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

An extremely active week with many cross currents.  Ideally, markets rally so we can short them.  Otherwise, we may just see SPX 770 or lower in February and then be ready for the next positional buying opportunities. 

As we have often said: 

H1 2009 MARKETS ARE DANGEROUS, WILD/CRAZY.
DOW Range 7260 to 9400 - Current Fair Value circa 8300; NAS 1525 SPX 855.
 

Note: Fair Value primarily based on future earnings. Weighing more the short term cost of money and dividend model, it would be higher. 

INVESTORS: Stay Patient. NO MARGIN USE.  Research what you wish to own long term and remain patient. 

KEY DATES:    JANUARY 26, 28, 30
DJIA:                8000 PIVOT 7700 SUPPORT 8500 RESISTANCE
SPX:                  825 PIVOT  780 SUPPORT 866 RESISTANCE
NASDAQ:        1500 PIVOT
XAU:                125 PIVOT
APRIL GOLD:   $912 FAIR VALUE S1 850  S2 840  S3 820  $940 RESISTANCE
MAR SILVER    $12 PIVOT
XOI:                  955 PIVOT
MAR OIL:          $40 PIVOT $35 SUPPORT $55 RESISTANCE  

The New Market Marker Sentiment is A Known Weak Economy; so what me worry? No! Buy.
2008 CLOSE:           DJIA   8776, SPX   903 & NASDAQ 1577
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:                       7 ~ FV 5 UV; 14 offer 4%+ Dividends 8 offer 5%+ Dividends.

THINK SWISS AND PRESERVE CAPITAL: FOCUS ON PROTECTING AGAINST DOWNSIDE RISK.

2. GE IMMELT-DOWN
HW: True, but GE has a positive H2 2009 horoscope. We have a first long term investing target of $15 to $18.  Any purchases BEFORE April obviously should be stopped in case there is another AIG/BAC type problem lurking. However, if/when the market is 7700-7300, this is likely to be one of our first FINAL buy and holds circa current pricing or better.  Put GE on your DJIA watch list and buy when you are comfortable for the long term.  It may be better ito buy GE in April, but all this depends on what else you own and your portfolio management style and mandate. 

3. Gold surges past $900 mark. We are nearly at $912 or current Fair Value for Gold. Current Gold Trading range is $840 to $925.

As COSMIC VALUE investors, I like to buy undervalued instruments and sell overvalued ones. Question:  Will gold retest $800 before or after $1000?  If you don’t know, then use money management to lock in intermediate term profits, while maintaining your core investing and hedging precious metal positions. 

Note:  Is gold fully on its own yet? Disassociated from both currencies and commodities especially Oil?  I am not so sure. Will gold rally or drop if February markets are down as I expect? I don’t know the answer and therefore have locked in some profits.  Should it retest $820 to $780, I will happily buy.  If it rallies to $1000, I will happily sell more.  I call this a Win-Win situation for all but greedy traders and investors.

We will say more after we present our latest Golden Thoughts at our February Triple Gold Conference at the Cornell Club in New York. 

4. “The case for credit easing remains intact, and we expect the Fed to continue to pursue this policy aggressively in coming months.”
Dean Maki, co-head of U.S. economic research, Barclays Capital
HW: Yes, but thinking AHEAD, the piper will be paid and handsomely. 

“Interestingly, any upward readjustments are probably being constrained by the recession, which should pull down core inflation meaningfully during the months ahead.”
Michael Gregory, senior economist, BMO Nesbitt Burns
HW: True, but some of the under-reporting of past recent inflation should also be considered. 

"But be prepared for a decline to new lows this year or next, for that would be the most likely historical pattern, as markets love to overcorrect on the downside after major bubbles. Six hundred or below on the S&P 500 would be a more typical low than the 750 we reached for one day."
Jeremy Grantham, chairman, GMO
HW: Nah. I think it is different THIS time! 

5. ‘Year of The Ox’ Signals Drop for Asian Stocks, Astrologers Say

With George W. Bush as prez, Dow drops most points ever

 “I think 2009 and 2010 are going to be bad years for the market,” Armstrong predicted, estimating that the Dow will stay stuck in a 7,500-to-9,500 range.

By contrast, Hirsch expects the blue chips to rally 40 percent by June.   

Quarterly Letter: Obama and the Teflon Men, and Other Short Stories. Part 1.
We are deep in the pickle jar, and it seems likely that, in terms of economic pain, 2009 will be the worst year in the lives of the majority of Americans, Brits, and others.

6. READER: Other than Valero (VLO), do you favor any oil stocks. and any not in us currency?
HW: Yes.  I list a number of favorite Canadian plays at our premium post:  ENERGY (1/19/2009). 

READER: I want to ask: Total derivatives is around 700 Trillions USD. How much is rotten? Toxic? 30%? 
If 30%, USA part of this could very well be 100 trillion USD. The American budget is around 3 Trillions USD. The state has 3 sources: 
1. Taxes. 100 Tr. could be a problem. 
2. Bonds.But in this context who will lend US money? 
3. Inflation. Well, God help USA. 
Comments?
HW: Yes. I agree. 

READER: I currently hold SSRI and was thinking of selling today, do you see much more upside for gold or silver next week or do you think we are at fair value?
HW: Not quite at fair value but close enough. I believe gold can test down over next two weeks.
I see Nothing wrong with taking a good profit or 1/2 profit NOW at 19.40 OB by MOC! Alternately, you can place a profit stop at $18.95 to $19.40.
Note: SSRI 20.27 MOC.

READER: RE: WSNW Alert Friday January 23:
Time to take or lock in SOME PROFITS. Gold 901 Silver 12
Gold could pullback but look at the XAU and HUI they are about to break out of resistance!!
HW: Yes true, but there is great profit already.
READER: Remember the XAU to gold ratio is still only about .13 that is still lower than any time in history other than the 4th quarter last year. I will not sell gold stocks until they are about fair value (xau to gold ratio hits the late teens.)
HW: YOU ARE NOT WRONG FROM AN INVESTING PERSPECTIVE. However, after 100-150% profits, we routinely locked in some profits. That is OUR style. Not saying you are wrong, just that is our preferred investing style.  

READER: You say it is time to lock in some profit. You had earlier said this market will be positive until February. .Tony/Prechter says Gold will soon go down to 600-650.My question: 
When ends the positive gold astro? Very negative astro after that?
HW: I repeat what I wrote the last cycle.  First of all gold can move higher although next Friday is likely to drop significantly.  There is a good profit and it is no longer undervalued short term. Hence it is wise to take profits WHETHER GOLD IS HIGHER OR NOT SHORT TERM.  This applies primarily to positional trading in physical gold and silver and Precious Metal large caps. Major Hedging and long term investments may be held.  Microcaps may be held.  In fact, if I am wrong, there is more profit in moving down the food chain and buying them as gold again reaches $1000.  However, given stocks such as SSRI or ABX and NEM which gave 150% and 100% respectively already, it is foolish not to take or lock in SOME PROFITS given today’s insane markets. 
I do not believe we will see $650 gold. I believe we are likely see $820 to $780 again. 

There is now MORE risk and less reward in holding gold than earlier. I will discuss in WSNW some of the astrotechnicals and also the question of whether gold will drop with the market in February as has up until very recently or whether it is independent of markets as last week due perhaps to the new cycle we have forecast or whether this was a temporary Lunar New Year phenomena.