- Significant downside risk until first week of January
- negative outlook this week
- possible break below Dow 8400/SPX 860 by Friday
- Nifty falling towards 2700/Sensex 8800
- Gold strength to end this week
- Significant downside risk until first week of January
- negative outlook this week
- possible break below Dow 8400/SPX 860 by Friday
- Nifty falling towards 2700/Sensex 8800
- Gold strength to end this week
A negative bias is likely to move prices lower this week, although we need to be prepared for the possibility that the larger move down may occur next week. The New Moon of December 27th is somewhat ambiguous and perhaps reflects the large price swings that will occur over the next four weeks. While malefic Mars and Pluto rise, Venus is in exact conjunction with Neptune, indicating the possibility of a steep fall early in the month and perhaps a sharp rise on the idealism (Neptune) of Barack Obama’s inauguration. Saturn’s retrograde station on Wednesday is a strong, if diffuse, bearish influence. Some early week gains are possible with the approaching Mercury-Jupiter conjunction on January 20th. These are unlikely to move the market very far upwards, but Dow 8800 is conceivable before Wednesday. Once the aspect separates, however, we will likely see more downside potential revealed. Friday looks to be the most negative day of the week, as the Moon opposes Saturn. If Monday is negative, then Friday may take the market down below the 8400 support level. If, however, this mini-rally continues early in the week, then Friday’s probable bearishness may only return us to 8500. That would leave next week to challenge the next support level of 8100.
I think it’s probable that we will see the Dow fall to at least 8100 and a possibility that it could fall all the way to the November lows of 7400 over the next couple of weeks. Markets will likely become highly volatile so trading right at the bottom may prove difficult. The subsequent Jupiter-Rahu rally may be quite strong and take the indexes above their recent highs of Dow 9200. I would not rule out Dow 10,000 by the end of January. Although there is the potential for a significant rise here, the rally will not last and February will see a quick erosion of these new gains. I expect more of a sideways or down market through February to April. A rally will likely begin in earnest in April and continue into June and July. The end of this early summer rally will likely be the highest prices for 2009 . Look for a significant down leg to begin by August. The autumn of 2009 may well prove to be a repeat of late 2008 with another sharp sell off as Saturn squares Pluto in November. The market levels at the end of 2009 are likely to be lower than current levels.
Trading Outlook: A possible rise early in the week will be a good shorting opportunity which could be covered in the following week. With the expected high volatility, it will be important to move gradually in and out of positions. Since the rally will likely be short-lived, longer term positions should be approached with great caution.
Stocks in Mumbai fell 7% last week as investors took profits from the December rally and growing tensions between India and Pakistan increased nervousness. The Nifty closed Friday at 2857 and the Sensex at 9328. Friday’s very bearish Moon-Saturn square fulfilled its potential as the market fell 2%. The Mars-Pluto conjunction was central to this negative mood, particularly since it is in close aspect to the natal Mars in the Indian national horoscope. With Mars representing conflict and frustration and Pluto standing for power and coercion, this conjunction was at the root of the Indo-Pak tensions. While I had expected some pullback last week, the extent of the decline was somewhat unexpected as I did not think the Nifty would fall to 2850 until this week.
This week looks like more downside as the key Indian financial horoscopes are poorly positioned to cope with the dominant planetary patterns. The Mars-Pluto conjunction may contribute more pessimism as it closely aspects the MC/IC in the NSE horoscope. The Saturn retrograde station occurs Wednesday — the same day as the Mercury-Jupiter conjunction. While Saturn’s influence to push markets down is very powerful, it is also diffuse in terms of timing effects. For this reason, we cannot rule out some upside midweek from Mercury and Jupiter. Friday will likely see prices move into the red again, as Mercury is in aspect with Pluto. If Monday closes below 2800, then we could see the Nifty trading at 2700 by Friday. A retesting of support at 2525 is still in the cards for next week although investors should not rely on a decline of that magnitude.
With the lows likely between Jan 5 -9, with a possible carry over into the early part of the following week when Mercury turns retrograde on the 12th, a strong and potentially vigorous rally will likely dominate January trading. A potential top for that rally is January 24th when the Sun conjoins Jupiter, so that would be a possible date to cover any long positions. Depending on where the lows are, this rally should break above Nifty 3150, although it may not be able to reach the 3500 level. Looking further ahead, February and March look like mostly sideways to negative so the Nifty may consolidate below 3150 during that time. A new rally towards 4000 will mark the Jupiter-Neptune conjunction in June and July. Market will likely start a new down leg at that point with another Saturn-Uranus opposition in September and an even more bearish square aspect of Saturn and Pluto in November. It is possible that we will see Nifty 2200 and Sensex 7000 by the end of 2009.
Trading Outlook: Any strength midweek should be seen as a shorting opportunity with the aim of covering next week. A gradual scaling in of long positions can take place next week with possible near term lows occurring before January 12. More conservative investors seeking buy and hold opportunities may take a partial long position next week and wait for the decline in February and March to add to it.
The US dollar remained weak last week as many world currencies showed gains. The Euro was up a cent and closed Friday above1.40. I had expected more strength in the greenback by now, but the favourable influence of the transiting Jupiter in the Euro chart continues to offset the negative influence of Saturn. It is possible that we may see weakness in the US dollar until the Mercury-Jupiter conjunction on Wednesday, after which the rise should be stronger. The US dollar should rise concurrent with the January rally. The Rupee lost ground last week amidst rising Indian-Pakistan tensions and closed Friday at 48.4. I expect it to fall further this week, perhaps as low as 50 by Friday. Next week will see further weakness as the dollar rally will likely push most world currencies much lower.
Crude oil weakness continued last week as it closed near $37 for the February contract. Crude is still probably another week or two away from a significant low before it can rise in price. Saturn, the significator for oil, stations on Wednesday near the 4th house cusp of the Futures chart, but it will take time for the new planetary pattern to be reflected in the price. Crude will probably trade below $35 this week, and below $30 next week.
With the continued dollar weakness and Indo-Pak tensions, gold stayed strong and closed Friday at $871. This was higher than anticipated, although I did expect some kind of boost from the separating aspect of Sun from malefic Pluto. I remain bearish for gold this week, although I acknowledge the possibility that a few more up days are possible by midweek. The January trend should be mostly down, however, as transiting Rahu aspects natal Ketu in the Futures chart. Gold should bottom in late January or February and then will begin another move up.