WALL STREET, NEXT WEEK
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WALL STREET, NEXT WEEK: MARCH 14
FINANCIAL ASTROLOGY FOR THE SUCCESSFUL INVESTOR AND TRADER
 
1. MARCH MARKETS
2. UP STARS/DOWN STARS
3. ASTRONUT
4. QUOTES
5. ON THE WEB
6. LETTERS
7. AFUND LETTERS

FUTURE RISK: 2006 A CLASSICAL RECESSION OR JUST UNDER 2% GROWTH?
Many economists are now expecting close to 4% growth in Q1 2005. Perhaps, but I believe Q2 will almost certainly be less.   Others are painting a rosy "goldilocks" economy for 2005, averaging a comfortable 3%.  Personally, I don't believe in fairy tales.
WSNW readers are aware that the US February Budget Deficit widened to $113.9 Bln, the largest ever. The trade deficit numbers on Friday was only 58.3 Bln, the second largest on record.
Federal Reserve Chairman Alan Greenspan has stated that future budget deficits pose a bigger risk to the economy than record trade imbalances and the country's extremely low savings rate. "The resolution of our current account deficit and household debt burdens does not strike me as overly worrisome, but that is certainly not the case for our fiscal deficit."
The US continues to lives far beyond it means.
Looking further ahead, my question is whether 2006 will show under 2% growth or turn into a classical recession?

Will April corporate earnings add or subtract to the current seasonal tax season money inflows? Will we see a market breakout above Dow 11000 as a market trend, or will markets remain largely trading ones and range bound?  How much risk are you willing to tolerate?  The big question for the BIG money is what to do NOW, given higher future interest rates and slowing earnings growth? As always, diversification (including currency) is paramount. We also recommend some hedging as well as some market neutral (long/short) strategies. Investing is not as easy as it used to be.

COMMODITY WATCH
Canadian, Australian Dollars, Rand Surge After Commodity Prices Increase.
The Korean Central Bank was right on the money when it said it planned to diversify out of the US dollar and into Australian & Canadian dollars. In addition to high Oil prices, last week we saw Copper reaching a 16 year high.  It was no surprise that metal stocks like Phelps Dodge (PD) and Inco (N) came to 52-week highs as well. The Oil and base metal stocks dropped sharply as copper prices fell from a 16-year high and Oil did not hold $55.

Surely Gold stocks will react in a similar manner after Gold breaks out to $480+.  Use any MidMarch to early May Dollar strength, i.e. gold weakness, to accumulate both investing and trading gold.
No inflation? Remember when the financial press was screaming that there was no inflation as gold was under $400? Gold is NOW well over $400! Gold is both a currency and an inflation metal.  As the World Gold Council says: "ONLY GOLD IS AS GOOD AS GOLD."
Take it from this Leo financial astrologer that will certainly be true in Q3 2005.


QUOTE OF THE WEEK:
"It [$2 gasoline] sucks," said David Aguilera, a student at Colorado State University-Pueblo who plans to be traveling with friends to Las Vegas, Nev., for a portion of spring break later this month. "That means a lot more (gasoline) money. I won't be able to gamble as much now in Vegas."


TRADERS:  AS FORECAST, US stocks, bonds, dollar fall after trade data. Short term traders should be prepared to Cover/Protect Short term trades Tuesday. Wednesday pay strong attention to Oil's closing price.

INVESTORS: It may be time to BEGIN to TRADING-BUY some overly distressed stocks, e.g., ENZ, TIPS.      

GUEST HYDE PARK SOAPBOX: STAY AWAY FROM THE DOLLAR

KEYDATES:        MARCH 14, 16
DJIA:                    10650 SUPPORT 10800 PIVOT 10950 RESISTANCE
SPX:                     1190 SUPPORT     1200 PIVOT
NASDAQ:            2060 PIVOT
XAU:                    95 PIVOT 100 R1 105 R2 113 R3
XOI:                     850 PIVOT
OIL:                      53 PIVOT

Market Marker Sentiment: First Bullish, then Bearish.
DON'T BUY AND HOLD: BE LIQUID WITH A BALANCED AND DIVERSIFIED PORTFOLIO!
2004 CLOSE:             DJIA 10784, SPX 1211 & NASDAQ 2175
DIJA:         2 ~ FV 0 UV; 5 offer 4%+ Dividends.
While the internal Stock Market astrology in 2005 is mixed, the external risk potential is high. Looking ahead, my question is whether 2006 will show under 2% growth or be a classical recession?
PRESERVE CAPITAL: FOCUS ON PROTECTING AGAINST DOWNSIDE RISK.

2. Tech CEOs still reluctant to part with cash
We have always liked buying cash rich stocks.  This helps fund dividend payments and stock buybacks providing some support even in a down trending market. If hard times come as we expect by 2006, these cash hoards also fund acquisitions. Some Big names rolling in dough are:  MSFT, INTC, NOK and DELL. In H2 2005, we could buy Intel and Dell, should their stock prices drop far enough down to qualify as Value plus Growth. 

WELCOME HOME, BIG MONEY
"A Feb. 11 report by JP Morgan already identified $112 billion in slated repatriation deals, including $38 billion by Pfizer (PFE), $14.5 billion by Hewlett-Packard (HPQ), and $10.7 billion by Procter & Gamble (PG), alongside Johnson & Johnson's (JNJ) widely publicized $11 billion plan."  Not surprisingly, all four companies are among our potential H2 2005 Big cap market picks.

3. PC calls to say cellphone a necessity
"If you have been worried sick about filing your income tax returns just because you own a cellphone, don't be anymore. Finance minister P Chidambaram has removed cellphones from 1/6 scheme, under which it was mandatory to file tax returns if you owned a cellphone. Industry players said that the move finally acknowledges that mobile telephony is a necessity. "FM's move demonstrates that a cellphone is not RMT (rich man's toy) but CMT (common man's tool)," said Pankaj Mohindroo of ICA." 

We think this bodes well for the future of telecom manufacturing in India. Still, despite an increasing Rupee, we are still happily watching India from afar, until the Big Bang from China (Yuan re-evaluation).  What about Motorola [MOT] and Nokia [NOK]? Global mobile phone sales last year jumped 30% to a record 674 million units; forecasts are that global mobile phone sales this year will hit another record, exceeding 730 million units. Nokia (NOK) has the largest share of the global mobile phone market at 30.7%, followed by 15.4% for Motorola (MOT) and 12.6% for Samsung Electronics. of South Korea. We still like Samsung, but MOT and NOK are not our favorite telecom plays at this time.  However, should Motorola buy Lucent (LU) at a reasonable price, then that could become a horse of a different colour.

4. "It's been our call that the interest rate environment and higher oil prices are going to have a slowing effect on the economy. The market may be starting to anticipate that. That the 4 percent GDP and all the rest of that isn't going to be the order of the day this year."
Paul Nolte, director of investments, Hinsdale Associates
HW: That is our take too.

"In the first decade of this century, more often than not, the Canadian market has outperformed the U.S. market. And I expect that pattern will continue and largely because I believe that we remain in a secular bull market for hard assets, oil and gas, metals and minerals, forest products and we have a disproportionate amount of those in our marketplace and we do have a disproportionate amount of them in the indexes."
Peter Chandler, vice-president, Canaccord Capital
HW: I would certainly rather invest in Canada than in the US at this time.

"Earth and Wood (in the Rabbit) are still positive for the stock indices, so there is probably some more upside potential this month [March 2005]. Most markets are likely to put in their highs for the year during this month."
Four Pillars Finance Newsletter 6 March 2005
HW: Will the animal spirits run their course this month? I won't bet against it.

5. Learning To Sell Short May Enhance Your Market Savvy

A Bear Turns Bullish

America's Loss, Europe's Gain- Central Banks Shift Reserves
"The dollar's outlook does not look promising....Diversification-holding a portfolio of several currencies-is the new trend....The Bank of Thailand stated that it will likely decrease its US reserve holdings from 80% to 50%."
HW: I believe investing in Thailand may be worth a second look

6. READER: Re: Barrons Preview  Starcrossed? Hope it brings new clients.
HW: Thank you, such publicity never hurts [They spelled my name right!] J

READER: When do you think oil prices can go to 60.00 a barrel...on March 16th?
HW: I actually think the reverse is likely to happen, a drop towards $50. However, given the OPEC is meeting is being held in IRAN, I wouldn't rule out anything. However, the key point is, even if OIL drops $10 to $45, it is still damaging to the US economy and slows economic growth. Last year we believed oil would top at 52. Now ANYTHING IS POSSIBLE and that is the point. There is a need for the average investor to hedge either with gold or with ALTERNATIVE ENERGY:-solar and wind demand, will increase 25% a year on the average for the rest of the decade whether oil is $30 or $80!!!

READER: Do you still recommend shorting SBUX? Since SBUX have vanished from $TAR PICKS & PANS, where can I find it?
HW: That is because a SBUX short is not of particular interest to us as a short these days. [It was our play from above 60 to 50]. We prefer GOOGLE and CME. I also recommend locking the MSO short this month.  Its risk/reward is not as compelling as it was above 35.

READER: You said you recommend [shorting] CME and GOOG. What about long term PUTS on these? It should not be a problem on GOOG who has many contracts traded. But what about CME? (January 2006).
HW: I prefer the GOOG short long term to CME.  We are about to stop shorting the latter. However, GOOG remains our favorite trading short in 2005, as long it is remains above 100.  We like shorting it periodically anytime it is in the 188-2005 zone, depending on overall market conditions.

7. HERE WE TALK ABOUT AFUND CLIENTS

READER: I am fairly sure that if TNXT can get its financing, it should do very well in England.  By the way, did the TNXT President ever consent in giving out his horoscope date?
HW: I believe they are in good shape from a business perspective, and it is looking good for financing, but nothings is closed till it is closed.  Certainly they are a great story for an under $.15 stock that I believe belongs back in the $.30-.50 range, assuming a non-too-dilutive financing takes place.
Irwin's horoscope data is November 23, 1943 6:00 am Philadelphia, Pa.  I read it as VERY positive for the next two years.
 
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Author: INVESTING BY THE STARS, THE STUDY OF ASTROLOGY,TRADING BY THE STARS (01)
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