Wall Street Next Week MAY 17, 2004

WALL STREET, NEXT WEEK
Financial Astrology for successful investors and traders"

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WALL STREET, NEXT WEEK: MAY 17, 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

S: AFUND 2004 Stock Market Forecast- Midyear Update
We have placed our midyear update stock market forecasts on our website for WSNW subscribers. {It will be posted publicly next month}.

“Monday May 17 is the 212th birthday of the New York Stock Exchange and not surprisingly, sports a prominent Venus. Hence interest rates will be paramount to intermediate term market performance, as all market watchers already know. But do they know that both Venus and Neptune will be turning SR, stationary retrograde, that day as well? Venus will then be changing direction on June 29- “coincidentally” at the next FOMC meeting, while Neptune will leave markets confused until the end of October. “ Be that as it may, short term, we believe if you were unhappy about markets March 2000 and September 2001, don’t expect to be singing in the rain JUNE 2004! Markets can easily be tumbling down next month. This is a key risk time that investors should be prepared for and not ignore.

FUTURE MARKET RISKS: WHY SHOULD I WORRY?
Of course I worry about Interest rates, Inflation and Iraq. The US trade deficit swelled to an all-time high of $46 billion in March. But the shop-till-you drop US consumer could become an endangered species if/when the US stock markets (and later) housing markets fall. As for REAL inflation adjusted raises, you can forget-about-it unless you are a boss or work at google.com.

Bullish technicians were looking for another pullback before a more decisive upward trend can be established. Some believe last week’s test of Dow 9800 was enough. Perhaps for two weeks it may be. But markets will be challenged again strongly in June. How low is low? June markets CAN easily break 9800 support, and if Nasdaq drops below 1870, will 1850 hold? I don’t think so. 1800? Possibly, but 1750 is a more likely stop/pause price target, and even that number is rich.

INVESTORS: Prudence is the better part of valor. Stand aside or sell into any rallies in May. Maintain large cash reserves, 0 margin debt and sleep soundly at night.

TRADERS: Trend follow Monday. Tuesday is our next Market Marker Day.
INVESTORS: INTERMEDIATE TERM [< H2 JUNE 2004], the probability favors the bears. Before EOM, don’t forget the old Wall Street Adage: Sell in May, then go away.

KEYDATES:       MAY 17, 18
DJIA:                   10,000 PIVOT
NASDAQ:           1900 PIVOT
Australian $:         Accumulate

THERE WILL BE A NEW MARKET SENTIMENT THIS WEEK.
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. “We are naturally very pleased that 100% of our 2004 AFUND Global 12 portfolio reached or exceeded our price targets in H1 2004. However, given that we are unsure how low markets will go in June, whether 9500 will hold, or 9200 or even 9000, we advise holding off buying until late June at the earliest. We intend to post our buy numbers for our Global 12 portfolio then. In the meantime, you may wish to decide which, of these companies are appropriate for your long term core portfolio. Depending on your portfolio objectives, you may wish to have up to 30% participation of your portfolio in our Global 12 in H2 2004.”

Please note that in May we replaced HSBC (HBC) with Time Warner (TWX).
WSNW Subscribers are advised to periodically review our S: AFUND GLOBAL 12 premium post.

3. The US presidential elections involves a lot more than H-investing (Halliburton [HAL] vs. Heinz (HNZ]. Yes I know that both companies deny partisan status e.g. H.J. Heinz Company Confirms Its Widely Held Public Ownership And Non-Partisan Status. Be that as it may, looking at a 3 month chart HNZ is ahead, while a 1 year chart is neutral and the 6 month showed HAL is ahead. Pollsters many well wish to note these comparable stocks prices onto the election and especially November 2.

For more serious information on the US presidential elections, periodically visit our Investing for the 2004 US Election weblogs.

4. "Of course, psychologically, Dow 10,000 has some short-term effects on the market. Long term, the markets still look at corporate fundamentals, earnings, that sort of thing. But we do have some inflation and interest rate fears in play which could keep things lower, at least for now."
Stuart Freeman, chief equity strategist, A. G. Edwards
HW: Yes, they could, couldn’t they?

"Traders and investors aren't convinced things get better from here, that's why the market goes down when good news comes out. It's as if people are saying, 'OK, you've given me good news, but what's next?"'
Ken Tower, chief market strategist for Schwab's CyberTrader
HW: What’s next is Saturn going over both Bush’s and the US national horoscopes!

"It's taking a bit of froth off the market, and we need to see the market come off further before going higher."
Robert Sellar, European technology fund manager, Aberdeen Asset Management
HW: If this rally happens as soon as H2 May 2004, it will fade out end of month as markets retest lower in June.

5. Prepare for worst, market seer warns

GLOBAL INVESTING: Tips can still be tops in the long term

Oil Prices And Harbingers Of Doom
The bad news is higher energy prices have often been harbingers of recessions. Oil and energy prices rose sharply in 1981, 1990 and 2000, and each time an economic downturn followed in their wake.

6. READER: I am going to dump all my Canadian TSX index funds today based on your prediction for June, and if I have the guts will buy some more gold shares - BEMA and or Glamis (GLG) or maybe Millennium Bullion Fund.
HW: Whether to dump all or some stock should be a tax decision as well as a risk/reward one. Certainly I recommend reducing market exposure, but I don’t think I would choose today [5/12] to do all given the market drop that COULD be short term bottom. [9822 low that day still holding].

READER: Housing in southern California and Vegas is insane, housing pricing are escalating exponentially. It appears that investors have driven up the price of housing here in Vegas along with 7000 people moving to the valley monthly. In southern CA, demand is far ahead of supply, and that is always the case except when the defense industry suffered from base closures. That was the only time housing fell in southern CA. Your comparison to the 30 year fixed rate in [5/10] WSNW is probably not a good comparison. Most people here in NV and CA are purchasing housing with 3 and 5 year ARMs. rate for these are about 4% and 5% respectively. I believe investors who want to "flip" there purchases are using 3 yr ARMs.
HW: Yes, housing varies across the country. Clearly Las Vegas is booming. However, as rates go up, especially if/when the Fed rate gets above 2%, it will take its toll regardless of demand most everywhere.

READER: Do you think you will you be able to indicate the top of the next bounce up in the TSX before the inevitable downward trend continues this year?
HW: I do not know that there will be an “inevitable downtrend this year”. I believe May will be the top of the next bounce before a June correction. What comes after is probably more trading ranges, just a question of how high and how low until the US elections. Read WSNW for my current views of that.

Prospective Reader: If I subscribe to your service, will it tell me when to sell? Like most, I have no trouble buying quite successfully, but the selling is the trick. For instance, I felt I should have sold my gold assets a few weeks ago, but hesitated, and if I had I would have made about $15,000, which I could have re-invested in gold today. Does your service provide that kind of information?
HW: Are you talking about trading or investing? In general, selling should be pre-determined when buying in trading, and with investing the use of both timing services and trailing stops can be helpful. With gold, the metal, we would have been helpful. But we cannot give individual buying/selling targets, only information of general interest. However, I do think in general you may find our advisory services helpful. Why not try it and find out?

7. HERE WE TALK ABOUT AFUND CLIENTS

READER: I wish I had done all my buying [of IHITF] down here too. (I am averaged at 0.415) but you did not really give any encouragement, Really, what is going on in this company. Has their total manufacturing plan failed? You can't sell something you can't make! Usually when there is a dearth of information coming from a company, it is a bad sign. How is this one different?
HW: The issue is more on the sales rather than the manufacturing side. I agree that a dearth of information may seem to be not a positive sign, although it may not be negative. There is nothing materially new except more progress on the company’s own HI-rise projects. This is the reason the stock is so low, and at current price levels, undervalued. But these current levels, I believe, are a good bargain even with a dearth of fresh information.

READER: It is about the end of May soon and still nothing of worthwhile news. When is the next favorable date because it is highly unlikely that something will come forth by end of May?
HW: June, which is also the time of their AGM.
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