1. ASTROLOGY 101: JUPITER CONJUNCT NEPTUNE

• Jupiter (Optimism) conjunct (in the face of) Neptune (Uncertainty) is one dominant current astrological influence.
• Fine Line for Obama on How to Convey Hope on Economy – Jupiter (hope) and Neptune (fantasy/belief).
• Expansion (Jupiter) without limits (Neptune).
• May 29 Neptune SR and June 15 Jupiter SR- perhaps a reverse effect? 

By midweek, an astrological argument can be made for a brief strong rally.  How can it happen?  Fundamentally, the US economy will not improve dramatically for 2-8 years.  However, should banks be allowed to play even more creative accounting games and their profits then double and triple (by increased mark to fantasy accounting and ignoring off balance sheet debt, or better still, off loading debt to the US government and then buying it back with a PPT that gives most of the profits and few of the losses, well then yes, I suppose one could justify a short term rally. While I recognize this or some similar scenario is possible, I don’t’ and won’t buy it.  Should it occur, while traders naturally should buy with tight, trailing stops, investors are advised to sell aggressively!

I WANT MORE! - HOW HIGH IS UP?

• Zone 1 up to 8800
• Zone 2 up to 9000 to 9200
• Zone 3 9600+ 

Bullish fund managers are targeting Zone 2, circa the January 2009 highs. 

BUT HOW LOW IS LOW?

• Zone 1 Dow 7800 or SP 825
• Zone 2 Dow 7400 or SP 780
• Zone 3 Dow 6600 or SP 680 

Several smart fund managers are targeting Zone 2 the November 2008 lows rather than Zone 3 or the March 2009 lows.
We are basically looking slight above zone 2 to zone 2 before deciding to invest again:  Dow 7400-7700   SP 780-800 and Nas 1550. 

GUEST HYDE PARK SOAPBOX: John Mauldin Front Line Thoughts
“As the realization that the economy is not due for a robust recovery sinks in, I think the chances for another serious bear market test of the stock market lows will become increasingly high. As David Rosenberg said in his final memo from Merrill Lynch (and good luck to him in his new position, where I hope we all still get to read his very solid analysis!), if a few weeks ago someone had said you could sell all your stocks 40% higher, most of you would have hit that bid.

Now that price has in fact been bid. Do you want to gamble on a renewed bull run in the face of a continually shrinking economy? I suggest you give it some serious thought, or at least put in some very real stop-loss protection.”

 
KEY DATES:    MAY 20
DJIA:                8270 PIVOT
SPX:                820 SUPPORT 940 RESISTANCE
NASDAQ:        1700 PIVOT
XAU:                135 PIVOT 125 SUPPORT 145 RESISTANCE
JUNE GOLD:    925 PIVOT 900 SUPPORT 960
JULY SILVER:  14 PIVOT 13 SUPPORT 14.50 RESISTANCE
XOI:                 900 PIVOT 960 RESISTANCE
DEC OIL:         60 PIVOT 56 SUPPORT 67 RESISTANCE  

The Market Marker Sentiment is Some worry, then bargain hunting, then return to worry.
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
DJIA:                       10 ~ FV 4 UV; 8 offer 4%+ Dividends 5 offer 5%+ Dividends.
THINK TRADITIONAL SWISS AND PRESERVE CAPITAL: FOCUS ON PROTECTING AGAINST DOWNSIDE RISK. 

2.  How will Windows 7 financially impact Microsoft?
HW: A quick look at MSFT’s horoscope suggests no one will be in a rush to buy Windows 7 this fall.  MSFT is not likely to see bottom line improvement until January 2009, at the earliest. Hence we continue to rate MSFT underperform. 

3.  Why silver may outshine gold
Note: Fair Value H1 2009 for Silver is both difficult to calculate and often changing as does the price of Silver.  We value Silver alternately at $12/$12.80 as a commodity and $13/ $14.50 as an investment. We believe Silver will trade higher, rather than lower, in late May/early June, before being possibly negativity affected gold’s summer seasonality. 

NBF names gold takeover targets

HW: There are some good companies listed here. 

4. Commentary: U.S. could lose triple-A credit rating
Signs are emerging that there is eroding confidence in the country's ability to maintain solid credit ratings, former Comptroller General David Walker writes. That instability would only worsen with costly health care reform or a failure by the government to rein in its budget process. "The U.S. government has had a triple-A credit rating since 1917, but it is unclear how long this will continue to be the case." 

"The Worst Is Yet to Come": If You're Not Petrified, You're Not Paying Attention
"The worst is yet to come with consumers and banks," he says. "This country is going into a 10-year decline. Living standards will never be the same 

5.  “Is the bear market rally over, or is the bear market over? Yes. In other words, a range-bound market seems more likely than either a bear or a bull market for a while, though I see more upside than downside down the road.”
Ed Yardeni, President & Chief Investment Strategist, Yardeni Research
HW:  I do agree markets will be substantially higher by 2017-2020, assuming that is what you mean by “down the road”. 

 “Estimates suggest there isn’t that much further to run because equities are fairly valued. Earnings growth for 2009 and 2010 can’t support prices too much higher than where we are today.”
Hayes Miller, manger, Baring Asset Management
HW: Amen. 

“Some observers seem to be worrying about a relapse into recession after a temporary recovery.”
Riccardo Barbieri, head of international economics research at Bank of America-Merrill Lynch
HW:  WHAT RECOVERY? 

6. Analysts Turning Bearish on S&P 500 in Biggest Earnings Rally Since 2002
HW: Better late than never! 

Five reasons why rally could run out of steam

HOW THE BOND MARKET COULD BE EATING YOUR LUNCH

“BEFORE you do anything today check the money you have invested in fixed-income funds.” 

7. READER: re: NOTES: Will 5/11 again offer Day trading delight or lasting profits? Are you then talking long or short?
HW: Given it was “Play it again Sam” we are short. However, if markets don’t cooperate we will cover.  While going long later next week may be right, fundamentally I am not comfortable with that trade and prefer to stand aside than buy.
Note: Markets cooperated on Monday and then Wednesday and Friday.  We plan to lock profits in by or before Wednesday. 

READER: Will you be stating when to enter oil/gold/silver/dow/nasdaq for investing vs. trading ....or is long term investing really just not possible
HW: That is a VERY good question.  I don’t think it is possible for dow/nasdaq for 2009/2010.
As for gold and silver, given its seasonality, I am not sure.  As a hedge, yes it is possible.  As an investment, we could see wide profit/loss swings into summer. 

READER: You had predicted a W shaped market in 2009. Where are we at this moment? Are you expecting a strong correction later, in late summer or fall? How low do you expect the market to go—do you expect a retest of the March low?
HW: So many questions. By or before the fall, markets WILL Correct.
 

READER: Do you see ^DJI now heading towards 9000 or it will not hold 8500?

HW: There are some very short term negative astro influences early this week so probably it will break 8500.

More critical, will it break 8200-8300 or your 8270 number?  Maybe, Maybe not.

Note: Markets did break 8500 and are now pivoting circa 8270! 

READER: You mentioned you liked First Majestic (FR-T). Can you tell me what your target buy.and sell price is?
HW:  First Majestic is one of our favorite silver micro caps. We consider it a quality, undervalued silver producer and is a frequent presenter at our Triple Gold Conferences in New York.
It is currently trading near resistance at C$2.10.  A fresh buy closer to $1.60 is preferable, but that may not happen.  I see it as a potential double to $4 by February 2010.

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