WALL STREET, NEXT WEEK
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WALL STREET, NEXT WEEK: MARCH 17, 2008
FINANCIAL ASTROLOGY FOR THE SUCCESSFUL INVESTOR AND TRADER 

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

1. MARKETS CAN BE VERY WILD/CRAZY FOR SOME TIME- STAY PREPARED.

INIVESTORS: WHAT TO BUY AND WHEN? WHAT TO SELL AND WHEN?
 

  1. BUY UNDERVALUED QUALITY COMPANIES 25% TO 60% OFF 52 WEEK HIGHS. [If Buying at more than 60% Discount, understand DISTRESSED INVESTING PRINCIPLES.]
  2. DON’T FIGHT THE FED - BUT DON’T COMPLETELY TRUST IT EITHER [Keep a classic 10% gold hedge]
  3. DON’T BUY THE BROAD MARKET- SELECT STOCKS PRIMARILY FROM FAVORITE LONG TERM INVESTING THEMES. Visit our premium subscriber posts of Wall Street, Next Week for ideas.
  4. KEEP PLENTY OF CASH IN RESERVE.
  5. OUR IDEAL BUY IS CIRCA DOW 11111 [10820 to 11444]. Whether this is seen or not in 2008, stay patient.  Slowly accumulate companies you intend to own for the long term [2010-2012].
  6. TAKE PROFITS FREQUENTLY.
  7. IF IN DOUBT, DON’T, OR DO LITTLE.
  8. FINALLY, COMSIC VALUE INVESTING IS ABOUT BUYING AND HOLDING UNDERVALUED STOCKS WITH GOOD GROWTH PROSPECTS. MARKETS OVERSHOOT VALUATION BOTH ON THE UPSDIDE AND DOWNSIDE.

 

TRADERS: WHAT TO BUY AND WHEN?  WHAT TO SELL AND WHEN?  Is Wall Street Close to a Bottom? 

  1. TAKE PROFITS FREQUENTLY.
  2. HAVE A LARGE CASH POSITION AVAILABLE FOR THE LATE SUMMER/FALL.
  3. STEP IN SLOWLY, BUT EXIT QUICKLY.
  4. IMAGINE THAT YOU ARE PLAYING A GAME IN AN INSANE ASYLUM.
  5. TRADE ONLY WHEN YOU HAVE HIGH CONFIDENCE AND A VERY FAVORABLE RISK/REWARD.
  6. REVIEW OUR S: DAILY MARKET COMMENTARY BEFORE ENTERING AND EXITING TRADES.

REMEMBER: MARKETS CAN BE VERY WILD/CRAZY FOR SOME TIME. 

HYDE PARK SOAPBOX: Don't take a penny or a nickel at face value
 

TRADERS: Given currently Wild Markets, we continue to recommend VERY short term Day Trading.  Ahead of Tuesday’s 2:15pm FOMC announcement and a short option expiration week, be VERY careful.

 

INVESTORS: While we are investing short term in a rising “Wall of Worry”, my long term view is well known: focus on protecting against downside risk.

 

 
KEY DATES:     MARCH 18, 20
DJIA:                12000 PIVOT 11600 SUPPORT 12400 RESISTANCE
SPX:                 1300 PIVOT S1 1280 S2 1270 S3 1248
NASDAQ:         2200 PIVOT 
XAU:                 190 SUPPORT 210 RESISTANCE
APRIL GOLD:    1000 PIVOT
MAY OIL:          110 RESISTANCE  S1 102 S2 100 S3 98 S4 95 

New Market Marker Sentiment is:  Worry and HEAVY Recession Fears.
DON’T BUY AND HOLD: BE LIQUID WITH A BALANCED AND DIVERSIFIED PORTFOLIO!
2007 CLOSE:           DJIA 13264, SPX 1468 & NASDAQ 2655
2006 CLOSE:           DJIA 12463, SPX 1418 & NASDAQ 2415
2005 CLOSE:           DJIA 10717, SPX 1248 & NASDAQ 2205
DIJA:                       8 ~ FV 0 UV; 6 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. NOW for the first time in a long time, many stocks in our subscriber premium sections are trading AT or near value.
For example, 5 out of the 12 stocks in our S: UNCERTAIN TIME STOCKS are potential long term accumulations.  While I prefer to invest in undervalued stocks, this is news.
Yet, I recognize the extraordinary risk in today’s stock markets.  We can easily see moves of 500 points upside or 1000 downside. This demands more than ordinary attention. 

BUSINESS AND BANQUETS
At Susquehanna’s SIGnificant Investment Options in Healthcare at the New York W, we discovered Novavaqx (NVAX), reiterated our buy for MorphoSys (MOR.GR) and added three stocks to our S: Health Care watch list: Given Imaging (GIVN),  MWI Veterinary Supply (MWIV) and Obagi Medical Products (OMPI). 

STOCK WATCH
VISA (V) IPO. 
Citibank <16 OCO late April/early May.  

3. “Short term call (3 months):
*     We believe that the price of gold needs to consolidate.
*     That being said, the stocks are not reflective of the current gold price.
*      We think it is wise to take some profits on strength now only to redeploy during expected summer weakness (likely to occur late April - July)”
Paolo Lostritto, mining analyst, MGI Securities

HW: We agree except we believe PM weakness begins in late March.  Gold (and most likely Oil) will be down within a few days of the FOMC.  Assuming Ben does not totally destroy the US Dollar with a 1% discount rate cut, and especially if he does the “right” thing and only .50% instead of .75%, Gold will be under $900 as soon as April. Thereafter we plan to buy gold at $858 or better.
BY THE WEEKEND, WE RECOMMEND REDUCING INVESTING GOLD 35%. Alternately, place tight profit stops.
This does not apply to one’s 10% Commodity portfolio hedge, or undervalued quality micro and Midcap stocks.
This DOES apply to physical commodities and a number of the MAJORS. 

4. "This is more doom and gloom. The mind set for buyers now is, 'if [home] prices are falling, why do I want to buy an asset that's going down in price?'"
Paul Kasriel, chief economist, Northern Trust
HW: Because you are a “contrarian investor”?  Because purchasing a home is more than simply an investment?  Because the sky is blue?

“TIPS are a really good buy. They're cheap with the Fed continuing to emphasize growth over inflation and inflation continuing to come in higher.
Bill Chepolis, money manager Deutsche Asset Management
HW:  Yes. TIPS WERE a good buy, but we think it soon getting time to take well deserved profits.

"It's likely that first-quarter earnings are going to be troubling for a large number of companies. The market has some valuation support here, but the near-term fundamentals are a bit sketchy."
Sasha Kostadinov, portfolio manager, Shaker Investments
HW: Only a bit?  For financials, they are a disaster, while too many non-financial firms’ corporate profits have been “financial engineered”, rather than “old fashioned” profitable sales.
 

4. Unlike Consumers, Companies Are Piling Up Cash 

Double-Digit Inflation Crisis Looms 

Dividends Do Double Duty

6. READER: The current prices of $ 100+ levels have nothing to do with demand and supply. It is on account of 'Speculation' and ' Weak US Dollar'.
HW: I agree.  However, over time, fundamentals DO MATTER.  And that time is coming VERY shortly.

READER: What do u think of PIED and Minco?
HW: I think both are undervalued at the present time.

READER: Didn't you say oil would go down in the short term? With what's happened over the past couple of days, is there hope for sub-100 in near term?
HW: Actually that was MY partner’s work. My work is for March 23 onto to April.
So I expect to see OIL down sub100 but MAY oil, not April..

READER: What, in your opinion, are the prospects for emerging market stocks from mid-March to May?  I'm looking at several int'l stocks & ETFs, as well as a few resource stocks closely linked to the Chinese market.   
Also, do you think that gold will climb into May or do you foresee a correction in precious metals between now and then?

Finally, when would you expect the next major market correction?
HW:  I think they are extremely risky.
I am expecting a strong correction in gold beginning no later than the week after the FOMC.
We are not in one already? 

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