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1. WHERE VALUE BEGINS
2. LETTERS
Since the 1998 market cycle shifted its internal dynamics from a gaming casino to that of a Ponzi scheme, we must begin to ask WHERE does value begin, assuming our July 20 Year High holds. This presumes you have CASH reserves to BUY. Have you reassessed the wisdom of investing in the fashionable "Buy and Hold" style? Do you believe in the AFUND investing strategy of "Buy, Hold AND Sell?"
10% of 9338 or 8404 is just a blip.
20% of 9338 or 7470 is just the start of a bear market.
30% of 9338 or 6536 is a place to begin covering shorts, but NO REAL Value here.
It begins to appear selectively at 6000 or below.
However, on the Nasdaq, Value ONLY begins to appear at 1000 or 50% down! But remember those prices are NO bargains either. Some stocks will retreat 90% in a bear market. Perhaps then they MAY be worth looking at.
Will 9000 establish a ceiling or floor next week? If the former, 8500 is almost guaranteed - perhaps in the classic, Monday panic, Tuesday recovery. Watch Wednesday after next for first clues as to the primary market direction next month. We will use August 5 as our Market Direction day, either to argument or fight the August eclipse August 7.
Key Dates: August 5, 7
DJIA: S1 8800 S2 8500 S3 8400 R1 9000
2. Japanese Market - The Nikkei 225 Index has rallied after holding long term support near 14500 (the lows of 1992, 1995, 1997, and 1998). However I do not see further gains above the Winter 1998 peaks by 17500 for some time. We would trade the 14,500 to 16,500 range.
2. CONGRATULATIONS ON YOUR 7/20/98 FORECAST.
HW: Thank you.
I didn't sell, I am telling you, she is going to climb and split, climb and split, climb and split.
HW: Now aren't you glad that you changed your mind and sold that Tech stock?
I have been hearing how the market will be going down with the astrological occurrences in February, March and Bear time of May 4. How the market may have topped in early spring then late spring, but now we may hit a new high in the summer.
I took your recommendation and bought gold and I am now down approx. 37%. I also bought shares in IHI which has gone nowhere, and Motorola that has a one point gain.
You did predict a drop for HP, but I am still waiting for CPQ to reach 18-22, and Microsoft (Wintel) to decline, the Internet stocks which are grossly overpriced (but doubled since), and waiting for Disney to hit a wall.
Having said all that I am still astounded by your prediction of a 500 point drop on the Dow and then recommending the repurchase next day, a truly amazing call.
HW: Two points:
(1) I think you are making a basic mistake of using a newsletter writer to perform financial advisor functions rather than as a SOURCE of investing and trading ideas. I am not acting here in the capacity of your money manager, but as a supplier of generic market information. Wall Street, Next Week is an excellent source of trading and investing ideas with probabilistic price and time entries with superior risk/reward. We have pointed out the major times the market could/should tumble, as for example our last WSNW Alert #31 "Sell at 9350 on July 20", a VERY profitable forecast far in advance.
(2) Most of the investments you made were given as long term investments and will see if they outperform, e.g. Gold in 1999. Also Gold did SPIKE immediately after our recommendation. It depends on which instrument you used whether you will make money or not. We could have made a mistake with recommending Campbell Resources (CCH), instead of Canyon Resources as our baby Gold stock pick. We will know next year. IHI could explode any day and I continue to recommend it constantly. Motorola is a turn around situation that we believe will outperform. Finally, many of the lower prices you are waiting for, should happen in time for Godot's arrival.
On the New York Stock Exchange, Merck fell 10, or 7 percent, to 128-1/2, after the company said second quarter diluted per-share earnings were up 15 percent to $1.07 -- one cent lower than the consensus earnings estimate of analysts polled by First Call. IBM 1.50 vs 1.49 jumped 7 with the same .01 difference from analyst's estimates - Rational investing? Ha!
HW: I couldn't agree with you more!
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Author: INVESTING BY THE STARS McGraw Hill, TRADING BY THE STARS (99)
May 15, 1998 Sixth Annual Astrology & Stock Market Conference NYC