Wall Street Next Week JANUARY 3, 2005

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

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

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

1. 1/10 New Moon 7:03 am ET
1/19 Sun enters Aquarius 6:22 pm ET
1/25 Full Moon 5:32 am ET
1/28 Mars conjunct Pluto

2. PROSPERITY AHEAD?
First, I wish all WSNW readers a HAPPY NEW YEAR and best wishes for Health and Prosperity in 2005.
We see 2005 markets much the same as 2004. While many analysts expect SPX 1250 and DJ 11000 as the next move, we continue to see more downside risk to at least retest SPX 1111. Insider sales rose 20 percent as executives at United States companies sold stock last year at levels not seen since the bursting of the Internet bubble in 2000. Also given US markets are near our 2005 projected highs, we naturally have a slight bearish bias except for January effect stocks. We expect the 2005 market top in Q1 2005, probably in January.

TRADING NOTE: There are potentially three distinct January market periods, one every 10 days: the January 10th New Moon and corporate earnings start, the January 20th US presidential inauguration and on January 30th the next scheduled OPEC meeting and IRAQ elections.

Powerful US consumer spending along with corporate profits are likely to moderate and then decline in 2005.
Higher quality investments in most markets are likely to outperform lower quality investments as the pace of global economic growth slows in 2005, according to Merrill Lynch's 2005-Year Ahead Report. I agree. This, along with new accounting rules, is why holding many Nasdaq stocks past Q1 2005 will be FAR more risky than usual.

INFLATION: Where costs may rise in '05
Hershey Foods [HSY] is raising the price of candy bars by nearly 6%, though customers will get a reprieve on some price hikes until Valentine's Day. The higher prices are necessary, the company said, because of increased costs for raw and packaging materials, fuel, utilities, transportation and employee benefits. Overall, the changes translate into a 3 percent price increase over the company's entire domestic product line. While 3.5% is the natural Fed rate, we believe the Fed will hesitate to raise more than 2.75%, due to a far weaker than generally realized US economy.

TRADERS:     We are waiting to see which way the winds blows on January 4th.
INVESTORS: We would be actively playing January effect small and microcaps until January 16th.

KEYDATES:    JANUARY 4
DJIA:               10,800 PIVOT
SPX:                1210 PIVOT
NASDAQ:       2190 PIVOT
GOLD:            430 Support 438 PIVOT 455 Resistance;

Market Marker Sentiment: First Bullish, then Bearish.
DON’T BUY AND HOLD: BE LIQUID WITH A BALANCED AND DIVERSIFIED PORTFOLIO!
12/31/2004 EOD:    DJIA 10783 SPX 1211 & NASDAQ 2175
October 2004 Lows:          DJIA   9660 SPX 1090 & NASDAQ 1899
DIJA:            2 ~ FV 0 UV; 4 offer 4%+ Dividends.
While the internal Stock Market astrology in 2005 is more of the same, the external risk potential is very high.

3. We are still keeping our powder dry except for special situation stocks like our January Stock of the Month Club pick (TBA).

4. From last week’s WSNW: Meteor Explodes Over Jakarta
Astronomers say a meteor likely exploded over the Indonesian capital of Jakarta Sunday morning. Witnesses say there was a bright object with a tail of fire streaked across the sky, and then there was a loud explosion. Indonesia is on high alert after several foreign governments warned last week that Islamic militants may be planning attacks over Christmas.
HW: However, it seems they missed The wave that shook the whole world. Shades of James Bond, no?
Re: As the JSX Index been rising all year, we believe the 1000 level has built in the “good news” of reconstruction aid. We would avoid this market, despite our initial contrarian impulses.

Dollar Low as the euro? What are some of the reasons of the currency decline? According to the Onion:
The European Union consisting of 25 culturally and linguistically distinct nations is more unified than the US.
Currency markets hate freedom.
It is a part of an ingenious plan to keep American tourist out of Europe.
They also add that some experts think it may have something to do with the fact that the US has a shitty economy!
HW: We recommended shorting the Euro in December, but will cover/stop midJanuary ahead of the February Fed oco 133.

5. "This rally has probably gone a little too far and what has been driving it is managers buying a lot of high-risk stocks hoping they can make up for weak performance earlier in the year."
Paul Mendelsohn, chief investment strategist, Windham Financial Services
HW: So true.

“Consumers don't have the income growth necessary to sustain higher inflation. The lack of spending power leads to sales disappointments that lead to discounting. These are entirely acceptable rates of inflation from the Fed's perspective.''
Avery Shenfeld, senior economist, CIBC World Markets
HW: As the bible says: The rich will get richer and you will always have the poor with you.

“It would be a mistake to rule anything out in this currency market in 2005.”
Andrew Pyle, senior economist, Scotia Capital
HW: Yes, a true trader’s delight

6. Strategists expect stocks to shoot higher

2005, THE YEAR OF THE JUNIOR MINING STOCKS

10 Crippling Mistakes Traders Make

7. READER: Could you please give a target(s) and if possible a time frame on CME and SBUX in your DMC? I want to buy options on them and the way of investing depends of your estimates.
HW: February or March puts: CME target under 210 by March; SBUX a test of support at 55 with overhead resistance circa 65 sufficiently strong to hold intermediate term.

READER: Henry does this USWF have chart for a long term hold?
HW: I haven’t done the astrology on this one. I just like it for a January effect play and also to hold as a potentially profitable SRI microcap. I would probably hold it given it costs less than a nickel and helps the world.

8. HERE WE TALK ABOUT AFUND CLIENTS
January 2005 should be very interesting for IHITF and HESG!

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