WALL STREET, NEXT WEEK
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WALL STREET, NEXT WEEK: JANUARY 2, 2012
FINANCIAL ASTROLOGY FOR THE SUCCESSFUL INVESTOR AND TRADER

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

1. 2012-2015 WILL BE DIFFERENT THIS TIME
 
Our advice:
  1. Hold higher levels of cash than normal.
  2. Trade more frequently than normal.
  3. Hedge (be long/short) more than normal.
 
The reason is simple: there are significant risks to owning stocks in 2012 as well as significant risks to being short in 2012.
In other words, markets can change their mind on a dime. They hold significant risks No matter what you do or even IF YOU DO NOTHNG!
 
For example, by the time markets have decided that Euroland is no longer high risk, attention will shift to Japan, the US, China or elsewhere.
The only thing you can expect for sure are market surprises and therefore be well prepared for them by:
 
  1. Hold higher levels of cash than normal
  2. Trade more frequently than normal
  3. Hedge (be long/short) more than normal.
 
Bottom line:
We are ready to buy markets (after a correction in H1 2012) but we are in NO hurry.
 
 
TRADERS: Usual Cross currents expected.  Play P2 or P3 levels only.
INVESTORS: My long term view is well known. Focus on protecting against downside risk and only buy and hold stocks with sustainable earnings at Discounted Value pricing.
Invest only in stocks at bargain prices that you are willing to hold until 2013-2014. 
Soberly prepare for the reality of a weak two track US economy until 2013-2015.

FAIR VALUE:  DOW 11082 SPX 1124 NAS 2380
LONG/SHORT PORTFOLIO: L2/S3
 
KEY DATES:   JANUARY 3
DJIA:               12000/12450 DUAL PIVOTS  R1 12400 R2 12450  R3 12600
SPX:                1257 PIVOT 1200 SUPPORT  1300 RESISTANCE
NASDAQ:        2652 PIVOT
APRIL GOLD:  1480 SUPPORT?  1700 RESISTANCE
MAR SILVER:  28.50 PIVOT 26 SUPPORT?  30 R1 32 R2  34 R3
MAR OIL:         100 PIVOT 90 SUPPORT 105 RESISTANCE  
US$:                 79 SUPPORT R1 90  R2 81.80 R3 82.20
MAR COPPER INTERMEDIATE TERM ACCUMULATE  S1 340 S2 320 S3 300 360 RESISTANCE?
 
The current Market Marker remains:
"Reality is underwhelming, should I be worried? Nah, the world doesn’t end until Dec 21, 2012, if then."
2010 CLOSE:           DJIA 11217 SPX   1257 & NASDAQ 2605 
2010 CLOSE:           DJIA 11577 SPX   1257 & NASDAQ 2652 
2009 CLOSE:           DJIA 10428 SPX   1115 & NASDAQ 2269
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:                        4 ~ FV 0 UV; 4 offer 4%+ Dividends 2 offer 5%+ Dividends.
THINK TRADITIONAL SWISS AND PRESERVE CAPITAL: FOCUS ON PROTECTING AGAINST DOWNSIDE RISK

BOTTOM LINE: STAY LIQUID. Focus on safety.

2. Our investing focus will be around five 2012 Forecasts:
              I.      Germany is our favorite G8 country in 2012.
            II.      Euro will be mixed in 2012, but a buy for 2013
          III.      Buy Copper – 2012 Target $4 OB
         IV.      Sell Silver by March- Potential bottom Target well below $26
           V.      Oil will be lower later this year before US Presidential elections i.e. more often below $100 than above.
 
3. Soros Sees Gold Prices on Brink of Bear Market
HW: It would be nice if gold falls to at least Fair Value ($1404).
 
In 2012, we are looking more at Copper than precious metals and Gold and not Silver.
 
We repeat our view of H2 2011:
1) Gold is overvalued;
2) There are risks to both buying gold AND selling gold short term;
4) Gold shares offer more value than gold itself.
 
We did finally see P1 of our gold investing December 29 with the GDXJ ~22.
Our Fair Value for Gold in Q1 2012 is $1404. GDXJ at 18-22 is a long term buy and hold; GDX at 44-48. That will be true for many of the higher quality precious metals stocks. While we are close to finally (like 2010 and before) buy and hold, we are NOT forecasting major gold moves- although it is always possible and a good hedge. Think of gold companies as cash flow manufacturers and juniors as biotech or technology discoveries plays.  More on this as time goes by.
 
Should Silver not hold $26 support midterm, and I don’t see why it should, then P1 is $25 P2 $23, P3 $20 and P4 is $18.80
 
4. “Confirmation of gradual improvement of the US economy bodes well for the global market.
 Chad Morganlander, money manager, Stifel Nicolaus
HW: Yes I am optimistic for 2016/2017.   We do expect several tradable rallies before then e.g. November US election rally
 
“We’re seeing a market in which there’s very little long- term investor interest.
David Kelly, chief market strategist, JPMorgan Funds
HW: Until there are more pockets of value, why should it be different?
 
“We believe stocks are expensive – that’s based on their inability to sustain earnings and record [profit] margins.”
Michael Lebowitz, principal head, Absolute Investment Management
HW: I agree and after January earnings so likely will many investors.
 
5.  Here comes another year of trading dangerously
 
Here comes another year of trading dangerously
 
2012: Stocks up 10% — or Doomsday scenario?
 
6. READER: You said a preXristmas rally. Is that rally still going on?
HW: No.  Now we expect more mixed markets as Hope vs. Reality battles continue. 
    
 
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