WALL STREET, NEXT WEEK
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WALL STREET, NEXT WEEK: AUGUST 16, 2004
FINANCIAL ASTROLOGY FOR THE SUCCESSFUL INVESTOR AND TRADER


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

WHAT ME WORRY?

·    The US federal deficit widened by 28% to $69.2 billion in July from $54.2 billion a year ago. Outlays were about $3 billion more than anticipated. U.S. Federal Reserve Board Governor Susan Bies previously warned that the dollar will have to adjust because of the size of the current account deficit, which has now grown to 5% of GDP. Last Friday the currency markets started to pay attention.

·    Venezuela Energy Minister Rafael Ramirez sees oil prices holding near 21-year highs for the rest of the year.  "We maintain that oil prices are going to stay near historic highs. When asked how long prices would stay at these levels, Ramirez said, "We believe at least for the rest of the year because we are now entering the winter period which is historically a time of high consumption."

·    Friday, US investors shrugged off concerns of a record high US trade deficit, spiralling oil prices, and the threat of terrorism during the Athens Olympics after Friday’s unbelievable report of  0.1% inflation. Will Tuesday’s CPI numbers be as realistic?

·    Investors pulled money from U.S. stock mutual funds for the third consecutive week, according to AMG Financial Services. AMG Data said there were fewer fund classes reporting inflows than in any week since March 12, 2003. Most domestic and non-domestic sectors had outflows. Global funds had inflows of $113 million.
HW: I don’t wonder why. After all, you can fool some of the people all the time and all of the people some of the time, but you can’t fool all of the people all of the time!

HYDE PARK SOAP BOX- THE US DOLLAR IS ONLY MONEY
Britain's trade gap with the rest of the world has ballooned to its widest for more than 300 years as the consumer boom sucks in a record value of overseas goods. The deficit rose to 10.8 billion pounds in Q2 2004 from 9.2 billion pounds in Q1 2004, the biggest since records began in 1697!  Not to be out done, U.S. June Trade Gap Widens to Record $55.8 Billion.
“Federal Reserve officials are watching the growing trade imbalance and its contribution to the $144.9 billion current account deficit. Staff members have said that “outsized external deficits could not be sustained indefinitely.''
HW: Before or after November is the ONLY question. In the meantime, the smart money is looking to invest in companies that will continue to benefit from future US dollar weakness.

TRADERS:        THE USUAL OPTIONS EXPIRATION GAMES
INVESTORS:    BE PREPARED TO BUY AHEAD OF THE “PLANNED” SEPTEMBER RALLY.

KEYDATES:       AUGUST 16, 18
DJIA:                   9800 SUPPORT?
NASDAQ:          1750 SUPPORT?
OIL:                    S1 46 S2 45 S3 44 R1 48 R2 50 R3 52
GOLD:                $400 PIVOT

SIDEWAYS Market Marker Sentiment: Initial Worry, then Rally, ending Flat.
DON’T BUY AND HOLD: BE LIQUID WITH A BALANCED AND DIVERSIFIED PORTFOLIO!
12/31/2003 EOD:    DJIA 10453   NASDAQ 2003 SPX 1111.
FAIR VALUE:        DJIA  <9600, NASDAQ  <1750, GOLD > 400.
DJIA:                      2@ FV 0 UV; Only 3 offer 4%+ Dividends.
While the internal Stock Market astrology, as in 2003, is mixed, the external risk potential is VERY high.

2. Google IPO Starts Despite Playboy Interview. Friday was an UP day in the market as Google founders seemed to ignore the fact it was Friday the 13th. Will GOOG trade 108 OB “on par” with Yahoo? If not, will YHOO and other HHH Internuts drop?  If GOOG rallies, will it mark a clear NASDAQ bottom? Stay tuned.

“Many analysts, including yours truly, are warning investors to remain cautious and look for solid, dividend-paying stocks, ideally with an aggressive share buy back program, IF they invest at all in today’s exceptionally risky environment. In Q3 2004 we are looking for a minimum of…”
WSNW subscribers may wish to visit our newly updated premium post S:12 Stocks for Dividends and Income 2004-2005.

3. Record 6.9 Million Adults in Corrections Obviously this says a lot about American “values” Market wise, Corrections Corp. of America (CXW) is especially worth owning if you believe in a Bush November victory. Of more personal investing interest, accumulate upon good weakness, or trading buy on strength, computer security stocks such as Checkpoint (CHKP), Symantec (SYMC) and Trend Micro (TMIC), all of which while clearly overvalued, are also highly likely to continue to be Nasdaq out performers into 2005.

4. "At a certain point the selling becomes overdone. It won't take much to put us through a few good days."
Barry Ritholtz, chief market strategist, Maxim Group,
HW: Say an options expiration week short squeeze or after a pause, a programmed Republican National Convention (RNC) rally?

"Gold has been held back on the falsehood that the U.S. economy was booming; which in turn, would make interest rates rise sharply; which in turn, would make the U.S dollar fly; which in turn, could only be bad for go”.
Peter Grandich, editor, Grandich Letter
HW: If truth then be known, Gold would be $450 sooner, rather than later.
 
"Tomorrow is going to be key. We're going to look very carefully at what the Fed has to say. Until then, there's no real conviction in trading. You're seeing some bargain hunting, but we're not seeing the signs of a true bottom here."
Russ Koesterich, U.S. equity strategist, State Street
HW: I believe the Fed is saying .025 now [done] and nothing in September and either .25 or .50 in November, the former if Kerry Wins, the latter if Bush.

5. Bulls are unfazed by long decline
“The end of the pain will be marked not by a certain price level, but by a "date on the calendar," Kleintop said. "If we get through the Olympics, the Republican National Convention and get a better idea of who is likely to capture the White House, stocks will rise."

Seeing Signs of a Stock Recovery in Some Obscure Tea Leaves
“Stocks are likely to rebound, at least for a while, if one obscure indicator, proves as accurate a forecasting tool as it has for the last 60 years….
"Buy markets when they are under pressure for a significant time, then, when you get moves like the last one or two years, take money off the table. Buy low, sell high," he advised. "But you have to remember to sell."

Buffett ups bet against dollar to $19B
Value of his holding company's contracts in foreign currency had increased $8 billion by June 30.
HW: I would recommend increasing it by at least another $8 Billion this quarter, assuming you haven’t already.
 
6. READER: I noticed that you had no comment on GOLD/THIS IS SCARY STUFF....
HW: That is why we recommended investors double their gold hedge in August, while traders should trade it actively by buying at key support levels and taking frequent profits at key resistance levels.

READER: I mentioned in my Aug'-4 forecast for India Web Page that US Light Crude Oil may test US $ 45.45.
IT TESTED THIS LEVEL ON 12TH AUG'04 AT NYMEX. BULL'S EYE!
Please put the following as a Special Update on the India Web Page…..
HW: Done

READER: [Re: WSNW 8/19/2004] I love reading this stuff.
HW: Thank you.

7. HERE WE TALK ABOUT AFUND CLIENTS
Due to unusually active markets keeping us up nearly 24 hours a day, we are delayed in updating AFUND clients IHI and HESG analysis. We hope to complete them both shortly.

READER: For current [IHI] shareholders, it is a big improvement vs. previous updates. But for new investors, I think something more substantial like big orders, or profits will be needed in order to rush them to buy the stock. HW: I disagree. Aggressive and speculative buyers want to buy BEFORE that sort of news and the first double or triple.  For more conservative small cap investors, I agree.

READER: Now that the PR is out, when are you going to update us on IHI?
HW: Our EPS update is now on our website. We hope to complete the rest this coming week.
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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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