1. MARKETS
2. AUGUST STOM
3. DAY TRADING
4. QUOTES
5. LETTERS
Recent exhaustion highs established DJIA 11,200 as a strong ceiling with secondary resistance at 11,000 and most likely 10,800 as well. Add the July 28 Lunar Eclipse, combined with the forthcoming August 11th Solar eclipse, this points to a serious test of DJIA 10,000 this August. While the market may pass its FIRST 10,000 tests, it is our belief it will NOT hold intermediate term.
Previously, I noted how Goldman Sachs (GS) going public was the clearest sign of a market top to date. However, I was a bit early: The latest news - that the New York Stock Exchange, the world's largest stock market, plans to convert to a publicly traded corporation and sell its stock on the Big Board by Thanksgiving, most CERTAINLY IS!
On last Tuesday, Market Marker Day, the broad market action opened UP
and then stayed strongly bullish all day until near the close; while the
Internet stocks fell DOWN after 3 PM suggesting the upcoming zeitgeist
remains:
THIS MARKET DOES GOES NOT WANT TO GO DOWN, BULLS WONT GIVE UP UNTIL
THE LAST MINUTE, BUT THE FAT LADY HAS ALREADY SUNG FOR THE INTERNET SECTOR.
If AOL breaks its previous low of 89 and does not rally back past 100, it is curtains for Nasdaq. Likewise when Amazon becomes unable to hold 100. At the height of the Dutch Tulip mania, a single tulip sold for more than the price of a town house. What is the value of a tulip bulb today? Now keeping that in mind, imagine "buying and holding" Yahoo (Yhoo) or FreeServe (FREE) or Amazon (AMZN) etc. LONG TERM!
I encourage everyone to remember the real estate mania of the 1980s and the lesson of Rockefeller Center Properties. It does NOT matter if you own the BEST property in the world if you paid MUCH MORE than it is worth. A lesson to be reviewed in November.
KEY DATES: August 5, 10/11
DJIA:
10,000 Test
2. Our August stock pick will be from our Real Estate Investment
Trust (REIT) watch group. We are waiting for a little more blood
-below 52 week lows? - later this month.
Health Care Property Investors (HCP) with a 10% current yield will
be our most likely choice. Its investment portfolio includes 355
health care facilities and recently declared its 55 consecutive quarterly
stock dividend increases. We like that track record. Alternately, depending
on price, we are also looking to our favorites SOVRAN SELF STORAGE (SSS)
8.8% Yield and SL Green (SLG) 6.6% Yield as possibilities. However,
these REITS are likely to bring only 15-20% in 12 months including yield.
Still it is a positive return!
We are also watching Covance (CVD), one of our two favorite drug companies,
which may be ready for a rebuy soon.
3. Those of you that follow cultural zeitgeists will have noted the recent Atlanta murders are the 1999 equivalent of bankers jumping off buildings. Unfortunately, we can expect much more of this as more day traders lose more money.
"Day trading requires ... a sophisticated understanding of the markets and market dynamics, and sophistication in identifying securities to trade and in accurately timing buys and sells," NASD said. The NASD (NASD) NOW requires brokerages where day trading occurs to warn customers of the risks involved before they open an account. The NASD made the announcement late on Thursday, when a day trader went on a shooting rampage at two Atlanta day trading firms, killing nine.
4. "We have a much greater speculative bulge than in the 60's.
Price are going up, so people buy. That justifies the expectation, so they
buy more. It's a classic bubble." John Kenneth Galbraith:
HW: Amen
Kathleen Stephansen, Senior Economist, DONALDSON, LUFKIN & JENRETTE:
"We're staying with our forecast for a tightening in October or November
as opposed to August."
HW: Now that the ECI report is out, I suspect you changed your opinion.
We foresee 6.25%+ THIS year and sooner, rather than later.
5. READER: Did I miss this list? I would love to see it.
" As per several reader's request, the following is the ENTIRE list
of Portfolio 2000 world class company stocks that we plan on buying this
summer AHEAD of any market correction:
"
HW: That was the entire list of stocks. We are not buying ANY
Big Cap stocks this month until the market corrects. However, in August,
we will be buying some mid and microcaps.
READER: Henry where can one get a good calendar that shows the dates
you refer to so one can follow things while one learns this stuff
HW: NY Astrology Center Bookstore.
2000 calendars are available this month.
READER: I was wondering if you had any target prices to buy back into
the S&P. I know that many people (myself included) have index funds
which comprise the bulk of their portfolios. I rolled those monies into
a money market fund to weather the storm, and while your DJIA numbers are
well known, I was wondering if you had any S&P target prices for us
to watch for. You know, when the worst is over,
I'd like to be able to say I got back in at-or close to-the bottom.
Any insights would be greatly appreciated.
HW: First trading target is 1250 where much bargain hunting buying
may begin; P2 1030 is far stronger support of course.
READER: Can you tell me what caused the huge volume spike in IHITF the
other day?
HW: My guess is we are getting closer to September 9 - IHI day.
Some traders may be trying to buy stock in advance believing this publicity
could push IHI stock up 50%-100% as did the BCHG winter show. Also,
I believe there is a new group of Vancouver Brokers taking a fresh look
at IHI. They may be seeing what I do: that its stock SHOULD BE much higher
as soon as investors believe IHI is ready for sales and production. That
could happen as early as the announcement of equipment ordering, the first
phase of which could be any day.
READER: Could you please give me the dates for the [IHI} show in September?
HW: September 9, 1999, which is also Roger's birthday. Email Investor
Relations for a party invitation. The annual shareholders meeting will
be held in their newly remodeled show house. I will be there, so
introduce yourself and say hi.
READER: I've been trading the markets with the Elliot Wave principle
and could not agree more on your visions.... And this is the top for now.....The
DOW will test 7400 again and possible 7000 or 6500, then buy the "dip"
and be long to test the previous tops until around 2003 or 2004 and be
ready for the great "bearmarket" like we had in Japan which take at least
5 to 7 years The great supercycle 4. What the trigger will be I cannot
predict of course but at that time you'll think of this comment.
HW: While history repeats, it rarely duplicates. I tend to think
market cycles are more compressed than they have been historically.
However, we have plenty of time to decide.
READER: where we can access coverage re indexes on the Internet what
is happening on Asian markets. I have been searching and can find all the
exchange sites but none even have delayed coverage just end of day.
HW: Twenty minute delay for major future exchanges can be found at
Yahoo at: http://finance.yahoo.com/m2?u.
READER: I am so ready for this market to take a beating:
1) How bad is it going to get?
2) When??? I am getting impatient! I want to come in one
morning and see the NDX and SPX futures limit down.
HW: (1) Our Year end trading target is 7001.67.
2) It will happen as the 1999 DJIA and Nasdaq tops seem to be already
in place.
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