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The March 12/13 16 and 57 drops did not a 1000 point move make...yet. Did the Lunar eclipse cosmically signal a market top? Will the market drop 927 points Monday? Bulls can worry this weekend not just about CLINTON, but also YELTSIN, SUHARTO, NORTH KOREA etc. We remain bearish, and Monday we may rotate March options out to April, if they are not sufficiently profitable.
The US stock has primarily 4 remaining pillars of strength:
(1) Extreme Money Flows,
(2) Extreme Merger and Acquisition activity,
(3) Extensive Bearish Sentiment, (too much put buying) and
(4) Quarterly Window Dressing and IRA additions.
When this past week even Lucent (LU) shifted from from our Sell screen at 109 to our short screen at 117, I can't find much to buy besides IHI and sleep soundly at night. Many money managers believe "You can't be out of the market", I disagree. While to date profitable shorts have been stock specific and not market specific, our strategy of buying strong stocks/markets and selling weak ones continues to outperform.
What a mess in Japan! Key dates: March 20 and especially April 2. Japan is Indonesia's biggest creditor; guess who is likely to be left holding that bag?
Thursday's institutional sell of SPH at 106950+ "Till the cows come home" has yet to bear milk, while my personal OEWOA option buy at 2 11/16 - target 10+ has yet to excite my wife. Still, where is the market's reality check? The answer of course, is "in the mail". Soon the history of repeated short squeezes will be history and I predict the market will reward traders with more friendly bear hugs.
DJIA: 8200 8060 7906; then 7500, 6900 and 6500.
Note: If more reporting of poor corporate profits is NOT enough to kill this Bull, then May's Saturn/Neptune becomes our next choice to decimate the gambling sector, aka stock markets.
2. INVESTORS:
Our portfolios are designed NOT only to outperform, but just as important,
to hedge the risk of market insanity. They are designed for investors who
like to enjoy sound sleep.
COMPAQ: CPQ - Little profits this quarter and losses next quarter? Ideally, I wish to buy <19. Tech bulls may prefer 22-24. Should a market correction arrive before Godot, then 14 is the ideal price to really pig out.
ORACLE: ORCL - While now out of the last of our short term trading portfolios Friday morning (Sell on Good News), we are beginning to stop loss intermediate term ones vs a sell at 33-35. However, if you MUST own stock and you MUST own computer stocks, then ORACLE this quarter is one of the best to have in your portfolio and it remains in our UIT (obviously).
Screen Watch: NETSCAPE
NSCP: We plan a first buy under 15. Remember: A world without Netscape
is........ Microsoft!
3. Short Ideas: HEWLETT PACKARD, INTEL, TELEMEX
HWP: Earnings report in May - short at least until then.
INTC: Second cover at 68-69, but NOT an investing buy until this summer. Until then, short repeatedly. Market bulls could buy at 68-69, while cosmic value players like me prefer to wait until this summer or 45-50, whichever comes first.
TMX: A good short 52 OB to 40.
4. HOW NOT TO TRADE WITH WSNW
1. Making only one or two market bets. Do at least 5 or 10 or forget
it.
2. Not having enough money, i.e. gambling instead of speculating.
3. Substituting hope and wishful thinking for careful planning and
execution.
4. Using Wall Street Next Week as the sole basis of any investment
decision. Use Intersection theory: Act when in agreement with your own
system or another reliable one. Triple screens (3 approaches in agreement)
are the most profitable, but with fewer trading signals, are not liked
by action types, aka gamblers.
5. Having no exit strategy - When to sell will be the subject of a
future post.
5. By the way, during the eclipse period, Japan's market was up by about 500 points. It seems that eclipse can have both positive and negative effects on world's market.
HW: Yes, of course, they represent cosmic power, but remember, the effect of a lunar eclipse can last up to one month.
Q: I wonder if you could talk a bit about why you are bullish for stocks beginning on May 4, 1998? How long will you be bullish? There is a lot of talk On the Y2K problem (run on Banks, selling of equities causing a MAJOR crash). Many believe the problem will start to wreck havoc LONG before January 1, 2000. Possibly as soon as late 1998. Any thoughts? Is that why you are bullish for gold in 99?
A: Heck, we will only plan to take profits then before shorting again a few weeks later, and you call THAT Bullish? We are bullish on gold for supply and demand reasons, astrology and the introduction of the Euro. As to the Y2K, I can think of lots of reasons to be "bearish" on financial institutions, but this is NOT one of them IMHO.
Q: Do you have an opinion about crude and the oil services sector? It seems both are mighty depressed. I have an extra $2600.00 in my IRA just sitting in cash. There are several good stocks in that sector at about 26 price level. OR I could just buy an April OEX put or two before the coming eclipse!
A: Options put buying has NO business in an IRA. Stay in cash; reread our 1998 forecasts as to our opinion of the oil sector this year written when oil was above $20 and if you must buy, buy at 22 OB.
It's hard it imagine how could 1000 point drop happen, given the current market situation. There's not much news around as last Oct. However, anything is possible in the world, and I would bet with you for that. :)
HW: It did drop 1000 S/P points on Friday. Oh, did you think we meant 1000 DJIA points? :) March 12-16 are among the BEST Bear days of 1998. Perhaps it will take ALL this cosmic power just to STOP/TOP the US markets.
Q: Are you still assuming that the market is going to close @ 8060 or below? The reason I ask is that I have April puts against Ballard Fuel Systems(BLD) on Toronto, Micron Tech on NY & Dell. which are going in the direction of "buy, buy market" , instead of the other way.
A: Without knowing whether they are in or out of the money and whether they are naked or hedging your portfolio, I cannot answer you except to watch Monday and if a new trend is not your friend, stepwise reduce.
Come on Henry....IRAs and 401ks are more powerful than the stars. Although it's hard to imagine trees growing to the moon, who wants to fight all the IRA money coming into the market? Tough stuff.
HW: This financial astrologer.
"Can you afford NOT to have financial astrology in YOUR future?"
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