1. DECEMBER MARKETS
2. UP STARS/DOWN STARS
3. GOLDEN OPPORTUNITIES
4. QUOTES
5. ON THE WEB
6. LETTERS 

1. WILL THEY OR WON’T THEY?
How robust will year end Wall Street Bonuses be? Will markets end in negative territory as I believe they SHOULD (if they truly reflect Main Street) or will they be artificially kept up with relative valuations?
I believe that if you wait for the people who JUST found inflation last week to wake up and smell the roses in the US economy, you are skating on VERY thin ice. 

While markets may go up later in the week. (assuming Dow 12700-12800 continues to hold for the rest of year), I believe any Christmas/Wall Street Bonus rally calls for an orderly sprint to the nearest exit for ALL stocks you do not wish to hold past H1 2008.
Two exceptions are January effect stocks and precious metal stocks.  The former are potentially TRADES and not investments that need to be exited/profit stopped ASAP.  But it could be different THIS time (No January effect?). We will talk about that later.
The latter, are to be held not only as intermediate term investments, but as essential stock market hedges. 

Remember where US markets closed last year: DJIA 12463, SPX 1418 & NASDAQ 2415.   With the exception of a 10%+ increase in the money supply, is there ANY REAL FUNDAMENTAL reason for markets to be higher intermediate term?
 

GUEST HYDE PARK SOAPBOX: 1% Growth plus 4.3% Inflation = Stagflation [John Mauldin's Weekly E-Letter]
HW: You betcha! 

 KEY DATES:     December 18, 20
DJIA:                13300 PIVOT  S1 13275  S2 12800  S3 12680
SPX:                 1485 PIVOT
NASDAQ:         2640 PIVOT  S1 2600 S2 2650 S3 2640
Feb GOLD:        800 PIVOT 787-791 SUPPORT?
Feb Oil:             --> $87 

Market Marker Sentiment is:  TOO MUCH COMPLACENCY STILL- ONLY SANE RESPONSE IS TO OWN GOLD
DON’T BUY AND HOLD: BE LIQUID WITH A BALANCED AND DIVERSIFIED PORTFOLIO!
2006 CLOSE:           DJIA 12463, SPX 1418 & NASDAQ 2415
2005 CLOSE:           DJIA 10717, SPX 1248 & NASDAQ 2205
DIJA:                       1 ~ FV 0 UV; 2 offer 4%+ Dividends 2 offer 5%+ Dividends.
Looking ahead, my question is whether 2008 will show less than 2% growth or be a classical recession?  
THINK SWISS AND PRESERVE CAPITAL: FOCUS ON PROTECTING AGAINST DOWNSIDE RISK. 

2. We have a few high dividend stocks on our Christmas 2007 buy list, e.g. Lexington Realty under $16.50 and offering 9% yield.  Most are foreign stocks given that the S& 500 yields are under 2%, while many foreign company yields are more than triple that.

We are working on our WSNW premium post S: 12 Stocks for Dividends and Income 2008.  Short term, however, I am not in any rush to buy, nor do I advise you to do much bargain hunting so early in the market correction cycle. 

We plan to research companies within the US tourism sector that have MAJOR foreign appeal and low or no discount policy.  The streets of Fifth Avenue in New York are like Grand Central Station at rush hour.  WSNW reader suggestions are welcome.

3. Gold continues to drop on firmer dollar

Yes, but WSNW readers should not be overly surprised.  I believe the US Dollar is currently overpriced above 76.80.
 I see three reasons for this:

1. There has been the temporary positive astro it enjoys.
2. Too many Japanese and American soccer moms were selling the US Dollar
3. The smart money want to sell and the best way to do it is to push the US dollar above Fair value 76.80 first.

 Be that as it may, there is inflation and hence Gold should NOT be punished.  Buy on any weakness. Our forecast remains Gold WILL BE above $850 by/before February 2008. 

“GOLD: Short Term
 Oscillating around 800 – Gold is mired in a contracting range between 782 and 827. In the short term, the dip below 791 and oscillations suggest that the range will be in play longer than we hoped for. Next week, a move into the 777/782 support zone is likely where we would be looking for signs of stalling. Bigger picture, we view the contracting pattern as a pause in a bull trend and are patiently awaiting a break of 827 to suggest that the uptrend has resumed to 850 and higher.”
Barclays Daily Commodity Technical Strategy Daily December 14^th. 

According to Jeff Christian, who lectured at Terrapinn’s  2007 COMMODITY INVESTMENT WORLD CONFERENCE last week Gold will average $800 in 2008 and range from 760 to 900. If he is right. smart investors should know what to do.
OUR BOTTOM LINE:  Buy GOLD and undervalued quality Precious Metal stocks over the next two weeks that have been beaten down. We expect to see a 15%-20%+ return within 60 days on quality stocks. 
WSNW Readers, note: We added to our 2008 precious metals selection and updated price and target information. WSNW subscribers review S: Precious Metal Mining Stocks 2008 

4 “Trade will continue to support the U.S. economy, Exports may be able to keep U.S. growth in positive territory if the housing slump deepens and spreads.''

Michael Gregory, senior economist, BMO Capital Markets

HW:  Wishful Thinking! 

"We should still see reasonable sales growth and no recession. It's quite reasonable to expect high energy prices will slow business investment and, eventually, consumer spending, but people are working, the unemployment rate is low and Christmas is Christmas."
Allan Meltzer, professor of political economy, Carnegie Mellon University.
HW: I respectfully disagree. 

"This may be the calm before the storm, but so far the consumer is weathering the bad news out there."
Chris Rupkey, senior financial economist, Bank of Tokyo-Mitsubishi UFJ

HW: I am not so sure the consumer is weathering the bad news, or the reported news is faulty. You really believe inflation JUST began last week? 

5. Global Markets: The Good, the Bad, the Ugly 

Top foreign stocks for 2008 

BEN MUST BE REALLY WORRIED ABOUT THE ECONOMY

6. READER: DJI looks weak on the charts in the short term. Medium term - looks even weaker. According to you what is the next support for DJI?  Will 13000 hold for DJI in the short term?
HW: 12800, then 12700.  If it holds  past Tuesday, it could hold until year end bonus time. But I can’t think of the cover excuse.
READER: Right you are. It will not hold 13000!
HW: Well it SHOULD not hold 13000, whether it does before year end COULD be another matter.
 

"Can you afford NOT to have financial astrology in YOUR future?"
Stop reading Wall Street, Next Week, last week:  YES, I WANT TO SUBSCRIBE
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