FINANCIAL CYCLES WEEKLY UPDATE #0342 – October 19-25, 2003 with TIM BOST

COMMENT: We are moving into a week that requires extreme caution from traders, with three planetary stations, two planetary ingresses and a lunation combining forces to make a major shift in market direction quite likely. It’s a time when trust and confidence are quite vulnerable, and it becomes very difficult to maintain an optimistic attitude. It’s a shift in energies that is likely to impact perceptions of the economy, volatility in the stock market, and the U.S. government as well, with particular emphasis on the Bush administration and President Bush personally.
Not that shaky perceptions of the economy are anything new. Last week the Federal Reserve released its Beige Book on Current Economic Conditions, noting that, “on balance, the pace of economic expansion has picked up since the last report.” The Fed was pleased that “consumer spending generally strengthened” and “most districts report strengthening in manufacturing activity,” but added that there has been “a recent pullback in auto sales” and that “commercial real estate markets are still described as sluggish.” More importantly, the report admitted that despite “pockets of firming,” manufacturing employment “remained generally weak,” and that across the board “labor markets generally slack.”
In other words, there’s much to be optimistic about in the general economic situation, unless we happen to be talking about your job. In some cases, the dire employment outlook is due to manufacturing overcapacity, with factories designed to produce more goods than there is currently a market for. That’s the case with Goodyear Tire and Rubber Company, which has consolidated its operations and is closing down a plant in Huntsville, Alabama that employs 1,100 people. It’s also true of Procter and Gamble, which is getting rid of its weakest-moving brands and selling the plants that manufacture them. But in other cases, companies are simply shutting down altogether, as in the case of Republic Engineered Products, which filed for Chapter 11 bankruptcy protection on October 6 after sending home 2,500 workers at five plants in Ohio, Indiana, and New York. Obviously these locations aren’t among the “pockets of firming” that the Fed has found. The steel industry is in deep trouble—Weirton Steel is cutting one-third of its workforce, Slater Steel is closing two plants and eliminating 1,000 jobs, and Keystone Steel & Wire just shut down its rod mill and steel making operations in Peoria, Illinois, putting about 20% of its workforce on temporary leave.
Steel isn’t the only manufacturing sector that’s losing jobs. Wisconsin’s Weyco Group has just closed its last U.S. shoe factory. Carrier Corporation has cut 1,200 jobs in Syracuse, New York. Boeing has outsourced its parts supply and assembly in order to slash 11,000 jobs in Wichita, Kansas. And Maytag has announced it will close its 50-year-old refrigerator factory in Galesburg, Illinois by the end of 2004. So any sudden revelations in the next couple of weeks that reduce optimism about the economy will really just mean that we’re getting a better look at the Emperor’s New Clothes.
And then there’s the dollar. Sir John Templeton made the news this past week when word got out that he’s very bearish on the dollar, expecting it to lose another 40% of its value. He says that due to increasing strength in the Chinese and Japanese currencies, the U.S. will be obliged to raise interest rate to stem the outgoing tide of foreign investments. That rising trend in interest rates will make home purchases much more difficult, so Templeton concludes that U.S. investors need to be extremely careful about maintaining overextended positions in residential real estate. And with Sir John’s track record on international investing, he’s certainly some one worth listening to.
In Arizona, however, many people who’ve never even heard of Sir John Templeton can already understand the wisdom of his words. Not only are they experiencing the impact of the dollar’s decline when they purchase goods made overseas; they’re also feeling the real estate pinch. The Arizona Republic reported recently that in spite of a very hot housing market, a record number of people in the Phoenix area are losing their homes due to foreclosure. The combined picture of layoffs and higher price tags for consumer goods is making it ever more challenging to keep up with big mortgage payments.
So where does the dollar go from here? Well, if you read the headline in the October 6 issue of the German edition of London’s Financial Times, the one which read “Duisenberg Fears Dollar Crash,” you get a pretty good view of how the head of the European Central Bank is assessing the situation. And in Russia, Mr. Putin says he won’t rule out denominating Russian oil payments in euros instead of dollars. The new peach-colored $20 bills that have been in circulation for a couple of weeks now are said to be more difficult to counterfeit, but we really suspect that the design change is simply an effort to add some entertainment value to the currency, in the hope that the public will somehow believe that’s really worth keeping and using.

CORRECTION

We’re not exempt from errors and miscalculations, either in our publication or in our trading, as our alert reader Max Lenc reminded us this week. She noted that we “had mentioned Compucredit Corporation back in June, and gave the first trade chart date as: April 23, 1999. This past week, you listed it as March 23, 1999. Which one is it?”
Max was quite right about the discrepancy. The April date is the correct one; the March date slipped in when we were putting the letter together in the wee hours of the morning last weekend while attending the ISAR conference in California. At least Max was kind enough not to mention the many other typographical errors that crept in last week as well!


THE WEEK AHEAD

What a week we have ahead of us! With nearly 1,400 earnings reports coming out, there’s no way we will be able to keep track of them. Some of the heavy hitters coming out this week include 3M (MMM), Citigroup (C), Amgen (AMGN), Bank One (ONE), Schlumberger (SLB), J.P. Morgan (JPM) and E.I. Dupont (DD). Fortunately, there’s won’t be much economic news to contend with to add to the confusion—we’ll get the weekly Initial Jobless Claims report and the Conference Board’s Leading Indicators, and that’s about it.
The really big news this week is astrological, with the “hot zone” coming up toward the end of the week. Just look at the line-up involved: on Wednesday, with a Void-of-Course Moon throughout the trading day, we get a Vulcanus retrograde station and a Neptune direct station. On Thursday, the Sun moves into Scorpio. On Friday, Mercury enters Scorpio and Saturn forms an opposition to Chiron, just before Saturday’s Saturn retrograde station and the New Moon. To one degree or another, any one of these events could trigger a change in market direction, and with so many of them happening at once, it’s time to tighten our stops and pay close attention to any positions that we have active. There’s profit to be made here, but it’s not an environment for the faint of heart.
Have a great week!


GLOBAL EQUITIES MARKETS LAST WEEK

Stocks showed added strength last week in Paris, Frankfurt, and Tokyo, but weakened noticeably in almost all of the world’s other equities markets. The biggest loser for the week was the NASDAQ, however, which dipped into negative territory on the heels of a week that had seen some solid gains.

Dow Jones Industrial Average – up 0.49%
Dow Jones Transportation Average – up 0.84%
Dow Jones Utilities Average – down 0.36%
S& P 500 – up 0.12%
NASDAQ Composite Index – down 0.15%
Russell 2000 – up 0.25%
London FTSE-100 – up 0.77%
Paris CAC-40 – up 1.44%
Frankfurt DAX – up 3.07%
Sydney All Ordinaries – up 1.08%
Tokyo Nikkei – up 2.33%
Hong Kong Hang Seng Index – up 0.91%
Singapore Straits Times Index – up 1.50%


FINANCIAL CYCLES MODEL PORTFOLIO


POSITIONS CLOSED DURING THE PREVIOUS WEEK: ABMD, ORLY, SNIC.

We closed three portfolio positions during the previous week, with three losers producing a net loss of $694.00.

On October 15 we bought to cover 1,000 shares of Abiomed Inc. (ABMD) at 9.01, taking a loss of $260.00 (a 2.97% loss in 6 trading days).

On October 17 we sold 200 shares of O’Reilly Automotive Inc. (ORLY) at 38.25, taking a loss of $184.00 (a 2.35% loss in 6 trading days).

On October 17 we sold 500 shares of Sonic Solutions (SNIC) at 17.50, taking a loss of $250.00 (a 2.78% loss in 9 trading days).

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POSITIONS ADDED TO THE PORTFOLIO DURING THE PREVIOUS WEEK: GDYS, LIFC, QLGC.

We sold short 1,000 shares of Goody’s Family Clothing Inc. (GDYS) at 10.30 on 10/14/03, setting our initial buy stop at 11.50.

We sold short 1,000 shares of Lifecell Corporation (LIFC) at 6.94 on 10/14/03, setting our initial buy stop at 7.41.

We bought 200 shares of Qlogic Corporation (QLGC) at 51.15 on 10/14/03, setting our initial stop at 46.56.

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YEAR-IN-REVIEW MODEL PORTFOLIO ACTIVITY

Since the beginning of the year we have had a total of 134 completed trades, with 77 winners and 57 losers bringing us a total net profit of $43,726.00. The largest profit for a single trade has been $9,240.00; the largest single-trade loss has been $900.00; the average profit per trade has been $326.31. The mean duration of our trades has been 10.7 trading days.

During 2002 we had a total of 195 completed trades, with 119 winners, 74 losers, and 2 break-even trades bringing us a total net profit of $50,956.00. The largest profit for a single trade was $5,100.00; the largest single-trade loss was $1,055.00; the average profit per trade was $261.31. The mean duration of our trades was 12.7 trading days.

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CURRENT POSITIONS IN THE MODEL PORTFOLIO

Goody’s Family Clothing Inc. (GDYS) – sold short 1,000 shares at 10.30 on 10/14/03; currently 10.02. Lower buy stop to 10.50.

Lifecell Corporation (LIFC) – sold short 1,000 shares at 6.94 on 10/14/03; currently 6.42. Lower buy stop to 7.00.

N I C Inc. (EGOV) – bought 1,000 shares at 4.79 on 10/02/03; currently 5.22. Raise stop to 4.99.

Qlogic Corporation (QLGC) – bought 200 shares at 51.15 on 10/14/03; currently 52.70. Raise stop to 50.60.

Roslyn Bancorp (RSLN) – bought 500 shares at 23.50 on 09/30/03; currently 24.43. Raise stop to 24.18.

United PanAm Financial Corporation (UPFC) – sold short 500 shares at 19.25 on 10/06/03; currently 17.01. Lower buy stop to 18.51.

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STRONGEST MARKET SECTORS LAST WEEK

Gaming Activities; Medical Appliances & Equipment; Basic Wholesale Materials; Semiconductor Memory Chips; Apparel, Footwear & Accessories.

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WEAKEST MARKET SECTORS LAST WEEK

Education & Training Services; Auto Dealerships; Oil & Gas Drilling & Exploration; Consumer Services; Biotechnology.

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KEY ASTROLOGICAL EVENTS THIS WEEK

October 19
Heliocentric Venus in 24th harmonic to Pluto 00:42 EDT
Heliocentric Mars opposition Zeus 03:01 EDT
Mercury quincunx North Lunar Node 08:09 EDT
Heliocentric Mercury trine Neptune 13:20 EDT
Mercury semisquare Cupido in right ascension 14:06 EDT
Sun semisquare Jupiter 14:42 EDT
Mercury quincunx Admetos 17:40 EDT
Mercury semisquare Cupido 20:07 EDT
Mercury conjunct Apollon in right ascension 20:22 EDT

October 20
Jupiter quincunx Neptune in right ascension 00:09 EDT
Mercury sesquiquadrate Mars in right ascension 00:52 EDT
Mercury in 24th harmonic to Zeus 00:59 EDT
Venus sextile Chiron 02:43 EDT
Mercury conjunct Apollon 03:01 EDT
Heliocentric Mercury contraparallel Mars 04:28 EDT
Mercury square Vulcanus 05:26 EDT
Venus trine Saturn 05:48 EDT
Mercury trine Hades 09:06 EDT
Heliocentric Venus parallel Cupido 05:34 EDT
Sun square Vulcanus in right ascension 13:01 EDT
Heliocentric Mars trine Cupido 13:18 EDT
Mercury contraparallel Jupiter 16:07 EDT
Heliocentric Venus quincunx Saturn 16:35 EDT
Heliocentric Mercury parallel Zeus 16:44 EDT
Heliocentric Mercury sesquiquadrate Uranus 17:34 EDT
Mercury trine Hades in right ascension 21:12 EDT
Heliocentric Venus sesquiquadrate Vulcanus 21:12 EDT

October 21
Void-of-Course Moon 00:18 – 02:01 EDT
Heliocentric Mercury square Chiron 01:19 EDT
Heliocentric Venus semisquare Apollon 05:05 EDT
Heliocentric Mercury semisquare Jupiter 08:09 EDT
Heliocentric Venus conjunct Cupido 12:22 EDT
Heliocentric Mercury sextile Pluto 14:02 EDT
Mercury parallel Apollon 15:18 EDT
Venus parallel Chiron 17:23 EDT
Venus square Neptune in right ascension 21:16 EDT
Heliocentric Mercury in 24th harmonic to Poseidon 23:29 EDT

October 22
Heliocentric Venus trine Mars 02:56 EDT
Mercury semisquare Jupiter 04:15 EDT
Venus sextile Jupiter in right ascension 04:31 EDT
Mercury square Vulcanus in right ascension 05:39 EDT
Heliocentric Mercury quincunx Admetos 07:29 EDT
Void-of-Course Moon begins 09:19 EDT
Heliocentric Mercury square Vulcanus 10:37 EDT
Heliocentric Mercury trine Hades 11:02 EDT
Heliocentric Mercury in 24th harmonic to Zeus 11:28 EDT
Venus sextile Chiron in right ascension 12:03 EDT
Heliocentric Mercury conjunct Apollon 14:20 EDT
Heliocentric Venus contraparallel Vulcanus 15:40 EDT
Sun trine Uranus 16:18 EDT
Heliocentric Earth parallel Jupiter 16:34 EDT
Heliocentric Mercury semisquare Cupido 17:48 EDT
Mars quincunx Zeus in right ascension 19:43 EDT
Venus sesquiquadrate Kronos 19:52 EDT
Vulcanus retrograde station 19:53 EDT
Neptune direct station 21:54 EDT

October 23
Venus trine Saturn in right ascension 01:27 EDT
Void-of-Course Moon ends 05:27 EDT
Mars parallel Uranus 13:06 EDT
Heliocentric Mars contraparallel Zeus 14:05 EDT
Sun enters Scorpio 16:08 EDT
Mercury trine Uranus 16:57 EDT
Heliocentric Mercury semisquare Venus 20:45 EDT
Heliocentric Venus sextile Neptune 23:04 EDT

October 24
Heliocentric Earth contraparallel Uranus 04:20 EDT
Mercury enters Scorpio 07:20 EDT
Saturn opposition Chiron 07:45 EDT
Heliocentric Earth sextile Kronos 07:49 EDT
Sun semisquare Jupiter in right ascension 09:16 EDT
Heliocentric Mercury parallel Apollon 10:13 EDT
Mercury semisquare Jupiter in right ascension 14:25 EDT
Heliocentric Venus contraparallel Hades 15:31 EDT
Heliocentric Mercury enters Scorpio 18:03 EDT
Venus sesquiquadrate Kronos in right ascension 21:09 EDT
Sun conjunct Mercury in right ascension 21:12 EDT
Heliocentric Mercury trine Kronos 22:57 EDT

October 25
Sun trine Kronos 02:14 EDT
Mercury trine Kronos 03:44 EDT
Heliocentric Earth sextile Uranus 04:17 EDT
Void-of-Course Moon 04:30 – 06:08 EDT
Heliocentric Mercury trine Uranus 05:18 EDT
Heliocentric Earth opposition Mercury 05:46 EDT
Sun conjunct Mercury 05:59 EDT
Jupiter square 12/04/2002 Solar Eclipse Point 06:01 EDT
Mars trine Chiron in right ascension 08:26 EDT
New Moon 08:50 EDT
Venus parallel Neptune 13:31 EDT
Sun parallel Mars 16:12 EDT
Saturn retrograde station 19:43 EDT
Heliocentric Venus contraparallel Saturn 20:31 EDT
Heliocentric Mercury contraparallel Jupiter 21:27 EDT
Venus semisextile Pluto in right ascension 22:50 EDT
Heliocentric Mercury sextile Jupiter 23:51 EDT

October 26
Eastern Daylight Savings Time ends 02:00 EDT
Heliocentric Mercury semisquare Pluto 02:49 EST
Mercury semisquare Pluto 03:27 EST
Mercury parallel Mars 03:33 EST
Lunar Perigee 04:29 EST
Venus in 24th harmonic to Poseidon 05:16 EST
Heliocentric Mercury parallel Uranus 06:42 EST
Mercury trine Uranus in right ascension 07:58 EST
Mercury trine Kronos in right ascension 10:31 EST
Heliocentric Mercury conjunct Poseidon 12:59 EST
Venus opposition North Lunar Node 15:01 EST
Venus contraparallel North Lunar Node 15:18 EST
Sun parallel Uranus 18:40 EST
Sun semisquare Pluto 18:44 EST
Heliocentric Mars sextile Neptune 20:30 EST
Mercury parallel Uranus 21:09 EST

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STOCKS TO WATCH: CCBI, QLTI, ROSS.

Commercial Capital Bancorp (CCBI)
First Trade Date: 12/19/2002; 09:30 a.m.
Trading Strategy: Although we are typically hesitant to jump into stocks with less than a year of trading, CCBI is interesting because of transiting Neptune’s current sesquiquadrate to the extremely tight Moon/Saturn conjunction in the First-Trade chart, bringing a brief pause to this stock’s price advance. With Neptune slowing down to make its direct station this week, we can look for its impact to stay in place for at least another two to three weeks. This stock’s price movement has been bounded by a geocentric Saturn line at 8.55 and a geocentric Admetos line at 5.1, with extra energy points provided by a Moon line at 852.5. As CCBI moves out of Neptune’s domination in late October or early November, there’s a strong possibility of additional price acceleration, especially if it breaks through the as yet untested Saturn/Admetos resistance at 18.01. Our plan is thus to add a long position in CCBI to the Model Portfolio this week, setting our initial stop at 16.32.

QLT Inc. (QLTI)
First Trade Date: 10/25/1988; 09:30 a.m.
Trading Strategy: QLT is scheduled to report earnings on October 23, with Jupiter conjunct its First-Trade Midheaven. While that’s essentially a good-news situation, prices often do better before this kind of report than they do after the facts are known, and Jupiter won’t hang around the Midheaven for long. QLTI has been getting support lately from a True North Node line, set at 34.3 to correspond with the First-Trade position. If this stock closes below the current level of that line at 15.33 or lower, we will sell QLTI short, setting our initial buy stop at 16.84.

Ross Systems, Inc. (ROSS)
First Trade Date: 04/26/1991; 9:30 a.m.
Trading Strategy: Here’s another case of Jupiter passing over a First-Trade angle, with the added kicker of transiting Saturn conjoining First-Trade Mars. That suggests that current good news may not pan out as expected. In early September, when ROSS announced plans for a merger with CDC Software Holdings, Inc., a wholly-owned subsidiary of Chinadotcom Corporation, the stock gapped up. That deal is still pending stockholder approval, however, and with transiting Chiron getting ready to conjoin the ROSS First-Trade Uranus and Neptune, we’re not so sure that everything will go forward without a hitch. Things could get interesting as early as this week, when Saturn’s retrograde station will bring it within a degree of exact simultaneous aspects to First-Trade Admetos, Vulcanus, and Apollon. These three Transneptunians are currently defining support and resistance for ROSS, so we could have a situation in which a significant shift is at hand. Our strategy will be to take a limited position and sell ROSS short this week, setting our initial buy stop at 18.68.



FINANCIAL CYCLES (ISSN 1055-8527) is published by Taylor-Bost Consulting and edited by Tim Bost at Post Office Box 1657, Sarasota, FL 34230-1657 USA. Phone: 941-953-3545. Fax: 941-953-3732. Email: timbost@pipeline.com. Entire contents copyright 2003 Timothy L. Bost. No portion of this Weekly Email Update or its printed version may be reproduced without the publisher's written permission. Subscriptions to FINANCIAL CYCLES are $39.00 per month for weekly updates by email or fax, payable by monthly billing to a major credit card. Advance payment options (by credit card, check, or money order) are $228 for 6 months, $432 for 1 year or $815 for two years. All subscriptions are payable in US funds only— Visa, MasterCard, American Express, Diners Club, and Discover/Novus accepted; please make checks or money orders payable to Taylor-Bost.

By providing a source of independent market analysis, the purpose of FINANCIAL CYCLES is to foster the growth of person-centered business and investment astrology; to enhance the development and dissemination of financial literacy and prosperity consciousness; and to explore the use of technical analysis and financial astrology in promoting an esoteric spiritual understanding of economic trends, geocosmic cycles, geopolitical events, and market movements. FINANCIAL CYCLES is a general interest publication which is prepared from astrological information, news reports, cycle projections, and market observations which are believed to be accurate and reliable, but which cannot be guaranteed. Portfolio and trading reports in this publication do not include taxes and transaction fees, which should be taken into consideration by prospective traders and investors. Even with accurate information, past performance is no guarantee of future results. Speculation in securities and commodities involves considerable financial risk, and readers who plan to invest or speculate in securities or commodities mentioned in FINANCIAL CYCLES have the complete responsibility for making themselves fully aware of all the risks involved before they invest. The editor may or may not have positions in the securities and commodities discussed in this newsletter, and the information in FINANCIAL CYCLES should in no way be understood or construed as a solicitation or an offer to buy or sell any products or securities, nor should the material published in this newsletter be considered buy/sell advice.

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posted by Tim Bost @ 10/19/2003 08:44:08 PM