- Probable near term lows this week before January rally
- Probable decline to Dow 8100/SPX 825
- Probable decline to Sensex 9000/Nifty 2700
- Declines early and late week
- Gold decline to $780
- Probable near term lows this week before January rally
- Probable decline to Dow 8100/SPX 825
- Probable decline to Sensex 9000/Nifty 2700
- Declines early and late week
- Gold decline to $780
While I thought we would be closer to 8000 by now, I still think the downside risk this week outweighs the upside potential. Volatility will continue to be high. On Monday, the exact Mars-Saturn square will likely push prices significantly lower. This aspect could well move the market back down towards the 8100 level or possibly lower. The negative energy may spillover into Tuesday, at least early on. However, there is a chance for a recovery and gain by the close as Venus conjoins Rahu. Wednesday may also be higher as the Sun is in close aspect to benefic Jupiter. Thursday looks more negative as the Moon conjoins Saturn while Mercury is in aspect to Rahu. This can create an atmosphere of irrational caution that leads to a lot of selling. Friday is harder to read, although it may well begin lower. A recovery in the afternoon is possible though, as the Moon is in aspect with Jupiter.
We appear to be in the final stages of forming a bottom here. With the Saturn-Neptune aspect making its tightest orb over the next week and Saturn going retrograde on December 31, there appears to be a significant shift in planetary energy in the offing. The New Moon of December 27 is another part of this resetting of the predominant forces at work. This process will likely conclude in the last week of December with some significant down days before the market moves substantially higher. While I now think Dow 7400 will probably not be tested, we could see multiple probings down towards 8000-8100 over the next two weeks. It’s difficult to say when this week’s low will occur. While the early week looks clearly negative, Friday’s low also has the potential as a trading opportunity in preparation for the January rally. The conjunction of Jupiter and Rahu in Capricorn may move the market towards Dow 10,000-10,500. This rally may be relatively short-lived, however, as prices will begin to fall again by February.
Possible Trading Strategies: With the likelihood of lower prices, this week will be a good opportunity to cover short positions. The early week will be probably be too tempting to pass up, although a second chance will probably occur late week. At the same time, investors should consider building long positions in time for the January rally.
Stocks in Mumbai rallied 7% last week on renewed hopes that China’s stimulus package would boost economic activity throughout Asia. The Sensex closed Friday at 9690 and the Nifty stood at 2921. While I had expected a significant rise early in the week on the Mercury and Jupiter transits into Sagittarius and Capricorn, respectively, the strength of the gain was somewhat surprising. Perhaps more unexpected was that the gains largely held up later on in the week despite steep intraday declines Friday that saw the Nifty fall close to 2800. While stocks appear to have a new-found strength, they are remain below their 50-day moving average which is currently 3040 on the Nifty.
This week looks negative overall, although we will likely see at least one big up day. The early week looks difficult as the Mars-Saturn square becomes exact Monday and into Tuesday. Assuming Monday is not overly positive, we could see the Sensex fall to 9000 and the Nifty to 2700 by Tuesday. Midweek could see a bounce higher as Venus conjoins Rahu thus prompting a more acquisitive outlook as more investors take new positions. The end of the week should see the market fall again, however, as transiting Mars conjoins the NSE ascendant.
As we move closer to the New Moon of 27 December, stocks are still vulnerable to sudden declines as the current planetary geometry remains generally unfavourable. While the risk of a retest of Nifty 2525 is relatively small, we should expect prices to move mostly lower over the next two weeks. As Saturn and Neptune begin to separate, the predominant planetary aspect will be Jupiter and Rahu which will move towards a conjunction in January. This will likely mark a significant rally towards Nifty 3500-4000. I do not expect the January rally to last long however, as the market will probably peak sometime in January and show weakness in February and March.
Possible Trading Strategies: The lows this week will be good opportunities to cover short positions, although the last week of December may also provide tradeable lows. Investors looking to take long positions will also find some good bargains this week.
The US dollar continued to lose ground last week as most global currencies made substantial gains. The Euro closed Friday at 1.336 after a stunning 3 cent gain on Thursday. I had thought the Euro would be weaker here given the location of the Mars-Saturn aspect in the Euro chart. However, the negativity of that aspect was neutralized by Jupiter’s applying aspect to the natal Venus. The positive Jupiter influence may linger a bit longer here, but transiting Mars is becoming more powerful by Tuesday at the latest, and moreover it will aspect natal Jupiter. I expect the Euro fall back significantly this week, probably under 1.30. The Rupee strengthened last week to 48.7 as it rose almost 2% against the US dollar. It is unlikely to hold onto gains this week, however. Watch for it to slip back to 49.5.
In keeping with the retreat of the US dollar, crude oil rose to $46 by Friday’s session. I was surprised by the strength in this rally, especially given the difficult aspects surrounding Saturn, the significator for oil. Crude is likely to fall back significantly from here this week, with $40-42 possible by Friday. The short term outlook for crude remains bearish in December, although a more bullish trend is likely in early 2009.
Gold was another beneficiary of the decline in the US dollar, as it closed Friday at $820. As the Sun separated from malefic Mars, the price took a somewhat unexpected rise. This recent bounce is unlikely to go higher, however, as the Sun enters Sagittarius. Although this is a nominally benefic situation due to Jupiter’s ownership of this sign, the Sun is applying to an conjunction with malefic Pluto. Gold should fall back to $780 by Friday and continue to slide in the following week.