1. MARKETS
2. STOCKS
3. QUOTES
4. LETTERS
Will he or won't he? That is the key market market issue this week. Either way, we expect the stock market to close below 10,000 before October 19. Our Bond forecast remains that Alan Greenspan will raise rates or at a minimum change Fed bias to tightening. Currently it is is a 50-50% bet whether he will be forced to raise interest rates even further.
For some strange reason, we received many questions on Gold this past week. In two days, it reached our initial 1999 target of $325. We had to decide whether to sell or to buy. In trading accounts, we recommended selling Gold futures and buying back in the $300-$310 zone. However, in investing accounts, we bought more after a slight pullback. Why? Why would anyone in their right mind sell gold stocks today? OK I know, not every investors is rational. Still, it seems an equal no brainer to buying oil stocks this spring. Gold stocks should appreciate a minimum of 10-15% next year, and may go as high as 100%. All our portfolios have 5-10% gold weighting through May 2000.
With our gold forecast successful, our AFUND PERFORMANCE is still waiting on Japan correcting and IHI zooming. We continue expect both to occur in due course. Speaking of Japan, there is yet another major contrarian SELL signal. Japanese Housewives are beginning to get hot for Internet stock trading. This is a much stronger sell signal that the 1929 shoe shine boy stock tips or grandmothers and kindergarten investors. If you have ever been to Japan, you know why you should RUN, not walk to the exits.
KEY DATES October 5, November 5
DJIA: 9650 to 10,340
GOLD GOZ S3 285 S2 300 S1 310 P1 $325
P2 $350 P3 $387
2. IS THE PARTY OVER? Should you buy on a 10% or 15% correction? Is AOL going to 200 and not 70? While anything is possible, I do not believe it is the prudent way to bet your life savings!
Do you own many Revlons in your portfolio? How many stocks in your portfolio could drop 50% or more in the next 6 months? If you have a lot of cash and are properly diversified across sectors and countries, you will sleep better at night.
Most important, don't put all your eggs in any one basket, no matter how good. Are you so sure that what comes down MUST come up again in a short period of time. History does not agree with you. I continue to recommend that it is better to be safe than sorry, especially if you are are betting your retirement on it. We will now be updating UP STARS/DOWN STARS on a weekly basis for itchy fingered WSNW investors who can't wait until after November 5 to buy.
3. ``We're a bit worried over U.S. stocks, which look ready to
make correction at any time,''
Hiroshi Arano, director Dai-Ichi Kangyo Asset Management Co Ltd.
HW: Only just a "bit"?
"We believe we have crossed a major turning point -- the fairly strong
underlying gold fundamentals may again be the major influence on the gold
and gold share market since the single most prevalent cause of uncertainty,
central bank selling, is no longer an unknown."
Joe Foster, portfolio manager Van Eck Gold/Resources Fund.
HW: And don't overlook its October horoscope!
"Right now, the U.S. computer industry is looking at the same
problems orange juice makers face when there's a huge frost in Brazil -
a commodity industry hit by shortages and rising costs,"
Mr. Thaler, Deloitte & Touche
HW: Yet ANOTHER reason to dump Hi-Technology shares.
4. Congratulations first with your correct outlook of the overall Stock
Market.
HW: Thank you.
READER: I want to sell my GE stock as I have realized a substantial
profit from it. it has been going down since Monday, when would you
advise I sell?
HW: Sell it NOW; GE is a major short for us.
READER: What a pleasant jump in gold today, biggest one day jump
in 14 yrs. Good call.
HW: Astrologically, we have been waiting for the big big UP arrow for
October to kick it. Sooner or later, the market nearly always catches
up with the astro-fundamentals.
READER: Will you be making a published report for Stox.com like IHI?
Do you still consider the next potential target for Stox.com is around
$7.50?
HW: Yes, we expect to see $7.50 before year end. See our latest
report at STOX, Part II.
READER: Come on! I would hardly call the recent London gold sale
a nonevent when it was so very over-subscribed! :)
HW: OK a bull celebration.
READER: All my investments total 140K, so I mostly hold mutual funds.
At this point, 9/25, I am 65-70% cash as you prescribe - I loathe Saturn
sqrs - and am hoping for the interest rate hike 10/5, so I can begin to
make my move. How can someone like myself with limited resources who mostly
invests in mutual funds make the most out of Afund?
HW: 1) Buy 5% gold stocks.
2) Some bonds funds shortly after an interest rate correction
3) Patiently wait for a further correction and then re-invest
OR
subscribe to MONEY: we accept
a minimum amount of $100,000 in both our Jupiter and Saturn style investing.
READER: Since the S&P 500, NYSE, Dow industrials have made a head
and shoulders, could this correction be a bear market with a 17 to 19 year
cycle duration, before we see highs that have been recently made? From
looking at charts only 1929 and 1966 are the only other times when
the H&S shoulders pattern has been made. Also do you think the May
5, will be the bottom of this current stock down turn?
HW: Don't beleieve a bear markett will last 17 to 19 years, as cycles
are compressed today. Targets historically that would be reached in a month,
are often reached in a day or two given the simultaneous firing of multiple
buy/sell computer programs. Is May 5 the bottom? Could be, but not
exactly my bet. See our 2000 report to be released to WNSW subscribers
next month.
READER: XAU target in the 100-102 area by year end is a distinct possibility.
HW: Minimally the Astrologers Fund target as well!
READER:Are Gold coins a good investment?
HW: This is not my area of expertise, but I do know the transaction
costs are very high.
READER: You had both ABX and HM pegged to hit around their 52H, but
given the suddenness of their moves and everything behind that, are you
revising your forecast more to their 3 year highs now?
HW: GOLD assets will shortly become fairly valued instead of vastly
undervalued. But is there a compelling case to sell or short gold
ahead of the "end of the world" millennium fears? Probably not. [Excluding
possible behind the scene market manipulation to save one over leveraged,
but connected hedge fund manager.]
At XAU 100 OCO end of October, we look around and decide then.
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