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e-mail:
sidklein@sidklein.com
MOON,
TURN THE TIDES…
gently
gently away
Nikkei: 11,057.19
*April low: 7,603.76
*- See March 31 &
The
From that point, the Dow’s
correction led to the Nikkei’s decline to 10,500, which created buying
opportunities in individual names. The anticipated broader correction
referenced above would lead, I suspect, to that additional bit of correction in
With this view in mind, it
is unlikely that foreign managers will allow Japanese stocks to fall too far,
due to the under-investment of
(1)
NIKKEI – DOW RATIO:
From the May letter: “This
spread has begun a massive secular bull market (from the 1.0 area), from which
there are several ways to profit.”
This assumption carries
serious implications. For short-term traders, this indicator may help identify
the inflection point at which the Dow recommences rolling over to the downside.
For long term investors, there are serious risks and opportunities implied by
the fact that this relationship, which was as high as 14 in 1989, has based and
is forming a very bullish bowling pattern out of secular support around 1.0.
Jimi Hendrix’ timeless medley of same title as this
report, had a different object in mind but there is a common sentiment: It is
time to go and the stars have divined it, just as the tides of the Elliott Wave
prepare to wash away the memory of what had to end. Whether it takes more time
or less, the fact remains that the Dow peaked in February and, as long as that
is the case, the matter is but one of time (simply, we’re rolling over).
Due to calamities around
the world (SARS, Mad Cow, etc.), profits and economic growth were diverted
GOLD, DOLLAR:
On May 1, SKC offered: “Considering
the price pattern similarities to the Dow Jones that large cap gold stocks
have, and given the enormous compounded gains that SKC has enjoyed over the
past fifteen months by moving in timely fashions from small caps to mid-caps
and then to large caps
(which themselves include 50% - 100% returns, over the past year
or so), it is wise to use equity strength to liquidate positions (into
countertrend rallies).”
·
“A rally
into the low 400s in gold should be used to liquidate stocks.”
(2)
The notion of lightening up
on gold stocks was borne largely of two considerations. Firstly, gains have
been substantial, while gold stock prices, in many cases, recently came to
discount metal prices ($430?) that might not be exceeded in the intermediate
term.
·
“The
intermediate term has shaped up in such a way as to suggest that one should use
a pullback in the US Dollar to take up to a 30% position in that currency.
However, the Yen should not be sold. USD allocations may come from gold and the
Euro. “
Immediately thereafter, the
USD did pull back before a strong spike up. Through it, the Yen was able to
retrace its month’s losses.
*The next regularly
scheduled commentary is set for the first weekend of July.
Sid Klein
________________________________________________________________
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(3)