WALL STREET, NEXT WEEK
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WALL STREET, NEXT WEEK: MAY 10, 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. IM OF THE WEEK
7. AFUND LETTERS

1. WILL INVESTORS MAKE MONEY IN 2004 WITH BUY AND HOLD?
I didn’t believe so in January, and I continue not to believe so.  May markets are likely to find more and more “get even” selling on rallies.

2003 MARKET CLOSE:  DJIA 10453, SPX 1111 & NASDAQ 2003
FRIDAY MAY 7 CLOSE: DJIA 10117, SPX 1098 & NASDAQ 1917.

The bill collectors are coming in June.  I don’t know which way the markets will move after Monday. Whether they will rally strongly after one or two failed support tests, trade in a May range (most likely) or continue down on fear (less likely short term), THEY ARE LIKELY TO BE DOWN MUCH FURTHER H1 JUNE 2004. If you were unhappy about markets March 2000 and September 2001, don’t expect to be singing in the rain JUNE 2004! 

NO INFLATION WATCH
Bridgestone is raising prices up to 5% on most tires effective June 1 because of the rising cost of raw materials. Birds Eye Foods is increasing prices 5-7% on all product categories effective June 28, 2004  "Our industry continues to be challenged by increases in agricultural commodity prices," says Dennis M. Mullen, Birds Eye Foods chairman.  While just last week, I had dinner at my favorite “little India” restaurant in the East Village and suffered more than sticker shock. Not only had my early bird dinner special increased by a whooping 15%, but now I not only to have to forgo the complimentary glass of wine plus I have to choose between a desert OR coffee or pay more! The Fed seemingly overlooks this “invisible inflation”, but not the bond market as it is foretelling interest rates rising to 1 ½% and then 2%. US Bond holders beware.

U.S. Treasury Secretary John Snow says the U.S. economy appeared headed for a long period of expansion, but said making tax cuts permanent was essential to maintain momentum in the recovery. Perhaps it is because the cost of raising children has just gone up, with Chanel’s new “graphic” sneaker in satin and mesh now costing $490!  GOLD bugs: your day will come!

TRADERS: Monday Nasdaq has the potential to be a falling knife, but may wait for Tuesday’s Cisco earnings.
INVESTORS: INTERMEDIATE TERM [< H2 JUNE 2004], the probability favors the bears.

COMING MAY 17, 2004: Our Mid 2004 stock market update for WSNW subscribers.

KEYDATES:       MAY 10
DJIA:                  10,025 Support
NASDAQ:          S1 1900 S2 1850 S3 1800 S4 1750
TIPS:                   THIRD FINAL BUY
GOLD:                TRADING BUY; INVESTING ACCUMULATE

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. “The percentage of households in California able to afford a median-priced home stood at 21% in March, a 7%-point drop from the same period a year ago, according to the California Association of REALTORS (C.A.R.).   C.A.R.'s monthly housing affordability index measures the percentage of households that can afford to purchase a median-priced home in California. The minimum household income needed to purchase a median-priced home at $428,280 in California in March was $97,340 up from $82,080 in March 2003, based on a typical 30-year, fixed-rate mortgage at 5.48% and assuming a 20 percent down payment. Saturn is in Cancer and will be hitting home (US horoscope in June). Meanwhile Rates on 30-year fixed-rate mortgages in the United States rose to 6.12%, the highest level in eight months. Enough said!  We continue to advise to avoid REITs and most housing stocks until then. Thereafter, if there is enough blood in the streets, we may recommend rebuying quality REITs.”
WSNW subscribers should look to a revision of this premium post--- for bargain basement buying ideas later next month.

3. Darwin-Free Fun for Creationists
“Dinosaur Adventure Land, a creationist theme park and museum here that beckons children to "find out the truth about dinosaurs" with games that roll science and religion into one big funfest with the message that Genesis, not science, tells the real story of the creation. Kent Hovind, the minister who opened the park in 2001, said his aim was to spread the message of creationism through a fixture of mainstream America — the theme park — instead of pleading its case at academic conferences and in courtrooms.” Serious competition for Disney (DIS)?  Probably not, but I don’t expect great Disney’s earnings forthcoming Wednesday after market. So I continue to avoid Disney. Personally, I would be more inclined to buy Time Warner (TWX) after D-Day. I would even BUY TWX/SELL DIS as I believe it would also soar more after divesting American Online, than the comparable event of Eisner leaving Disney.

4. "I thought for sure the market would sell off dramatically this morning. But now I really think the rate hike has already been baked in, so it doesn't necessarily matter when the Fed moves. By the time they really do get around to raising interest rates, the horse will be so far out of the barn it'll be in a different pasture."
Brian Pears, head equity trader, Victory Capital Management
HW: What IF interest rates need to be higher than 2% next year?

“Consumer spending is still plugging away, though I don’t expect it will remain spectacular.”
Stephen Stanley, Greenwich Capital
HW: The end is near.

“Asia performed well last year and will surprise on the upside this year and outperform the rest of the world.”
George Greig, manager, William Blair International Growth Fund
HW: I am not sure about the upside surprise, but I agree with Asian basic global out performance, ex-China.

5. Buffett Increases Bet Against Dollar, Prefers Acquisitions to U.S. Shares
Billionaire Warren Buffett is increasing his bet against the U.S. dollar and seeking acquisitions because he sees no bargains in U.S. stocks and wants to ``rapidly deploy'' Berkshire Hathaway Inc.'s $36 billion in cash.

Interest Rates and the Death of Gold

Deficit Threatens Economy, Greenspan Says
Noting that some economists have worried that the Fed's extended period of low interest rates has spawned a housing bubble of inflated home prices, Greenspan said any "misalignment" of home prices probably would be dealt with by "a softening in housing markets" as interest rates rise.

6. Henry: have you looked at the distribution. By the first Half of June markets will be lower.
X: Nobody ever expects a perfectly good stock with strong reco's to reverse and go down 40% in 10 days just on market drop.
Henry: Wait until June some of your Nasdaq stocks could be 50% under.
X: I don’t expect them to be down 50% in 10 days. That’s a commodity, not a stock.
Henry: Nasdaq stocks are not stocks. You don’t think even a blue chip Nasdaq stock like Amazon or Yahoo can drop 50% in 4 days?
X: FNDRY misses by 3 cents stock is down 20% in 3 minutes: nobody can play in that environment-NOBODY.
Henry: Then don't play, or short markets. They are VERY overvalued. The economy is NOT growing, as the media would have you believe- get with the BIG picture.

7. HERE WE TALK ABOUT AFUND CLIENTS

READER: I am looking at a transaction of 250 shares of IHIT @ $0.17 which is $42.50. What kind of insanity is that? I am totally confused. I don't know much but it is obvious that some trader is messing with this stock. Can't we get some strong positive news out of Roger to put an end to this kind of manipulation? Have been on this puppy for a long time now and am really getting discouraged. NOTHING positive is happening (that we know about). Sorry to bother you again but I am now totally frustrated. (Sign of weak hand?)
HW: This could be someone testing the market.  Notice how it was followed (hours later) by 2600 shares at .18 1/2 and .19.  The two points that I see are 1) There is little stock for sale 2) There is a need for strong positive news to double and triple the share price. Until then it is likely to be range bound, with some savvy long term investors ADDING to their positions and lowering their cost of ownership.  I only wish I had done ALL my buying down here!

READER: IHI on the TSX shows closing price in Canadian of .20 (down .05) with volume of 23,000 but IHITF on OTC:BB shows closing price [5/6] of .21 in U.S. (up .05) which is about .28 in Canadian at volume of  7,000. Why is there such a difference in prices between TSX and OTC:BB trade exchanges? Also, was the total volume traded at 60,000 (23,000 + 37,000) for the day?
HW: The total volume was 60,000 for the day. IHI stock is very dry (little offered for sale) so a little buying or selling will seem to move it.  Should the last trade be a buy as on the US side and a sell on the Canadian you get this apparent distortion.  Currently, the vast majority of IHI investors are simply holding for the AGM and then IHI’s Hi-Rise buildings and other large orders.  Occasionally there is some selling, but given the volume of shares outstanding, even a small amount of money can seem to move this market.  It is a tug of war between some traders/shorts who keep trying to push IHI stock down and some investors, who like the incredible long term value bargain and wonder how low it can go as they scoop up and average down their share costs.

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Author: INVESTING BY THE STARS, THE STUDY OF ASTROLOGY,TRADING BY THE STARS (01)
May 13-15, 2005 Eleventh Astrology & Stock MarketConference   NYC
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