1. JULY MARKETS
2. SHORTING
3. JAPAN
4. QUOTE
5. LETTERS
Is there is a UAL-style market zinger in this week's earnings reports? If not, can it survive the next major 4 astrological landmines this summer? I do not imagine so. We remain on a buyers strike. Assuming we make it to the Lunar eclipse at the end of the month above the July 1 close of 11,066, we will raise cash levels even further, or write more covered calls.
Waste Management (WMX) dropped 40% in a day! July 1 Starbucks (SBUX) dropped in a similar fashion. With today's "rational" stock prices, we expect to see much more of this next week as this becomes a common pattern for more and more stocks THIS SUMMER.
$20 oil was P2 of our energy move. We now agree with conventional thinking that Oil will be range bound from $18 to $22. At $22, OPEC threatens to increase supply. However, current pricing is far enough above the cost of production to maintain good profitability in the Oil industry.
This Monday Venus enters Virgo and that evening is a Full Moon and Mercury SR. At the end of the week we have Saturn Square Uranus on the 17th.
Key Dates: July 12 and 16
DJIA:
Test of 11,200 Resistance
2. The Dow market rose 5 percent the week of July 1, its best performance since October 1998. We lost money coming in too early for our July 1 pivot - with the holiday and its historic bullishness 1/2 before and 1/2 on July 6 would have been more prudent. A few days later on Thursday, our pricing system (FINALLY) calculated a POTENTIAL PRICE TOP OF DJIA 11200 and SPU 10416. Whether this holds beyond the New Moon and Mercury S/R (A new market cycle) depends on next week's earning show. Still, when most of the analysts I track see great risk in the market and only differ as to WHEN - this month or next for disaster, that is too foreboding. Given the BIG picture, it won't matter if we were a few days or even a weeks early.
WSNW readers are often reminded of the need for money management. So even when going for a killing, they do NOT lose their shirt if wrong. A critical issue in any trade is not only what you trade, but the size of the trade. Never place a bet you CANNOT afford to lose if it goes against you.
With Saturn/Uranus coming next week, it is a good time to pick short candidates. Always be prepared to run away if the market does not behave as expected. (If I do not, it is because of other positions in portfolios.) The next few months will NOT be boring -- promise!
3. Japan. we continue to SHOUT, is a major mess that is about
to unfold. From the July 3, 1999, Australian Financial Review Mr
Yen blows through lest the bubble burst:
"It was confirmed during the week that one of the world's top finance
officials, Japan's Eisuke Sakakibara - known as Mr Yen - is about to retire
from his job as the country's main international negotiator. But why?
He told an acquaintance that he decided not to press for another year in
the post because he expected that Wall Street would crash during that time,
and he did not want to be around to try to deal with the consequences for
Japan.
It was Sakakibara who first conceived the brilliant nickname for the
US economy - bubble.com. The US is vulnerable, he says, to the possibility
that the Internet-led stockmarket bubble will burst with awful consequences."
HW: Softbank has risen 75% this quarter. Ahead of the Saturn/Uranus
Square midmonth, it may suffer a potential a Triple whammy: Japan and Yen
and Technology. There is also (Bank of Tokyo-Mitsubishi) BTM, which
is under severe astrological pressure or Sony (SNE), while a strong company
with relatively good indications, is highly liquid and overpriced above
112.
4. ''The American workforce is falling into debt so deep that it is
affecting not only their savings for retirement but job performance as
well,'' ''Employees with money problems'' -- and that's most of us, according
to Professor Thomas Garman of Virginia Polytechnic Institute (VPI), in
Blacksburg, Va. Average household debt levels in 1997 were ''well above
those in 1983,'' or at 84.8 percent of personal income.
HW: Americans feel rich because of the soaring stock market and real
estate. Have you any insurance for when the music stops? Depending
on your debt level and whether you have 6 months savings in cash, use fresh
money for this rather than the stock market. Why not "cash out" a little
if you are still fully invested as insurance?
5. READER: What do you think the DOW will do over the next 9 months?
Should I put my 401k into a less risky investment option?
HW: This is the advice I give friends, family and clients.
READER: For once I am in total agreement with you! This early
July cycle turn I have been discussing is a high versus a low. You
will be happy to know that I just purchased the August OEX puts.
HW: I shall be happy if you make money due to listening to me, NOT
following me. That is to say, whatever input I offer IN CONJUNCTION WITH
your own analysis TOGETHER makes your money than otherwise.
READER: What other reasons, besides Astrology, will this market turn
around?
The backdrop is perfect for the bulls. (strong earnings, strong economy,
low inflation, stability overseas) It is all too perfect. Is there
a possibility that this Saturn/Uranus Square, and the grand cross will
be a non event? You might think that we would be seeing some kind pullback
in front of the square. I just find it hard to take these upticks everyday.
HW: This is like asking if the tortoise beat the hare in a race.
Yes it is possible, but simply not the way I would choose to bet. Some
possible summer trigger events include:
Oil over $20. Bonds market moving past 6.18%. Japanese or Chinese
crisis. Clinton Solar Return problems. An August drop to beat
the October/Y2k crash. Finally an "ideal event" would be a big earnings
shortfall of a tech major stock to get the ball rolling. So with
Saturn/Uranus and two eclipses let us watch and see.
READER: What happened? I thought the market was going down?
HW: Patience. Manic markets drop either by crashing or by ceasing forward
momentum, although the latter takes time before investors realize a firm
top is in place. We still have 4 more key summer dates that are potential
BEAR KILLERS.
READER: Since you follow Nostradamus closely, am I renewing my subscription
for two years and the world is going to end in less then one year?
HW: If so, it is a good thing I am collecting now. I am NOT betting
it is ending, otherwise I would offer lifetime subscriptions! :)
READER: Is CPQ a buy at 25 or should one wait until this thing
comes down & I do not fully understand the meaning of the first
three numbers 18 15 10 25 30 40
HW: These numbers depending on whether you buying (UP Star) or selling
(Down Star). Since it is an UP Star, we would like to buy CPQ at 18 or
15 or 10 and then sell at 25 30 and 40. Remember we are expecting
the market to go down again BEFORE going up. Today we SOLD some Compaq
at 26.
READER: [It is] JULY 1 and the market is not 8888, but 11000.
HW: You are confusing price targets with Key dates. The 8888
price target is the direction we are looking for. The July date was a pivot
date [one of 4 in 1999]. It was calculated to be a top last year.
It was key (-1 day) in the Bond Market and with Alan's help, it would have
been right on the money. Since he didn't, he "owes me".
READER: The major high is on JULY 7 or August 17. You are betting against
the trend.
HW: If your dates are right, they are still within our time frame and
I will be happy. As to betting against the trend, we do that often, although
sometimes we lose as with our July 1 call, and more often we win like with
the Euro and Oil.
READER: I called Arch Crawford's hotline last night, on Friday's message
he stated that the weekend is bearish in a "heliocentric" manner.
What is he referring to?
HW: Venus, Mars and Pluto are conjunct Heliocentrically (from the viewpoint
of the Sun) suggesting a possible market turn.
READER: Henry, after having read your (excellent) book and reading your
column for more than a year I would question whether you are letting your
fixed opinion combined with possible pride keep you from seeing other potential
manifestations of astrological patterns. It seems to me that you
are not seeing some of these patterns in CONTEXT of what has already occurred.
HW: There is ALWAYS more than one interpretation to any astrological
factor.
From an investing view, this is the only one I am comfortable with.
From a trading viewpoint, we play R/R and probability and hence I will
be wrong periodically ( occasionally BIG time e.g last October) and perhaps
this July, although I am not willing to concede that just yet.
READER: I'm a little concerned regarding your seeming change of heart
over this whole crash of '99 issue. Do you or do you not still firmly believe
that this event will occur? I took it in good faith from you as an expert
financial astrologer that this was going to happen, and now, the language
of your recent messages has changed to more than a little dubious of your
own predictions. Perhaps I am reading you wrong, but you're scaring the
heck out of me.
HW: The question is where will your portfolio be at the end of
1999: Higher or MUCH lower? Yes, I believe MUCH lower. In fact,
1929 may be an apt comparison to 1999. On the other hand, maybe the
market will ONLY correct 20%. Should you be fully invested and buy
and hold? I couldn't sleep at night if I were. Could the market
hold 10,000 and we will just witness sector crashes and stock rotation?
Possibly, but I think it is more systematic than that given two eclipses,
Y2K, Saturn/Uranus and next year's Jupiter Saturn. So we will just
have to wait and see. Still when the market is temporarily against
me, as I trader I must be prepared and protect.
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