Wall Street Next Week JANUARY 17, 2005

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

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WALL STREET, NEXT WEEK: JANUARY 17
FINANCIAL ASTROLOGY FOR THE SUCCESSFUL INVESTOR AND TRADER

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

IS THE RISK OF INVESTING TODAY WORTH THE REWARD?
I think not, given our projected market high for 2005 was already seen January 3rd. We expect the rest of January to be choppy as corporate earnings are mixed. More important will be forward looking statements. Is a new era of low growth or a protracted Japan-style recession awaiting the US economy? Given Iraq and record trade deficits, the latter is increasingly likely later in 2005 and 2006. One scenario is for the markets to slowly work their way lower after a few tests of 10400, and then 10200, and finally 10K later in Q1 2005. Another is for a failed test of 10700 first, and then 10500 to become short term resistance.
We are keeping our powder dry except for short term situations.

As for the microcaps, we will begin considering prudent stops mid next week. By February, most trades will be completed, although obviously longer term investments will be held and perhaps added to should market condition warrant.

Finally, while gold is not expected to explode skyward until July, given the great risks of the January 28-30 period, we will be adding some trading gold and hedging gold over the next two weeks.

TRADERS:     Choppy news as markets may retest support.
INVESTORS:     We may wait until midFebruary or March for a tax season rally for an investment “trade.”

KEYDATES:    JANUARY 20
DJIA:               10400-10450 SUPPORT 10500 PIVOT
SPX:                1992 PIVOT
NASDAQ:       2050 SUPPORT 2120 RESISTANCE
GOLD:            425 PIVOT

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; 5 offer 4%+ Dividends.
While the internal Stock Market astrology in 2005 is more of the same, the external risk potential is still high.

2. Is the dollar decline overdone or just getting started? More the latter, although it will be very choppy trading for a while as bulls and bears fight. We are basically trading 80.45 to 83.80 on the Dollar Index, buying the former and selling above the latter.
Where are US interest rates headed? Short term, we see up to 2.75, then reaction problems. What will that mean for the dollar? Some short term support until February. What does that mean for US markets? It will have less and less support from foreign investors. Stay liquid and basically only invest in dumped and misunderstood value stocks. The rest of the market best for traders, not long term investors.

3. CIA report: India, China global players
India and China will become major new global players by 2020, enjoying both political and economic powers, a report by a CIA think tank predicted. We naturally agree. I wonder if they are also expecting the Yuan evaluation between the Chinese New Year (February 9) and April 10 (circa April 8 Solar Eclipse)? Currency traders should not be surprised but prepared just in case.

4. “I think the market goes up in choppy fashion until late March, and then I think we see our next major bear market down leg, pushing the S&P down to 980. I think we are going recessionary.”
Sam Jones, president, Robert Jones
HW: Well the S&P would then be somewhat closer to true value.

"Big caps should outperform this year."
Joseph Battipagila, chief strategist, Ryan, Beck
HW: And the DOW and SP should outperform NASDAQ this year, too.

“If inflation is expected to be low, then why must the Fed raise rates at every gathering?
Charles Payne,
HW: To defend the US Dollar! Of course, inflation has not been low for years.

5. When The Market Heads South, A Good Defense Is Your Best Bet
“Why swim against the market's current by trying to stay in all your positions or looking to take new ones? Instead, follow some of these basic strategies that can help you stem losses and avoid further pain.
One of the first steps you can take: Sell your weakest stocks. Though you should always want to own only the strongest players, it's much more important now. Since three of four stocks follow the market's trend, only the best offer a chance at success.”

Five years later, irrational exuberance still lurks on the stock market

Europe selling U.S. stocks short

6. READER: Do you know of a good natural gas company based in Canada besides PGH?
HW: Viking (VKR.UN), which is half gas, half oil.

READER: Do you thing the Gold Market could go up, or just a little rebound, like the beginning of last year.
HW: Our first trading target is 475 within six month and eventually a test of $500 over the summer. Of course, you need patience to accumulate.

READER: The Canadian dollar what is your target for this year?
HW: Trading range of 80-86, with 84-85 in July.

READER: How does GOLD look to you? I think it will test US $ 480 pto shortly.
HW: We are very bullish for the summer and would ACCUMULATED 415 to 425. We will be doing a trading buy for the end of January as well

7. HERE WE TALK ABOUT AFUND CLIENTS
We are holding all and looking for fresh fundamental news to move out of current trading ranges.

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