FINANCIAL CYCLES WEEKLY UPDATE #0420 – May 16-22, 2004 with TIM BOST

COMMENT: The facts about the systematic, illegal abuse of detainees by U.S. troops and intelligence operatives at the Abu Ghraib prison in Iraq get uglier and uglier as they continue to be revealed. Like it or not, it’s a story that won’t go away, and the dogged persistence of congressional investigators and the news media is making it increasingly clear that eventually we’ll get to the bottom of this mess.
The question is, will we also be able to get to the top?
Seymour Hersh’s article in the current issue of the New Yorker, like his insightful piece in that publication two weeks ago, does much to detail the incompetence, corruption, and mismanagement that have characterized much of the war against Iraq and have helped create the horrors at Abu Ghraib. At the root of the problem is the Bush Administration’s unilateral decision that captured members of Al Qaeda and other terrorist organizations are “illegal combatants” who do not deserve the protection of the Geneva Conventions. Although the mistreatment of detainees may not have been directly ordered by Secretary of Defense Donald Rumsfeld, it was certainly in line with policies and procedures that he had approved.
According to Hersch, it was on January 13 that Joseph Darby, a military policeman at Abu Ghraib, spilled the beans about the abuses in the prison. And, says Hersch, “Within three days, a report made its way to Donald Rumsfeld, who informed President Bush.” But the whole matter was apparently considered so inconsequential that little was done to follow up.
Although Rumsfeld accepted full personal responsibility for the events at the prison when he testified before a congressional committee, Hersch’s latest article in the New Yorker provoked a quick response from Department of Defense. In official DOD News Release No. 458-04, Pentagon spokesman Lawrence Di Rita characterized the article as “outlandish” and “conspiratorial.” He added that “No responsible official of the Department of Defense approved any program that could conceivably have been intended to result in such abuses as witnessed in the recent photos and videos.”
So what’s really going on here? A look at Donald Rumsfeld’s natal horoscope is quite revealing (born 5:40 p.m. CST on July 9, 1932 in Chicago, Illinois). He’s definitely someone who spends most of his energies in a reactive mode, reading situations and then responding to them in ways that will him the greatest advantage. Solar arc directed Saturn is now conjoining his natal Hades/Admetos conjunction, while the current transiting opposition of Hades and Pluto is inexorably moving into alignment with the Ascendant/Descendant axis in his natal chart. Hades first conjoins his natal Descendant in June, and then Pluto and Hades repeat the contact while in exact opposition next January. In other words, the Secretary of Defense has a date with destiny, and the coming months will oblige him to deal with the most reprehensible and unsavory circumstances in a way that will eventually have a profound personal impact upon him.
Nor should we ignore the impact upon the markets. Despite the sensational dynamics of the story, the Abu Ghraib scandal is not about media muckraking. It stains America’s already tarnished reputation in the world at large, it galvanizes the rage of America’s foes while profoundly embarrassing her few remaining allies, and it seriously erodes the trust of the American people in their government and its motives. All these factors not only weaken the nation’s viability in global commerce; they also add to the underlying sense of doubt and uneasiness that can make investing more treacherous and trading more difficult.
As traders, it’s a factor that we have to take into consideration. But it also offers us a chance to discover new depths of personal discipline, spiritual balance, and emotional detachment as we step into the daily stream of opportunities that the market brings us.
Have a great week!

*****


THE WEEK AHEAD

There won’t be too many earnings reports this week, but we will get numbers from Jo-Ann Stores (JAS), Lowe’s Companies (LOW), Spectrum Pharmaceuticals (SPPI), Toys R Us (TOY), Applied Materials (AMAT), Deere & Company (DE), Saks Inc. (SKS), Staples (SPLS), TJX Companies (TJX), Home Deport (HD), Gap (GPS), Foot Locker Inc. (FL), Hewlett-Packard (HPQ), Intuit (INTU), Barnes & Noble (BKS), Dillard’s (DDS), Fred’s (FRED), Hormel Foods (HRL), Navistar International (NAV), Ross Stores (ROST), Sharper Image (SHRP), and Stein Mart (SMRT).
It’s also a fairly light week for economic reports. There will be the Empire State Manufacturing Index, the State Street Investor Confidence report, the Philadelphia Federal Reserve Index, Housing Starts, Initial Jobless Claims, and Leading Indicators. Friday is a double-witching day for options expirations, and the pundits will be paying close attention on Thursday as well, with speeches from both Fed Chairman Alan Greenspan and Fed Governor Benjamin Bernanke, plus congressional testimony from Treasury Secretary John Snow.
As we mentioned last week, this week’s biggest astrological action comes on Monday, with nearly simultaneous retrograde stations by Neptune and Venus. This is a configuration that is likely to bring a trend reversal, but since the market action in U.S. equities has been anything but strongly trending lately it’s a little hard to tell what the net result will be. Our analysis suggests that a move to the downside is the most likely outcome during the next few weeks, but this is certainly not a time to forget caution while making assumptions about market trends.
The heliocentric Mercury/Mars opposition late Tuesday night, coming just before the New Moon, could make for some extra anxiety and a more energetic market environment when Wednesday’s trading gets underway. The Mercury/Poseidon dynamics on Thursday may add some hopeful optimism to the market action, but a strong eclipse contact right at the day’s closing bell makes it advisable to clear out short-term positions before the end of the trading day. Our plan is to stay out the market altogether on Friday, thanks to a void-of-course Moon that lasts throughout the trading day.

*****


GLOBAL EQUITIES MARKETS LAST WEEK

Last week saw U.S. markets basically treading water, with a slight bias to the downside. The European markets took slightly more substantial losses. The big news was in Asia, however, with Hong Kong, Tokyo and Singapore all gapping downward on the weekly charts and absorbing substantial losses in equity value. Hong Kong not only broke below important support levels that have been in place since last fall; it also traded well below its 50-week moving average for the first time in almost a year.

Dow Jones Industrial Average – down 1.03%
Dow Jones Transportation Average – up 0.10%
Dow Jones Utilities Average – down 0.97%
S& P 500 – down 0.27%
NASDAQ Composite Index – down 0.71%
Russell 2000 – down 0.88%
London FTSE-100 – down 1.26%
Paris CAC-40 – down 1.37%
Frankfurt DAX – down 2.38%
Sydney All Ordinaries – down 1.01%
Tokyo Nikkei – down 5.15%
Hong Kong Hang Seng Index – down 5.32%
Singapore Straits Times Index – down 4.81%

*****


FINANCIAL CYCLES MODEL PORTFOLIO


POSITIONS CLOSED DURING THE PREVIOUS WEEK: DRL, HZO, PPP, RHAT.

We closed four Model Portfolio positions during the past week, with four losers producing a net loss of $1,510.00.

On May 10 we sold 300 shares of Doral Financial Corporation (DRL) at 31.25, taking a loss of $450.00 (a 4.58% loss in 2 trading days).

On May 10 we sold 300 shares of Marinemax Inc. (HZO) at 28.30, taking a loss of $210.00 (a 2.41% loss in 2 trading days).

On May 10 we sold 200 shares of Pogo Producing Company (PPP) at 46.90, taking a loss of $170.00 (a 1.78% loss in 2 trading days).

On May 10 we sold 400 shares of Red Hat Inc. (RHAT) at 23.95, taking a loss of $680.00 (a 6.63% loss in 9 trading days).

*****


POSITIONS ADDED TO THE PORTFOLIO DURING THE PREVIOUS WEEK: CDIS, SRCL, MICC, SNCI, VLCCF.

We added five long positions to the Model Portfolio during the previous week.

We bought 400 shares of Cal Dive International (CDIS) at 27.80 on 05/11/04, setting our initial stop at 26.33.

We sold short 200 shares of Stericycle Inc. (SRCL) at 47.50 on 05/11/04, setting our initial buy stop at 49.45.

We bought 500 shares of Millicom International Cellular (MICC) at 20.75 on 05/12/04, setting our initial stop at 19.10.

We sold short 1,000 shares of Sonic Innovations Inc. (SNCI) at 9.30 on 05/12/04, setting our initial buy stop at 10.23.

We bought 500 shares of Knightsbridge Tankers (VLCCF) at 18.69 on 05/14/04, setting our initial stop at 16.29.

*****


YEAR-IN-REVIEW MODEL PORTFOLIO ACTIVITY

Based on the Model Portfolio’s composition at the beginning of 2004, featuring positions with an acquisition cost basis of $53,947.50 ($66,022.50 in long positions less short liabilities of $12,075.00), we reduced our cash holdings in the Model Portfolio to $46,052.50 on January 1. This returned the total portfolio value to $100.000.00 as we began trading in 2004.

So far this year we have had a total of 79 completed trades, with 33 winners and 46 losers bringing us a total net profit of $1,817.50. The largest profit for a single trade has been $1,980.00; the largest single-trade loss has been $750.00; the average profit per trade has been $23.01. The mean duration of our trades has been 8.6 trading days.

During 2003 we had a total of 176 completed trades, with 99 winners and 77 losers bringing us a total net profit of $51,717.00. The largest profit for a single trade was $9,240.00; the largest single-trade loss was $1,170.00; the average profit per trade was $293.85. The mean duration of our trades was 10.1 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.

*****


CURRENT POSITIONS IN THE MODEL PORTFOLIO

Avon Products (AVP) – bought 100 shares at 78.75 on 04/23/04; currently 84.39. Raise stop to 82.20.

Cal Dive International (CDIS) – bought 400 shares at 27.80 on 05/11/04; currently 28.68. Raise stop to 27.45.

Corinthian Colleges Inc. (COCO) – sold short 300 shares at 35.75 on 04/22/04; currently 28.16. Lower buy stop to 29.70.

Knightsbridge Tankers (VLCCF) – bought 500 shares at 18.69 on 05/14/04; currently 18.97. Raise stop to 18.26.

Millicom International Cellular (MICC) – bought 500 shares at 20.75 on 05/12/04; currently 21.45. Raise stop to 20.50.

National Medical Health Card (NMHC) – bought 300 shares at 28.75 on 05/06/04; currently 35.02. Raise stop to 33.75 on a closing basis.

Sonic Innovations Inc. (SNCI) – sold short 1,000 shares at 9.30 on 05/12/04; currently 8.80. Lower buy stop to 9.15.

Stericycle Inc. (SRCL) – sold short 200 shares at 47.50 on 05/11/04; currently 47.09. Lower buy stop to 47.75.

Transact Technologies Inc. (TACT) – bought 500 shares at 19.50 on 04/29/00; currently 28.18. Raise stop to 24.25.

*****


STRONGEST MARKET SECTORS LAST WEEK

Generic Drugs; Medical Practitioners; Oil & Gas Pipelines; Sporting Activities; Mortgage Investment.

*****


WEAKEST MARKET SECTORS LAST WEEK

Memory Chips; Manufactured Housing; Auto Dealerships; Jewelry Stores; Photographic Equipment & Supplies.

*****


KEY ASTROLOGICAL EVENTS DURING THE COMING WEEK

May 16
Neptune at maximum declination 02:40 EDT
Mercury enters Taurus 02:46 EDT
Void-of Course Moon 08:17 – 15:157 EDT
Sun trine Chiron 09:22 EDT
Mars trine Poseidon 09:39 EDT
Sun semisextile Venus 11:59 EDT
Sun sextile Vulcanus in right ascension 13:05 EDT
Mercury sextile Kronos 15:08 EDT
Sun in 24th harmonic to True Lunar Node 16:15 EDT
Mars square Zeus in right ascension 17:11 EDT

May 17
Neptune retrograde station 08:13 EDT
Mercury contraparallel Apollon in right ascension 09:24 EDT
Mercury contraparallel Apollon 09:42 EDT
Mars trine Uranus 13:28 EDT
True Lunar Node retrograde station 14:08 EDT
Mercury sextile Kronos in right ascension 14:59 EDT
Venus retrograde station 18:29 EDT

May 18
Heliocentric Earth sextile Heliocentric Mercury 02:09 EDT
Heliocentric Mars enters Leo 02:55 EDT
Heliocentric Venus parallel Heliocentric Pluto 06:22 EDT
Heliocentric Mercury in 24th harmonic to Heliocentric Neptune 08:51 EDT
Mars in 24th harmonic to Vulcanus 08:54 EDT
Venus semisextile Sun in right ascension 09:12 EDT
Mercury parallel Jupiter in right ascension 12:00 EDT
Mercury parallel Jupiter 12:02 EDT
Heliocentric Venus trine Heliocentric Saturn 12:09 EDT
Mars square Zeus 13:39 EDT
Mars quincunx Cupido in right ascension 14:49 EDT
Mars semisquare Admetos 18:57 EDT
Heliocentric Mercury enters Aquarius 20:11 EDT
Heliocentric Venus parallel Heliocentric Chiron 22:16 EDT
Heliocentric Mercury opposition Heliocentric Mars 23:03 EDT

May 19
New Moon 00:52 EDT
Void-of Course Moon 00:52 – 03:47 EDT
Mars in 24th harmonic to Hades 02:44 EDT
Heliocentric Mercury quincunx Heliocentric Kronos 04:08 EDT
Heliocentric Venus sesquiquadrate Heliocentric Kronos 04:53 EDT
Sun trine Chiron in right ascension 06:44 EDT
Sun semisquare Saturn in right ascension 07:20 EDT
Mars trine Uranus in right ascension 14:22 EDT
Mercury contraparallel Uranus 14:30 EDT
Mercury contraparallel Uranus in right ascension 14:32 EDT
Mars sextile True Lunar Node in right ascension 19:54 EDT

May 20
Heliocentric Mercury semisextile Heliocentric Uranus 00:13 EDT
Mercury opposition Poseidon in right ascension 05:26 EDT
Heliocentric Mercury sesquiquadrate Heliocentric Jupiter 08:35 EDT
Heliocentric Mars semisextile Heliocentric Kronos 10:41 EDT
Sun enters Gemini 12:59 EDT
Heliocentric Earth enters Sagittarius 12:59 EDT
Heliocentric Earth sesquiquadrate Heliocentric Saturn 13:17 EDT
Mercury square 5/16/2003 Lunar Eclipse Antiscion 14:01 EDT
Heliocentric Mercury semisquare Heliocentric Pluto 15:11 EDT
Heliocentric Mercury square Heliocentric Poseidon 17:24 EDT

May 21
Heliocentric Mercury in 24th harmonic to Heliocentric Chiron 01:12 EDT
Mercury opposition Poseidon 02:42 EDT
Sun semisextile Kronos 04:02 EDT
Venus quincunx Chiron 04:40 EDT
Venus in 24th harmonic to Saturn 06:36 EDT
Heliocentric Mercury trine Heliocentric Zeus 07:10 EDT
Heliocentric Mercury sesquiquadrate Heliocentric Hades 07:35 EDT
Venus at minimum acceleration 08:00 EDT
Void-of Course Moon 08:13 – 16:35 EDT
Lunar apogee 08:24 EDT
Heliocentric Mars parallel Heliocentric Vulcanus 09:57 EDT
Mercury sesquiquadrate Pluto 14:59 EDT
Heliocentric Earth quincunx Heliocentric Kronos 15:19 EDT
Heliocentric Venus sextile Heliocentric Jupiter 15:39 EDT
Jupiter square 5/31/2003 Solar Eclipse Point 15:56 EDT
Heliocentric Mercury sextile Heliocentric Cupido 16:00 EDT
Mercury sextile Uranus 18:37 EDT
Mars sextile Jupiter 23:05 EDT

May 22
Mars quincunx Cupido 00:50 EDT
Heliocentric Venus semisextile Heliocentric Pluto 03:48 EDT
Mercury quincunx Zeus 04:25 EDT
Moon at maximum north declination 06:03 EDT
Heliocentric Venus in 24th harmonic to Heliocentric Poseidon 08:18 EDT
Mercury in 24th harmonic to Admetos 08:28 EDT
Mercury sesquiquadrate Pluto in right ascension 12:08 EDT
Mercury semisquare Hades 12:30 EDT
Void-of Course Moon begins 14:58 EDT
Jupiter square Cupido 15:07 EDT
Heliocentric Earth trine Heliocentric Mars 16:40 EDT
Heliocentric Venus parallel Heliocentric Neptune 18:12 EDT
Mercury quincunx Zeus in right ascension 18:28 EDT
Heliocentric Mercury contraparallel Heliocentric Kronos 22:08 EDT
Heliocentric Mercury conjunct Heliocentric Neptune 22:40 EDT

May 23
Void-of Course Moon all day
Jupiter sesquiquadrate Chiron in right ascension 00:51 EDT
Heliocentric Venus sextile Heliocentric Chiron 00:59 EDT
Saturn sextile True Lunar Node 01:38 EDT
Heliocentric Venus opposition Heliocentric Admetos 02:20 EDT
Mercury semisquare Hades in right ascension 02:56 EDT
Heliocentric Venus trine Heliocentric Vulcanus 08:41 EDT
Heliocentric Mercury quincunx Heliocentric Saturn 09:40 EDT
Sun semisextile Kronos in right ascension 09:48 EDT
Heliocentric Venus semisquare Heliocentric Zeus 12:48 EDT
Heliocentric Venus quincunx Heliocentric Hades 13:41 EDT
Heliocentric Mercury sesquiquadrate Heliocentric Kronos 16:07 EDT
Venus in 24th harmonic to Mars 16:24 EDT
Heliocentric Venus semisextile Heliocentric Apollon 17:16 EDT
Mars sextile Jupiter in right ascension 17:42 EDT
Mercury quincunx Cupido in right ascension 17:48 EDT
Mercury quincunx Cupido 19:12 EDT
Mercury trine Jupiter 20:46 EDT
Uranus sextile True Lunar Node in right ascension 20:53 EDT

*****


STOCKS TO WATCH: EWBC, EAGL, LSCP, LIFC, ODFL.

East West Bancorp Inc. (EWBC)
NASDAQ
First Trade Date: 02/08/1999; 09:30 a.m.
Trading Strategy: Saturn is currently crossing the nadir of the EWBC First-Trade horoscope, and we expect the price of this stock to move higher in the weeks ahead. EWBC has just broken out above its 50-day moving average and also responded nicely to the recent Mercury/Venus sextile, so we have used geocentric planetary lines for Mercury and Venus (both set for 60 and a factor of -2) to get a clearer picture of support and resistance. Our plan is to add a long position in EWBC to the Model Portfolio this week, setting our initial stop at 53.05.

E G L Inc. (EAGL)
NASDAQ; Optionable
First Trade Date: 02/07/1997; 09:30 a.m.
Trading Strategy: EAGL has Saturn crossing the First-Trade Descendant, making it another good candidate for a long position. Geocentric planetary lines for Jupiter at 26.25 and the True Lunar Node at 20.58 will help us set our initial stop at a price level of 18.50 when we add a long position this week.

Laserscope (LSCP)
NASDAQ; Optionable
First Trade Date: 11/30/1989; 09:30 a.m.
Trading Strategy: Not only is Saturn conjoining the LSCP First-Trade Descendant, Poseidon is taking part in the action with this stock as well as it sits in tight conjunction to the First-Trade Midheaven. It’s also worth noting that transiting Jupiter is sextile First-Trade Jupiter as well, and that First-Trade Jupiter is about to get energized by transiting Mars. That adds up to a picture which could feature an impressive price run-up, so we’re adding a long position to the Model Portfolio this week. We’ll set our initial stop at 28.75, in tune with geocentric planetary lines for Uranus at 27.39 and Neptune at 28.09.

Lifecell Corporation (LIFC)
NASDAQ
First Trade Date: 02/28/1992; 09:30 a.m.
Trading Strategy: LIFC is getting its first Jupiter Return right now, and as transiting Jupiter activates First-Trade Jupiter, it also energizes the First-Trade Sun. This is pretty positive stuff, but there’s also the influence of transiting Pluto in opposition to First-Trade Kronos, suggesting that a powerful upward move is in store for this stock. It’s Saturn and Cupido, however, that most closely define the technical action for LIFC; we’ve used geocentric planetary lines at a factor of -2 for Saturn at 34.275 and Cupido at 23.35 to help set our initial stop at 9.92 as we put on a long position this week.

Old Dominion Freight Lines (ODFL)
NASDAQ
First Trade Date: 10/24/1991; 09:30 a.m.
Trading Strategy: Transiting Jupiter will be crossing the ODFL First-Trade Midheaven this week just as the stock undergoes a 3-for-2 split. With transiting Poseidon hanging out on top of First-Trade Mars as well, there could be some substantial speculative energy behind this issue. A geocentric planetary line for Jupiter at 15.94 nicely defines support and resistance for this stock; we’ll use it to set an initial stop at 35.05 when we add a long position in ODFL to the Model Portfolio this week.



FINANCIAL CYCLES (ISSN 1055-8527) is published by Taylor-Bost Consulting and edited by Tim Bost at 2831 Ringling Boulevard, Suite B-108, Sarasota, FL 34237 USA. Phone: 941-953-3545. Fax: 941-953-3732. Web: http://www.TimBost.com. Entire contents copyright 2004 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, 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. PayPal is also accepted for online orders; to subscribe go to http://www.TimBost.com/newsletter/subscribe.html.

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.

*****

posted by Tim Bost @ 5/16/2004 10:52:33 AM