WALL STREET, NEXT WEEK
Financial Astrology for successful investors and traders"   
 
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WALL STREET, NEXT WEEK: JUNE 27, 2005
FINANCIAL ASTROLOGY FOR THE SUCCESSFUL INVESTOR AND TRADER
  
1.  JULY MARKETS
2. UP STARS/DOWN STARS
3. GOLDEN THOUGHTS
4. ASTRONUT
5. QUOTES
6. ON THE WEB
7. LETTERS
8. AFUND CLIENTS

1. WHAT WILL BE THE TRIGGER FOR THE HISTORIC FIRESALE COMING IN 2006?
Derivatives, Fannie Mae, Medicare, Consumer Credit or Housing defaults, Higher Energy Costs, Natural Disaster(s), Terrorism or perhaps just the consequences of a simple act of defiance on the part of Iran or Venezuela, followed by Russia pricing their oil exports in Euros? S&L redux: There are also corporate pensions Liabilities, which as many accountants recognize, risk becoming the Savings and Loan crisis of the Bush presidency. I am far less worried about Social Security, which can be “fixed” with two simple adjustments: raising contribution limits and delaying benefits past 65.  While the end result will be similar, my bet is on a BOMB. I am unsure whether it will be a terrorist bomb or a debt bomb [consumer installment, mortgage housing, corporate pension liabilities or governmental budget deficits], which blows up first.

While from the prophet point of view, it is an interesting exercise to foretell the crash trigger, from the profit view; it matters not which of the nearly 40 potential crisis triggers we have identified will be the one(s) that ultimately are responsible. Whether it is a debt bomb or a terrorist bomb that "triggers" a market flight, neither would be the real cause. The fundamental reason for crisis is due to the financial irresponsibility on the parts of many individuals, US corporations and the US federal and state governments.

WSNW readers will remember that we had forecast that Fall 2001 would be a time of terrorism, with September 2001 a declining stock market.  However we did NOT know the target would be New York, nor the exact date of 9/11.  Within a day, we came to the conclusion 911 would have a positive simulative effect on the US economy, which had been in decline from March. Hence we were quite bullish in buying the markets shortly thereafter:
WSNW 53B  “9/17 2:10pm BUY…WSNW 53C “October 3, 2001 We are issuing WSNW Alert 53C BUY as we believe markets will target pre-911 levels e.g. DJIA 9605 and Nasdaq 1695 by early November”...  WSNW 53D “11/02 We think there is more good news coming ahead of November 6th”… See 2001 WSNW Tracking for more.

However, be warned, THIS TIME, there will be little cause for optimism economically. This is primarily due to the long term economic damage that has already been done to the US economy, which mortgaged its future in a wild spending orgy without fiscal discipline.  After the [Debt] bomb explodes, it will NOT be a market bullish event, but quite the contrary, especially should markets still be above 10,000 when it occurs.

WE EXPECT MARKETS TO CONTINUE TO UNDER PERFORM BULLISH EXPECTATIONS THIS SUMMER.
Now that Oil is $60, the question is how much higher and for how long? While short term traders may find this profitable to muse over this, intermediate term the economic damage was done at $50.  Before 2006, we repeat, Americans will realize not only are they no longer as rich as they once were, thanks largely to the US Iraq invasion, but that the error of cheap energy and food is over.
BOTTOM LINE: Sideways consolidation or breakdown ahead of the ides of July. As we forecast earlier, markets have tested down. They may or may not rally much ahead of the Q2 2005 closing or traditional July 4th celebration - the price of oil is the key.

TRADERS: We are very happily short on WSNW Alert Sell 11A & B. We plan to take some profits Monday and/or Tuesday ahead of this week’s Quarter end squaring, Wednesday’s 10:30 Oil report, Thursday’s FOMC Meeting and Friday’s pre-holiday trading.  Looking further ahead, we don’t see robust corporate earnings; so don’t be surprised to see further testing of DOW 10,000 and NASDAQ 2000 next month after the US Dollar loses its current astrological support. Remember NASDAQ nuts will soon be crying in their beer, assuming they are not heavily margined and can still afford it! 

INVESTORS: Unless you like to stay at parties until the very end, you should be raising cash levels this month and next. My long term view is well known: focus on protecting against downside risk through most of the rest of 2005, and 2006 will be bleak. Finally, Make sure you own Summer Gold.

GUEST HYDE PARK SOAPBOX: Snow, Greenspan seem out of ideas

KEYDATES:    June 6, 10
DJIA:               10332 PIVOT 10180 SUPPORT?
SPX:                1182 SUPPORT?   
NASDAQ:       2050 PIVOT, 2120 SUPPORT?
XAU:               90 PIVOT R1 95 R2 98 R3 100 R4 105 R5 113

Market Marker Sentiment: First Bullish, then Bearish.
DON’T BUY AND HOLD: BE LIQUID WITH A BALANCED AND DIVERSIFIED PORTFOLIO!
2003 CLOSE:        DJIA 10453, SPX 1111 & NASDAQ 2003
DIJA:         2 ~ FV 0 UV; 5 offer 4%+ Dividends.
While the internal Stock Market astrology is mixed, the external risk potential is high. Looking ahead, my question is whether 2006 will show less than 2% growth or be a classical recession?
PRESERVE CAPITAL: FOCUS ON PROTECTING AGAINST DOWNSIDE RISK.
Before H2 2006, reduce indebtedness as much as possible, as quickly as possible. 

2. Last week we downgraded IBM again. As IBM cuts in U.S., it hires in India is a PR disaster. First failing at PC manufacturing, and now the New York Time quotes the president of the Washington Alliance of Technology Workers as saying that IBM's move is to cut costs by shipping skilled jobs abroad. More and more IT professionals view buying IBM as “un-American buying”, much to the delight of Dell and Hewlett-Packard [HPQ] sales people.  Our IBM Fair value price was lowered from 77 to 72 in Q1 and last week we lowered it more to 69. We rate IBM “Under weight”, despite its modest Dow P/E under 15, due to its inappropriate response (IMHO) to global competition and challenged technology profit margins.
WSNW subscribers may wish to review our newly updated premium post S: DJIA.
 
3. Mercury and Venus enter Leo on Tuesday June 28 while at the same time they are conjoined with Saturn as the Three Planets Bunch Up in Twilight. “This is the best "trio" of planets until at least the year 2030, based on brightness, closeness, and ease of visibility.”
Stock market translation: Talk (Mercury) about Loving (Venus) Gold (Leo); this could be the best time to buy gold until 2030!

Accordingly, we raised our gold portfolio allocations from 15% from 10% last Friday. This does NOT include another 5%-10% we recommend reserving for trading Summer gold. Remember: Gold has long been considered a hedge against inflation, and a low gold price generally indicates that inflation is benign. Not so long ago, $400 gold implied there was inflation. Well look at the price of gold today! Or then again look at the price of food, energy, hotels, housing, medical insurance, etc., in fact almost everything of significance except clothing, computers, telecommunications and airfares.  Was it just a co-incidence that last week Airlines kick off summer with fare hikes?  Even if you are not sure, buy gold for the cheapest insurance against inflation and the declining dollar.

We correctly forecast Gold’s December 2004 $450 price target and then recommended a trading exit. We are currently very bullish going forward until our targets of P1 $450, P2 $460 and P3 $480 are next reached this Summer or Fall. Technically, gold is above its DMA (Daily Moving Average). We expect a number of shorts of weaker conviction to cover as hedge fund managers realize today there is more profit and far less risk to owning yellow gold than black gold. Gold has also reached key multiyear record highs in both the Euro and the YEN and this will add even more to gold's luster on a global basis.

4.  China's 114 securities firms last year had deficits totaling 14.99 billion yuan (1.8 billion US dollars), the Securities Association of China as quoted by the Chengdu Business newspaper on June 15.
“In the last four years, the composite index of Shanghai Exchange has dropped from the landmark high of 2,245 points to the current level around 1,100 points.  China may launch a US$15 Billion stock bailout which the FED will probably watch as it may be thinking of doing the same thing H2 2006.  Still few are optimistic. “In my view the stock market is still overvalued, even after falling 50%, said Joe Zhang, an analyst at UBS. “We were paying way too much for stocks back then. And now we are beginning to realize that what we bought was not BMW, it was Xiali Automobile.”
HW:  It could have GM, so perhaps you should consider yourself lucky. Seriously, it seems China’s rulers have learned well the lessons of the Internet Bubble: You don’t have to make money on your business models; you can make profits selling stock!  Notice how much of China is for sale today, while smart Chinese money is buying global manufacturing brands and commodities resources?

5. “Going over $60 will require a catalyst. A major event such as a hurricane, massive crude-oil inventory draw, or destabilizing geopolitical event will be needed."
Jason Schenker, economist, Wachovia
HW: Or a substantial decline in the US Dollar or perhaps just the pricing of Oil in Euro’s by a few exporters who prefer not to submit to US global dictates.

"We will definitely hit $60. The question is how much higher and for how long."
Fadel Gheit, senior oil analyst
HW: Good forecast and good questions.

"But once investors realize we’re living in a $50 to $75 per barrel oil world, they’ll reprice energy stocks accordingly."
Alan Gaines, CEO Dune Energy
HW: Whether they do or not, there is better risk/reward in buying alternate energy stocks.

6. Inflation and the gold rush
”The metal's recent jump worldwide and high oil prices may signal inflation pressures ahead.”
HW: May?

How Worldly Is Your Portfolio?
Diversifying beyond just U.S. stocks and bonds is the key to long-term gains.
HW: You betcha!

House prices | After the fall
Soaring house prices have given a huge boost to the world economy. What happens when they drop?
HW: Record housing foreclosures and consumer bankruptcies.

7. READER: If Gold is such a winner - then why only 10%?
HW: This is because of risk diversification. You could allocate 10% to investing and 10% to trading.
Note: As of June 24, we have upgraded our gold allocation to 15% for most investing accounts.

READER: I want to thank you for an ENZ trade I made.  I bought it end of April for $14 and sold it yesterday for $18.16.  With the upcoming drop in stocks will this be good to buy again lower?
HW: Yes.

READER; I found it interesting that you are recommending WRS as it is one of my larger REIT positions.
HW: GMTA.

READER: I just became a subscriber & have a question for u regarding the WSNW Alert 11A. On your sheet it shows:
6/17 MARKERS:          DOW   10630 SPX  1218      NASDAQ 2098  QQQ 38.12   GOOG  280  XAU 93
TIME DOUBLE:          DOW   10616 SPX  1215.55 NASDAQ 2088  QQQ 37.85   GOOG  273  XAU 92.73
6/17 EOD:                    DOW   10623 SPX  1217      NASDAQ 2090  QQQ 37.87   GOOG  280  XAU 92.88
1) Are "markers" your execution price? HW: This price or better.
2) So if the Dow goes to 10630, u sell it. HW: No.
3) Is "time double" mean u sold it again? HW: Yes.
4) "EOD" is the end of day closing price right? HW: Yes.
5) Where are the stop prices? These are individual depending on the individual risk/reward parameters of the trader. Note we update market information on a daily basis for our GOLD trading subscribers in our Daily Market Commentary. If you are trading markets, rather than investing in them, you may wish to upgrade your subscription level.

8: HERE WE TALK ABOUT AFUND CLIENTS. 
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PAST WALL STREET NEXT WEEK REPORTS
              FRIDAY 11 am listen to our Internet radio program TRADING BY THE  STARS.
(c) 2005 All rights  reserved.  The Astrologers Fund  "Always a Stellar Performance"
wsnw@Afund.com 212/949-7211 Fax 212/949-7274 370 Lexington Avenue, Suite 416 New York, N.Y. 10017-6503
Author: INVESTING BY THE STARS, THE STUDY OF ASTROLOGY,TRADING BY THE STARS (01)
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