Dow 6000 Within
Six To Ten Months
by Joseph Granville,
The Granville Market Letter
I see
many parallels in today's environment with October 1929. This major blast
upward in gold is seen to be another of the many parallels. It signals bad
news ahead for the stock market. Gold stocks are the place to be right now.
Note that we heard some bulls on CNBC telling us to not buy gold stocks.
This is the disbelief we like to hear.
NYSE
stocks are down an average of 26% off their 1999 highs. Since a drop of
20% is considered to be a bear market, then here is the evidence that we
are in a bear market and yet the Street sidesteps that evidence, talking
"correction" instead.
One
more magazine cover has been added to the collection of recent covers which
signals the coming bust. This was the cover of the current issue of Fortune:
"At work, at home, all day, all night: Everybody wants a piece
of this stock market. It's more than a bull gone mad. It's a new set of
rules. They can break you or make you rich..."
The
Fed is trying to let the air out of this balloon gradually. The latest warning
of tightness by the Fed is an attempt to do this. Try stocking a pin in
a fully inflated balloon and see what happens. Try letting the air out gradually
with a pinprick. It can't be done. This is Greenspan's dilemma. He is walking
on a bed of marbles, caught between a rock and a hard place. Robert Rubin
saw the handwriting on the wall and got out in July. Now that he is out,
he is freely giving warnings he wouldn't previously publicly give.
I
took subscribers to The Granville Market Letter completely out of the market
in August with the exception of gold stocks. This is no time to fool around
with any half measures. If you want to live to fight another day you can't
leave a dime left on the tracks. Go into the money markets. (Caution: Be
sure the securities held in your money market fund are all short-term governments.)
Buy T-bills. Select indicated short sales (Ed. Note: Granville recommends
shorting Air Products, Allied-Signal, American General, Armstrong-World,
Hewlett-Packard, and IBM in his October 7th newsletter.) Buy put option
(recommendations in current newsletter.) I told subscribers in August right
at the top that most stocks could be sold then and bought back later at
lower prices. I look for the Dow to go to 6,000 within six to ten months.
Editor's
Note: Joseph Granville is editor
of The Granville Market Letter, P.O. Drawer 413006, Kansas City,
MO 64141, 1 year, 46 issues, $250. As a Special Trial Offer, Mr. Granville
is offering the next 4 weekly issues for $31. The Granville Market Letter,
now in its 36th year of publishing, covers stocks, options and gold.
Mr.
Granville will be speaking at the Natural Resources Conference and Exhibition
which will be held just outside of the Chicago O'Hare airport at Rolling
Meadows Holiday Inn on October 23rd. For free tickets call Barbara Allen
at 1-800-285-1700 or 317-633-1742.