FINANCIAL CYCLES WEEKLY UPDATE #0425 – June 20-26, 2004 with TIM BOST

COMMENT: With the May Consumer Price Index showing its biggest increase since President Bush took office, and with the Producer Price Index also much higher than most economic pundits had anticipated, it’s becoming increasingly clear that inflationary forces are a good bit stronger than government economists have thus far been willing to admit.
The biggest contributors to rising prices are a weakening dollar, skyrocketing health care and insurance costs, and the rising demand for key commodities. Because other central banks around the world seem more and more willing to boost their interest rates while here in the U.S. Mr. Greenspan resolutely sits on his hands, we’ll almost certainly see the dollar continue its slide as global capital seeks the best available returns. With elections on the horizon, short-term political concerns seem likely to keep U.S. rates low for at least a few more months, no matter how potentially devastating the long-term consequences of Greenspan’s inaction may be.
Health care costs, including the price of insurance for providers and insurance for consumers, show no signs of leveling off. In fact, health care now accounts for 15 percent of the economic spending in the U.S., but for some reason it only represents 6 percent of the Consumer Price Index, thanks to government efforts to make inflation look a lot tamer than it actually is.
And then there’s the fact that more and more stuff just costs more than it used to, thanks to a bigger and bigger need for stuff. China’s runaway expansion has gotten a good bit of attention recently as a key culprit in the demand for all sorts of raw materials. The sleeping giant has awakened, and he’s mighty hungry! But while an increasing demand can certainly raise the cost of supply, it doesn’t necessarily create shortages. In fact, even when there’s an adequate supply on hand, prices can still go up, especially if they get a little bit of help from active manipulation behind the scenes.
Take oil for example. Even though credible industry analysis shows that there’s enough petroleum on hand to meet current needs comfortably, the fear that oil supplies could be vulnerable to war or terrorism is all it takes to create some price instability. Add a little bit of active rumor-mongering and you have all that’s needed to manipulate prices even more.
And so, after seeing gasoline prices top $2.10 a gallon, we go to the pumps to fill up our SUVs and are suddenly delighted to be paying the low, low price of just $1.95. It doesn’t matter that this is still a huge increase over the price we were paying just a few short months ago. Our attention span is so limited that we can only see the contrast with last week’s price.
Perhaps a trip to Iraq might be what we need to wake us up. If we pull up to the pump there we can expect to pay exactly 5 cents a gallon for gasoline. The low-priced petrol is kept at that price thanks to the generosity of U.S. taxpayers, who currently contribute approximately $1.50 a gallon to subsidize the cost of buying gasoline in neighboring countries and then shipping it to Iraqi gas stations. It’s something to keep in mind the next time we fill up here at home.
And what does all this mean for us as traders and investors? With inflation gathering strength, and with government agencies and the Federal Reserve determined to keep the economic picture looking rosy, we can reasonably expect bullish sentiment to dominate Wall Street for most of the summer. While the atmosphere may not be totally euphoric, is should be enough to give us some short-range opportunities for profit. And, as the move towards market optimism gets stronger and more widespread, it may also give us an opportunity to cultivate some contrarian common sense. After all, the bigger this bubble gets, the louder the bang it will make when it bursts.
Have a great week!

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THE WEEK AHEAD

The week should bring earnings reports from Walgreen (WAG), Goldman Sachs Group (GS), Darden Restaurants (DRI), Morgan Stanley (MWD), Bed, Bath & Beyond (BBBY), FedEx Corporation (FDX), Kerr McGee (KMG), Worthington Industries (WOR), Micron Technology (MU), Nike (NKE), Family Dollar Stores (FDO), Tektronix (TEK), Apollo Group (APOL), and Paychex (PAYX).
On the economic front, we’ll be looking at numbers for May Durable Goods, May New Home Sales, May Existing Home Sales, Q1 GDP, and the June Consumer Sentiment report from the University of Michigan.
The week’s astrological picture begins with a powerful station by the transneptunian hypothetical planet Zeus, just hours before the Summer Solstice. That should be enough to put some extra energy into the market action, especially in Asia and Europe, where trading will get underway closer to the planetary phenomena. On Monday we get a solar eclipse trigger and a heliocentric Mercury/Saturn opposition, so disappointing news may break near the end of the trading day in the U.S. A void-of-course Moon throughout the trading day on Tuesday will keep us away from the market action, but the heliocentric Mercury/Chiron opposition a couple of hours after the closing bell should help to move the markets into a more positive frame of mind. Mars forms a heliocentric semisextile to Saturn on Wednesday and then moves into Leo geocentrically; both of these actions are typically followed by a rising stock market. On Thursday we’ll move away from trading activities after lunch so the void-of-course Moon can impact the markets without us. As Friday’s trading draws to a close, we expect the Mercury/Jupiter sextile to pump in some positive energy to finish up the trading week on an upbeat note.

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GLOBAL EQUITIES MARKETS LAST WEEK

In spite of some mildly positive numbers, it was a sluggish week for U.S. stocks overall. Results in Europe were mixed, while Asian issues turned down decisively. This could be the kind of buying opportunity that some investors have been watching for, however, so we’ll need to keep a close watch on Japan, Hong Kong, and Singapore as the new week starts.

Dow Jones Industrial Average – up 0.06%
Dow Jones Transportation Average – up 1.45%
Dow Jones Utilities Average – up 1.53%
S& P 500 – down 0.13%
NASDAQ Composite Index – down 0.66%
Russell 2000 – up 0.25%
London FTSE-100 – up 0.44%
Paris CAC-40 – up 0.80%
Frankfurt DAX – down 0.54%
Sydney All Ordinaries – up 1.56%
Tokyo Nikkei – down 1.67%
Hong Kong Hang Seng Index – down 4.57%
Singapore Straits Times Index – down 2.03%

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FINANCIAL CYCLES MODEL PORTFOLIO


POSITIONS CLOSED DURING THE PREVIOUS WEEK: AVP, EAGL, ODFL, WITS.

We closed four Model Portfolio positions during the past week, with four winners producing a net profit of $3,183.00.

On June 14 we sold 200 shares of Avon Products (AVP) at 44.35 taking a profit of $995.00 (a 12.63% gain in 34 trading days).

On June 14 we sold 500 shares of E G L Inc. (EAGL) at 23.00, taking a profit of $1,475.00 (a 14.71% gain in 18 trading days).

On June 14 we sold 300 shares of Old Dominion Freight Lines (ODFL) at 26.78, taking a profit of $633.00 (an 8.55% gain in 18 trading days).

On June 16 we sold 800 shares of Witness Systems Inc. (WITS) at 12.85, taking a profit of $80.00 (a 0.78% gain in 9 trading days).

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POSITIONS ADDED TO THE PORTFOLIO DURING THE PREVIOUS WEEK: CGNX, DAKT, MATW, TRMB.

We added three long positions and one short position to the Model Portfolio during the previous week.

We bought 400 shares of Cognex Corporation (CGNX) at 33.00 on 06/14/04, setting our initial stop at 32.66.

We bought 400 shares of Daktronics Inc. (DAKT) at 23.50 on 06/17/04, setting our initial stop at 22.98.

We sold short 300 shares of Matthews International Corporation (MATW) at 32.25 on 06/17/04, setting our initial buy stop at 33.25.

We bought 400 shares of Trimble Navigation Ltd. (TRMB) at 26.84 on 06/18/04, setting our initial stop at 25.54.

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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 96 completed trades, with 45 winners and 51 losers bringing us a total net profit of $14,161.50. The largest profit for a single trade has been $5,250.00; the largest single-trade loss has been $750.00; the average profit per trade has been $147.52. The mean duration of our trades has been 9.5 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.

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CURRENT POSITIONS IN THE MODEL PORTFOLIO

Advanta Corporation Class B (ADVNB) – bought 600 shares at 16.85 on 06/09/04; currently 18.57. Raise stop to 17.05.

Cognex Corporation (CGNX) – bought 400 shares at 33.00 on 06/14/04; currently 36.14. Raise stop to 34.15.

Daktronics Inc. (DAKT) – bought 400 shares at 23.50 on 06/17/04; currently 23.07. Stop set at 22.98.

Knight Transportation (KNGT) – sold short 300 shares at 27.50 on 06/10/04; currently 27.59. Lower buy stop to 28.37.

Knightsbridge Tankers (VLCCF) – bought 500 shares at 18.69 on 05/14/04; currently 24.69. Raise stop to 23.72.

Matthews International Corporation (MATW) – sold short 300 shares at 32.25 on 06/17/04; currently 32.44. Lower buy stop to 33.00.

Maxim Integrated Products (MXIM) – bought 200 shares at 49.25 on 06/02/04; currently 49.30. Raise stop to 48.20.

Trimble Navigation Ltd. (TRMB) – bought 400 shares at 26.84 on 06/18/04; currently 27.00. Raise stop to 25.98.

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STRONGEST MARKET SECTORS LAST WEEK

Metal Fabrication; Copper; Oil & Gas Drilling & Exploration; Recreational Vehicles; Industrial Metals & Minerals.

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WEAKEST MARKET SECTORS LAST WEEK

Drug Related Products; Education & Training Services; Memory Chips; Specialized Semiconductors; Sporting Goods.

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KEY ASTROLOGICAL EVENTS DURING THE COMING WEEK

June 20
Heliocentric Mercury trine Heliocentric Poseidon 00:29 EDT
Heliocentric Mercury opposition Heliocentric Venus 03:08 EDT
Mercury conjunct Kronos in right ascension 03:37 EDT
Mercury conjunct Kronos 03:40 EDT
Venus sesquiquadrate Chiron in right ascension 05:07 EDT
Heliocentric Mercury semisquare Heliocentric Admetos 05:08 EDT
Heliocentric Mercury in 24th harmonic to Heliocentric Vulcanus 06:45 EDT
Void-of-Course Moon 06:46 – 11:05 EDT
Heliocentric Mercury square Heliocentric Zeus 07:53 EDT
Sun in 24th harmonic to Saturn 08:02 EDT
Heliocentric Mercury in 24th harmonic to Heliocentric Hades 08:10 EDT
Heliocentric Venus sesquiquadrate Heliocentric Admetos 11:01 EDT
Heliocentric Mercury quincunx Heliocentric Cupido 12:48 EDT
Zeus direct station 15:37 EDT
Mercury sesquiquadrate Neptune in right ascension 17:28 EDT
Heliocentric Venus in 24th harmonic to Heliocentric Chiron 17:58 EDT
Sun enters Cancer; Summer Solstice 20:56 EDT
Heliocentric Earth enters Capricorn 20:56 EDT
True Lunar Node semisquare Hades in right ascension 21:34 EDT
Heliocentric Venus square Heliocentric Zeus 21:50 EDT
Sun sesquiquadrate Neptune 23:05 EDT

June 21
Mercury trine Poseidon in right ascension 00:14 EDT
Heliocentric Earth sesquiquadrate Heliocentric Mars 02:19 EDT
Heliocentric Mercury quincunx Heliocentric Neptune 05:58 EDT
Heliocentric Mercury semisextile Heliocentric Mars 12:33 EDT
Heliocentric Jupiter trine Heliocentric Admetos 13:39 EDT
Heliocentric Mercury in 24th harmonic to Heliocentric Kronos 15:23 EDT
Heliocentric Mercury conjunct Heliocentric Saturn 15:45 EDT
Heliocentric Venus semisextile Heliocentric Cupido 17:14 EDT
Mars opposition 11/23/2003 Solar Eclipse Antiscion 17:51 EDT
Mars semisextile Kronos in right ascension 19:35 EDT
Mercury semisquare Admetos in right ascension 21:50 EDT
Mars parallel Vulcanus 23:28 EDT

June 22
Hong Kong markets closed
Sun parallel Kronos in right ascension 00:39 EDT
Sun conjunct Kronos 00:53 EDT
Heliocentric Earth opposition Heliocentric Kronos 01:02 EDT
Sun conjunct Kronos in right ascension 01:02 EDT
Mars parallel Vulcanus in right ascension 01:42 EDT
Heliocentric Mercury sesquiquadrate Heliocentric Uranus 03:10 EDT
Void-of-Course Moon 03:54 – 22:10 EDT
Mercury trine Poseidon 04:54 EDT
Mercury square Zeus in right ascension 08:41 EDT
Sun semisextile Mars in right ascension 10:20 EDT
Heliocentric Mercury quincunx Heliocentric Pluto 10:35 EDT
Mercury at maximum declination 10:50 EDT
Heliocentric Mercury sextile Heliocentric Admetos 16:01 EDT
Mercury quincunx Cupido in right ascension 16:02 EDT
Heliocentric Mercury sextile Heliocentric Jupiter 16:21 EDT
Mercury sextile True Lunar Node in right ascension 17:26 EDT
Heliocentric Mercury conjunct Heliocentric Vulcanus 17:43 EDT
Heliocentric Mercury opposition Heliocentric Chiron 18:01 EDT
Mercury trine Uranus 18:11 EDT
Heliocentric Mercury semisextile Heliocentric Hades 19:12 EDT
Heliocentric Mercury square Heliocentric Apollon 20:02 EDT
Pluto quincunx Admetos in right ascension 21:27 EDT
Mercury square Zeus 21:47 EDT

June 23
Heliocentric Mercury sesquiquadrate Heliocentric Cupido 00:04 EDT
Mercury in 24th harmonic to Vulcanus 02:27 EDT
Heliocentric Mars semisquare Heliocentric Kronos 03:26 EDT
Mercury semisquare Admetos 06:20 EDT
Sun sesquiquadrate Neptune in right ascension 07:16 EDT
Mercury trine Uranus in right ascension 07:47 EDT
Mars square 4/19/2004 Solar Eclipse Point 09:51 EDT
Mercury in 24th harmonic to Hades 11:36 EDT
Heliocentric Mars semisextile Heliocentric Saturn 12:01 EDT
Mars in 24th harmonic to Saturn 12:49 EDT
Mercury semisextile Venus in right ascension 13:07 EDT
Venus semisquare Vulcanus in right ascension 13:37 EDT
Mercury quincunx Cupido 16:43 EDT
Mars enters Leo 16:50 EDT
Heliocentric Mercury enters Leo 23:15 EDT
Sun trine Poseidon in right ascension 23:35 EDT

June 24
Mercury sextile True Lunar Node 02:52 EDT
Heliocentric Mercury semisextile Heliocentric Kronos 03:52 EDT
Heliocentric Mercury in 24th harmonic to Heliocentric Saturn 04:37 EDT
Heliocentric Mercury in 24th harmonic to Heliocentric Mars 05:52 EDT
Mercury semisextile Venus 09:13 EDT
Heliocentric Venus semisextile Heliocentric Neptune 12:21 EDT
Saturn quincunx Neptune 12:40 EDT
Void-of-Course Moon begins 13:19 EDT
Heliocentric Earth quincunx Heliocentric Mercury 13:53 EDT
Heliocentric Mercury quincunx Heliocentric Uranus 16:21 EDT
Mars square Poseidon in right ascension 20:50 EDT

June 25
Heliocentric Mercury sesquiquadrate Heliocentric Pluto 00:14 EDT
Heliocentric Mercury square Heliocentric Poseidon 00:48 EDT
Venus parallel Admetos 02:00 EDT
Venus parallel Admetos in right ascension 03:21 EDT
Heliocentric Earth sextile Heliocentric Uranus 04:46 EDT
Void-of-Course Moon ends 06:50 EDT
Heliocentric Mercury semisquare Heliocentric Jupiter 07:05 EDT
Heliocentric Mercury in 24th harmonic to Heliocentric Vulcanus 07:41 EDT
Heliocentric Mercury sextile Heliocentric Zeus 08:56 EDT
Heliocentric Mercury semisquare Heliocentric Hades 09:16 EDT
Mercury sextile Jupiter 12:48 EDT
Mars semisextile Kronos 13:24 EDT
Heliocentric Mercury trine Heliocentric Cupido 14:26 EDT
True Lunar Node direct station 16:14 EDT
Moon at 0° declination 18:41 EDT
Mercury sextile Jupiter in right ascension 18:46 EDT
Heliocentric Mercury contraparallel Heliocentric Venus 21:24 EDT
Pluto semisquare Poseidon 22:38 EDT
True Lunar Node quincunx Cupido in right ascension 23:08 EDT

June 26
Sun semisquare Admetos in right ascension 02:54 EDT
Heliocentric Venus opposition Heliocentric Saturn 04:28 EDT
Heliocentric Mercury parallel Heliocentric Kronos 08:20 EDT
Heliocentric Mercury opposition Heliocentric Neptune 09:38 EDT
Heliocentric Earth contraparallel Heliocentric Mercury 10:10 EDT
Sun trine Poseidon 15:48 EDT
Mercury quincunx Neptune 16:11 EDT
Mercury conjunct Saturn in right ascension 17:09 EDT
Void-of-Course Moon begins 19:41 EDT
Mercury conjunct Saturn 20:09 EDT
Heliocentric Mercury semisquare Heliocentric Kronos 20:13 EDT
Venus square Uranus in right ascension 20:51 EDT
Heliocentric Mercury semisextile Heliocentric Saturn 21:27 EDT

June 27
Heliocentric Mercury parallel Heliocentric Hades 02:07 EDT
Saturn parallel Hades 02:21 EDT
Mercury quincunx Neptune in right ascension 02:38 EDT
Sun square Zeus in right ascension 02:46 EDT
Heliocentric Venus quincunx Heliocentric Mars 03:20 EDT
Heliocentric Earth in 24th harmonic to Heliocentric Pluto 03:51 EDT
Heliocentric Mercury parallel Heliocentric Saturn 03:54 EDT
Heliocentric Mercury conjunct Heliocentric Mars 04:09 EDT
Heliocentric Mercury quincunx Heliocentric Venus 04:23 EDT
Heliocentric Jupiter sextile Heliocentric Vulcanus 04:39 EDT
Mercury in 24th harmonic to Kronos 06:29 EDT
Heliocentric Earth sextile Heliocentric Poseidon 06:56 EDT
Apollon square Vulcanus 10:12 EDT
Void-of-Course Moon ends 12:13 EDT
Heliocentric Mercury parallel Heliocentric Vulcanus 12:22 EDT
Mars contraparallel Cupido 15:13 EDT
Sun quincunx Cupido in right ascension 17:16 EDT
Mars contraparallel Cupido in right ascension 17:22 EDT
Heliocentric Mercury trine Heliocentric Pluto 18:13 EDT
Sun sextile True Lunar Node in right ascension 20:01 EDT
Heliocentric Mercury contraparallel Heliocentric Cupido 20:40 EDT
Sun trine Uranus 20:54 EDT
Heliocentric Earth sesquiquadrate Heliocentric Mercury 21:25 EDT
Heliocentric Venus semisquare Heliocentric Uranus 22:40 EDT
Mars sesquiquadrate Pluto in right ascension 23:51 EDT

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STOCKS TO WATCH: ATRX, EASI, HELE, UFCS.

Atrix Laboratories Inc. (ATRX)
NASDAQ; Optionable
First Trade Date: 05/08/1990; 09:30 a.m.
Trading Strategy: This stock has had transiting Saturn conjoining not only its First-Trade Ascendant, but its First-Trade Vulcanus as well, with transiting Chiron conjoining First-Trade Saturn for an extra kicker. As the transiting True Lunar Node has conjoined its First-Trade Mercury, the price action has exploded, sending ATRX gapping up decisively. Its price action is being bounded by planetary lines for Chiron (G,10.26,N,0) and Zeus (G,17.59,N,0); if we get a daily close above the Zeus line at a price of 32.78 or higher, we will add a long position in ATRX to the Model Portfolio. We will set our initial stop at 31.01.

Engineered Support Systems (EASI)
NASDAQ; Optionable
First Trade Date: 08/21/1985; 10:000 a.m.
Trading Strategy: Saturn has been sitting on the First-Trade Midheaven of this stock, and now the way is clear for a significant price move upward. It won’t be long until Mars conjoins First-Trade Jupiter, which should give the picture a little extra energy. In recent trading EASI broke through two increments of an Apollon line (G,19.1,N,0) in an extremely positive move. We’re ready to add an immediate long position to the Model Portfolio; we’ll be setting our initial stop at 50.83.

Helen of Troy Ltd. (HELE)
NASDAQ; Optionable
First Trade Date: 07/06/1976; 10:00 a.m.
Trading Strategy: Venus is conjoining the HELE First-Trade Kronos and this stock is also experiencing a transiting reversal of the Lunar Nodes. Transiting Saturn conjoining the First-Trade Sun has been keeping it from moving ahead too rapidly, but as Saturn gets out of the way and Uranus takes over in its transit the First-Trade Descendant, we should see a stronger price advance. A True Lunar Node planetary line (G,22.05,N,0) is significant for the trading action here; once we get one more daily close for HELE above the increment of that line at a price of 34.95 or higher, we will enter a long position for the Model Portfolio. Our initial stop will be set at a lower increment of the same line, at 32.74.

United Fire and Casualty (UFCS)
NASDAQ
First Trade Date: 07/07/1971; 10:00 a.m.
Trading Strategy: With Saturn conjoining the UFCS First-Trade Sun and transiting Uranus conjoining the First-Trade Descendant, this stock is ready for a big move. Its price action has been well defined in the past by a geocentric Neptune line (G,24.04,N,0) which is currently significant support. Our plan is to enter a long position in this stock early this week, setting our initial stop at 53.10.


FINANCIAL CYCLES (ISSN 1055-8527) is published by Taylor-Bost Consulting and edited by Tim Bost at 2132 Beneva Road, Sarasota, FL 34232 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.

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posted by Tim Bost @ 6/20/2004 03:41:10 AM