WALL STREET, NEXT WEEK
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WALL STREET, NEXT WEEK: JANUARY 16, 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. WE EXPECT MORE OF THE SAME
 
Markets continue their risky adventures. Bulls are hoping for a bear capitulation, but where is the fundamental reason for that?  I don’t see it the limited upside out weights the downside risk.
While there is strong momentum and desire to rise to SPX 1300-1310, it is counter balanced by Euro worries along with U.S. stocks face lowered earnings bar. The net result is likely to be somewhat neutral and choppy with more surprises possible e.g. Europe, Japan, China in Q1 2012.  Hence we see no reason to rush to put money to work just now.  The risk/reward is simply not worth it.
 
If markets rise first, then sell, reduce or at least add some shorts to a long/short hedge or the equivalent.
Should markets drop first, wait and when prices are better invest.
Alternately, trade VERY short term.
 
The choices are not great, but the alternatives- investing with such risk is not attractive either.  Spend the interim researching stocks if and when we see better prices, or just do nothing investment wise, and take a winter vacation!  In other words, continued patience is key.
 
We repeat our 2012 Investing Mantra here:   
Bottom line:
We are ready to buy markets (after a correction in H1 2012) but we are in NO hurry.
 
 
GUEST HYDE PARK CORNER
“It is a time for all investors to approach the market like professionals, actively manage risk and protect the downside first. If you are not comfortable in that role, seek out a financial advisor who can help you achieve your goals.”
Joe Terranova: 'Buy High Sell Higher,' 2012 Outlook
HW: I agree.
 
 
 
TRADERS:    CONTINUED VOLATILITY is to be expected.
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 11088 SPX 1128 NAS 2388
LONG/SHORT PORTFOLIO: L1/S1
 
KEY DATES:   JANUARY 19,
DJIA:              11217/12450 DUAL PIVOTS   R3 12600/12680 RESISTANCE
SPX:               1257 SUPPORT 1308 RESISTANCE
NASDAQ:        2650 SUPPORT 2750 RESISTANCE
APRIL GOLD:  1650 PIVOT 1600/1620 SUPPORT 1700 RESISTANCE
MAR SILVER:  30 PIVOT  28.50 SUPPORT 32 RESISTANCE
MAR OIL:        100 PIVOT S1 98 S2 97 S3 95  105 RESISTANCE  
US$:                80 SUPPORT 82.52 RESISTANCE
MAR COPPER: INTERMEDIATE TERM ACCUMULATE
 
Until March 28, the Market Marker is somewhat neutral.
2011 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:                       5 ~ 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. While more close in price than timing to selling markets, (outside of special situations), we continue to bide our time.  If/when markets are closer to SPX 1305-1308. we recommend begin selling/additional hedging..

 
3. Junior miners positioned for takeovers, IPOs
 
Gold and Silver continue to trade somewhat irrationally e.g. I believe gold should RISE on Euro problems not fall!  Be that as it may, for the next 4-7 weeks, we will buy AND sell the precious metals.
We repeat on a long term investing basis, however, many small and midcap gold stocks are undervalued while some energy ones are very fairly valued.
For the former, we are looking to a repeat of GDXJ 22 (to 18) buys, for the latter Oil at or under $85.
 
4. “We have seen a good bit of commentary recent about how Europe is either in recession or on its way to one, while expectations for the US economy are improving. We are not sure that sort of commentary is right. Yes, European prospects have worsened. However, depending on how far back one looks, estimates for US growth have either not improved all that much, or have worsened…
Now, if the US has seen its best growth, Europe is going into recession, and we toss China in as likely to have seen its best growth for the cycle, the risk of negative feedback is pretty worrying.
HW: We agree 100%!
 
“Even though there were some disappointments, the underlying trend in earnings was still strong. There was some growth there, not as strong as it has been in the recent past, but suggesting we’ll get a decent up-year in stocks.”
Jeffrey Kleintop, chief market strategist, LPL Financial
HW: Highly possible BY YEAR END, but we are a long way from that in time and not that far away in price!
 
 
“The inflation outlook provides the Fed with some wiggle room. While growth remains uneven, manufacturing activity has been resilient.”
John Hermann, senior fixed-income strategist, State Street Global Markets.
HW: While these are about as good as weather forecasts, at least they may provide short term comfort to markets.
 

5.
Commodity trading no longer just risk-off, risk-on
 
How to play Europe’s debt downgrades
 
S&P 500 performance around MLK holiday is mixed
 
 
6. READER: I have silver bullion that I purchased in the mid-teens. I'm going to sell, but my question is: Should I sell ALL or do you see silver coming back in 1 or 2 years and setting previous highs or going lower than the mid-teens?
HW: Wait until at least Friday - silver should be up tomorrow. [It did]  And not totally safe until March period so be cautious and step in. You can take your profits (tomorrow) or half your profits- that way you don’t lose whether Silver continues to rally much higher or falls back down to earth next.
 

 
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