004, then markets will test Dow 10K in May.
Either way, IN H1 JUNE 2004, MARKETS WILL DROP & BE BELOW DOW 10K. How low? TBA.

TRADERS:
 Last week was: More earnings, More Iraq.  This week it is: wait until FOMC, then More Iraq.

INVESTORS:
Intermediate Term [<H2 JUNE 2004], Bears win.

KEYDATES:        MAY 4, 6
DJIA:                   10400/10500 Dual Pivots
NASDAQ:           S1 1920 S2 1900 S3 1800 2000 Pivot R1 2020 R2 2055  R3 2080
XAU:                   SECOND BUY

MARKET SENTIMENT IS STRONG OPTIMISM, PAUSE, THEN SLIGHT PROFIT TAKING
DON’T BUY AND HOLD: BE LIQUID WITH A BALANCED AND DIVERSIFIED PORTFOLIO!
12/31/2003 EOD:    SPX   1111 DJIA 10453 NASDAQ 2003.
FAIR VALUE:        DJIA  <10,000,    NASDAQ  <1800, GOLD > 400

2. Given the strong likelihood of a MAJOR stock market correction before the second half of June 2004, we have updated our S: 12 Stocks for Bad Times premium post.  Of course, with a few exceptions such as gold, which we bought above our value pricing, we are obviously in NO rush to buy ahead of the Dow dropping below 10K.  Exceptions are naturally for mandated and hedged portfolios.
WSNW subscribers are advised to review this list shortly and again in mid-June.

3. It is a longstanding Mother's Day tradition to show appreciation for family matriarchs by celebrating Mother's Day at a restaurant.  National Restaurant Association research shows nearly 4 out of 10 Americans dine out on Mother's Day. “On Mother's Day, many families honor the women in their lives by taking them out for a special restaurant meal," said NRA President Steven C. Anderson. "Although restaurants are an essential part of Americans' lives throughout the year, they also serve as a social oasis n times of celebration and special occasions.” Mother's Day is the second most popular holiday or occasion to dine out, following only by birthdays.  Still, we don’t believe May 9th sales will be high enough for us to revise upwards our view of Dow component McDonald’s (MCD) as “overvalued” above 28 despite McDonald's Earnings Increase 56 Percent with help from new products, such as adult Happy Meals [salad and bottled water] and McGriddles breakfast sandwiches, later hours and its focus on food and service quality over expansion. In fact, even with a rebound in the restaurant industry as a whole, we are reminded to put back Krispy Kreme Doughnut (KKD) and Starbucks (SBUX) onto our Short Watch list.
WSNW subscribers are always welcome to visit our frequently updated S: 2004 Stock Watch premium post.

4. We have had a little bit of a sloppy market because aside from the earnings picture, there are several other things going on: the interest rate picture, the international situation.''
Michelle Clayman, chief investment officer, New Amsterdam Partners
HW: I call it “headless chicken” trading markets. 

"Economic growth in the first quarter was strong and the second quarter may be as good or better."
Ken Goldstein, economist, Conference Board
HW: I don’t believe Q2 2004 will be a vast improvement over Q1.

"It's pretty clear that the good earnings news we're getting was the reason for last year's big rise, so most of this earnings news is priced in.  There is a chance that this is as good as it gets."
 Edgar Peters, chief investment officer, PanAgora Asset Management
HW: Yes.
 
5. Inflation mounts, but where's Fed?
"The seeds for inflation have been sown," said Gary Thayer, chief economist at the St. Louis investment firm A.G. Edwards & Sons Inc. "The Fed can't be perpetually patient in dealing with this."

When rates rise, some people win
“…But Mr. Hunt takes the "extreme minority view" that the economic outlook is far more fragile than the IMF or the Federal Reserve assume. The fiscal stimulus from the Bush tax cuts ends in a few weeks, he says. Less mortgage refinancing and higher oil prices will hurt the economy. The previous four "oil shocks" since 1970 were followed by recessions, he notes. And consumer spending is endangered by record debt levels and almost no growth in wage and salary income.
In addition, the nation's money supply has been growing at its slowest rate in seven years - 4 percent over the past 12 months, says Hunt. That implies slower growth ahead.”
HW: Didn’t realize I am a member of the “extreme minority”!

Sell on the rumor, buy on the news
“…it so often is shrewd advice that, when the news is good, investors should buy on the rumor and sell on the news.  And when the news is bad, just the reverse often is good advice: Sell on the rumor, buy on the news.”

6. READER: I guess your Gold call was a little bit too early. I will start buying when it approaches 360-370, the downward support of the uptrend.
HW: Yes our first buy often can be.  We are planning a second buy 370-375, although if I had not bought already I would be buying NOW at 377 ahead of the 8:30 news [4/29].

7. HERE WE TALK ABOUT AFUND CLIENTS

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