“IT’S THE ECONOMY, STUPID.”
Home sales will bottom in August 2009 and the top will be June 2020, according to the 11-year Nodal cycle. Looking back to previous bottoms in the Nodal cycle such as February 1935, October 1953, May 1972 and January 1991 we were either in a recession or as in 1935, a depression. So most likely, between now and August 2009, the economy and the housing market will get worse. But what about investing in the stock market? If you choose the top stocks in favored sectors, there is money to be made in stocks. The markets usually thrive on low interest rates and low rates should continue.

GET IN AT THE START ON THE NEXT MOVE UP.
We have an opportunity to get in on the next price increase of the stocks that will do well in 2008. Since we know stocks that are in leading sectors do well, we want to identify which sectors will outperform in a new cycle. A new cycle began in December 2007 as Jupiter moved into the sign of Capricorn (12/19/07-1/6/09). And just as the 2007 transit of Jupiter in Sagittarius gave rise to the Gaming/Leisure sector, sports, import/export, transportation and the Higher Education sector, this new cycle will relate to Capricorn-connected areas. Some of them are: banking, investing, home repair, restoration construction, heavy equipment, building materials, reconstruction of infrastructure, discount stores, practical clothing, the environment, food products, family-style restaurants and farm equipment. Also included are basic materials that include aluminum, copper, steel, etc. and health-related stocks particularly companies that produce products and services for senior citizens.

Since cycles repeat we can go back twelve years to the last Jupiter in Capricorn cycle (1/5/96-1/22/97) and see which sectors were outperforming back then. The top 12 sectors were: Consumer Hardware, Specialty Retail, Energy, Electronics, Financial Services, Real Estate, Banking, Aero/Defense, Diversified Services, Drugs, Computer Software & Services and Consumer Non-Durables.

DECEMBER TOP WINNERS

REMOVING COVERAGE:
We continue to remove coverage on last year’s favored sectors and stocks in those sectors, most notably foreign stocks, particularly China. With a few exceptions, we think the run up in Chinese stocks is over. We have already removed the Gaming/Leisure sector. We did give Dick’s Sporting Goods (DKS) and Gamestop (GME) another month to see if they might outlast the sector but they have not….so they will be removed due to poor performance which means that sector is truly finished as a favorite.

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OVERALL TOP WINNERS