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

"Next week will be a make-or-break week. Are we in a recession? Is the Fed going to be one- and done? Either way, it will give us a feel for where we're going in the short term."
Paul Mendelsohn, chief investment strategist, Windham Financial Services 

To better measure 21^st century economics, I have long stated and believed that to speak of one or even two “economies” does not paint a realistic picture. It is not whether the US is in recession or not.  It is what percentage of the US economy is in recession!
At all times, Companies, {Nations & People] are in one of FOUR economic states Prosperity, Recovery, Recession and Depression.  Some companies like IBM and Boeing (BA) & Exxon Mobil (XOM) have strong profits and are in Prosperity and strong profits.  Others like Merrill Lynch [MER] and Citibank [C] have losses and declining profits and are in Recession.  And sadly, a number of companies and not just Bears Stearns [BSC], are in a Depression or have serious losses. 

Roughly speaking any of these four economies are dominant when it owns a 40% MARKET SHARE.  Current AFUND estimates of US economy:
 

PROSPERITY [Strong Profits]: 22%

RECOVERY [Weak Profits but Improving]: 24%

RECESSION [Small losses or Weak profits and Declining] 44%

DEPRESSION [Serious Losses] 10%

Hence by OUR numbers the US is well in our forecasted recession. 

I can think of at least five stated reasons for markets to rally in May:
1)       Stocks are cheap
2)       The worst is over
3)       Analysts have been too bearish in their profit projections.
4)       Tax rebates will be simulative
5)       Consumer Sentiment Index at 26 year low is lagging and/or contrarian indicator.
 

I don’t buy ANY of these arguments. Hence we plan to be short by Midweek.  However, we don’t intend to fight past Dow 13264 (2007 close).  If so, we regroup for another pre Summer stock sale. 

ASTRODATES
5/2 Saturn SD 11:07 pm ET
5/4 New Moon 8:18 am ET
5/19 Full Moon 10:11 pm ET
5/20 Sun enters Gemini 12:01 pm ET
5/26 Mercury & Neptune SR 

 KEY DATES:     APRIL 30, MAY 2
DJIA:                12888 PIVOT  R1 13000  R2 13100  R3 13264
SPX:                 1400 PIVOT  1360 SUPPORT  1410 RESISTANCE?
NASDAQ:         2425 PIVOT
XAU:                 180 PIVOT 170 SUPORT R1 192 R2 205 R3 215
JUNE GOLD:     888 PIVOT S1 880 S2 875 S3 850 R1 900 R2 912 R3 930
JUNE OIL:         118 PIVOT 110 SUPPORT 120 RESISTANCE 

The Market Marker Sentiment is:  Worry and HEAVY Recession Fears change in May.
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:                       2 ~ FV 0 UV; 5 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. When looking to invest long term, we usually think PPPTLE.

PPP themes [Population, Pollution, & Prevention] include AFUND favorites such as Natural resources, Food & Energy and Health Care/Healthy Living.  One upcoming choice is Health care REITs offer haven for the jittery

TL is of course, Technology and Leisure/Entertainment 

RECENT AWK IPO
AWK first trade horoscope at 9:55:41 on 4/23/2008 is not stellar. Despite my love of water, upon first glance I would wait until 2010 to buy this stock as that seems a rather positive time for American Water Works. 

3. "Oil is on an unsustainable course right now, because we can't continue to have such low demand with such high prices. This is still a supply-and- demand market to some extent, and one day we're going to hit a brick wall."
Phil Flynn, senior market analyst, Alaron Trading 

US Dollar Fair Value ~ $73.50
OIL Fair Value < $98
Gold Fair Value $878 

The fact that Oil is well above $110 is not only is hurting my portfolio trading results substantially this month, but leaves me surprised.  I don’t agree that Oil supply and demand are roughly in balance, but believe
1)       Short term there is too much Oil and
2)       Oil is WAY over priced.
However, as long as enough Big money disagrees with me, it will be foolish to continue my argument much longer.  We believed that April would be negative for BOTH Gold and Oil. So far I am only half right. If, by end the end of Next Week, Oil has not clearly topped short term, and is solidly priced above $115 support, then we reduce our shorts, if not for sound money management reasons alone

However, we still see $71 Oil coming, but when? Perhaps when more understand that the US is not only in recession, but that it will not be soon over as many believe (mostly those that never saw it coming!) 
Note: We have slightly raised Gold’s Fair Value to $878. Given that today gold is no longer substantially overvalued, we recommend begin reducing/profit protecting intermediate term shorts.
Note: My trading partner disagrees and has a far lower first positional gold buy target than mine of $858. Regardless of who is right, more and more gold stocks are becoming nicely undervalued and we plan a very measured and slow accumulation May 2008 to August 2008. 

4. “We expect generally disappointing results and a swath of lowered profit guidance that will drive the Standard & Poor's 500 Index lower in coming weeks.''
David Kostin, U.S. investment strategist, Goldman Sachs
HW: That is the rational investor approach. 

“`The backdrop today is one of the market being quite fairly valued, and in fact I think it's a pretty low-risk entry point for investors. When M&A activity starts to pick up it's an indication that the animal spirits in the market are rising.”
Fritz Meyer,senior market strategist, Invesco Aim
HW: Let us say not excessively overvalued. 

“`No bad news is good news.''
Charles Bobrinskoy, vice chairman, Ariel Capital Management
HW: Ha is all I can say for this ostrich indicator! 

5. The Bell Signals It’s Time To Buy
HW: It seems there is a lot of money agrees with you. 

Sell China Stocks
HW: I see H2 2008 as VERY difficult in China because of the US and global economic slowdown, RMB appreciation, high inflation rates, Olympic euphoria ending and not the least of which being the  8/01/2008 Solar Eclipse over China, Russia and Pakistan. 

Exchange-traded notes: Don't even think about it 

6. READER: DollarDaze Economic Commentary Blog: IT CAN'T HAPPEN TO US...CAN IT?
HW: I HOPE NOT. 

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