- January rally to be weak and choppy
- negative outlook this week, depending on Monday
- Thursday/Friday negative
- Gold likely to fall at week’s end
- January rally to be weak and choppy
- negative outlook this week, depending on Monday
- Thursday/Friday negative
- Gold likely to fall at week’s end
This week will be a test to see if the January rally holds or succumbs to bearish skepticism. Monday is the key day for the week as a number of contradictory influences will be activated in the early part of the week. While I am not certain on the direction of the market, it seems the move will be fairly large, probably greater than 2%. Given the strength of the rally on the back of the Mercury-Jupiter conjunction, we cannot discount the possibility that the rally will continue into midweek. Transiting Jupiter perfects its aspect to the NYSE natal Sun on Monday and this is more than enough to recommend that higher prices are still possible. At the same time, it is conceivable that most of the positive energy from the Jupiter aspect has already been manifest by last week’s rise to 9000 and that it may well have cleared the decks for some significant move on the down side on Monday. Mars is also in tense aspect to Saturn at that time, and this may be enough to tilt the balance towards the negative. I would tend to favour the negative outcome here. Tuesday and Wednesday may see more upside but it does not seem like a strong move and sideways trading is also possible here. The end of the week looks more decidedly negative as Mars is in tense aspect to Rahu on Thursday. Perhaps a greater negative influence will be Mercury in tense aspect to Saturn. This potential for a large sell off is increased because of Mercury’s approaching retrograde station that occurs on Saturday. Mercury’s slow speed will increase its ability to resonate with Saturn’s malefic energies, there is a greater chance for a large decline. Worse still, Mercury will be closely conjunct malefic and unpredictable Rahu when it turns retrograde so there is a potential for some high volatility at the end of the week and early into next week. Friday will see the Sun moving into aspect with Saturn which is often indicative of pessimism, although some kind of bounce back may be inevitable if Thursday’s decline comes to fruition.
So if Monday is strongly negative, then the week will likely be negative overall with pessimism carrying into next week and a retracement back towards Dow 8400-8600. If Monday turns out to be positive, however, then the rally may go all the way to 9600 (admittedly, a worse case scenario) before the sellers come in towards the end of the week. I don’t think these lofty levels are likely this early in the month, but it is still a possibility traders should be prepared for. In general, the prospects are good for some kind of rally in January with a possible peak near the 20th for the Obama inauguration or alternatively by the 23rd when the Sun conjoins Jupiter in the sky. At this point, a high of Dow 10,000 seems a little far-fetched and I think the high will be somewhat lower than that. February and March are looking increasingly negative, however, so that long-awaited retest of Dow 7400 will likely come then. There are a number of tense aspects between slow moving, powerful planets in those months that are more likely to push the Dow under 8000 than anything we can find at present. Saturn will once again oppose Uranus on Feb 5, Jupiter will conjoin Rahu on Feb 13, and Jupiter will be in a tense quincunx with Saturn on Mar 22. While none of these dates may correspond with specific declines, collectively they will create a bearish mood that will reflect generally falling prices.
Trading Outlook: Friday the 9th or Monday the 12th may be the best time to cover any short term short positions, even if the levels turn out to be higher than we would have liked. Investors may consider shorting any rallies above Dow 9500, whether they occur this week or in the second half of January, with the intention of covering in late February or March. Looking further ahead, I would be reluctant to take any significant long positions until we see lower lows, say below Dow 8200, or ideally, below 8000. These are unlikely to occur in January, so investors seeking safer long positions may be best advised to wait until February or perhaps better, late March. The rally may take a while to unfold, but the peak should be in June and July, so a longer term perspective may be more profitable.
Stocks in Mumbai rose 6% last week as most of the previous week’s losses were erased with the reduction of Indo-Pak tensions and the announcement of further RBI rate cuts and government stimulus plans. The Sensex closed Friday at 9958 and the Nifty at 3046. While I had mistakenly expected declines last week, the I had not ruled out the possibility of midweek gains on the basis of the Mercury-Jupiter conjunction. Friday’s gain was the greatest discrepancy from the forecast outcome, mostly attributable to the overriding beneficial effect of Venus aspecting the ascendant in the Nifty horoscope. The resulting rally took Indian stocks back to the early to mid-December levels. While potentially indicative of a rally higher, it is noteworthy that the rally will remain tentative unless and until the 3150 level of the Nifty is broken.
This week the market is unlikely to achieve that resistance level of 3150, and indeed, it seems poised to retrace back towards Nifty 2900-3000. Monday looks fairly negative as transiting Mars will be in tense aspect with natal Moon and Mars in the Nifty chart. Given the inexactitude of the aspect, this negative energy may be delayed until Tuesday’s session. Wednesday would appear to be the best day as the transiting Sun conjoins natal Jupiter. With the Thursday holiday closure, there will be a lot of selling pressure saved up for Friday’s session which looks quite negative. Mercury and Saturn will be in tense aspect to natal Mars, while Mercury’s negative effects will be multiplied owing to its slow speed as it approaches its retrograde station on Saturday. Moreover, Mercury will be in close conjunction with malefic Rahu, so the chances increase for wider price swings and declines towards the end of this week and into next. Mercury will be retrograde until Feb 1. While there are no certainties about trading correlations with Mercury retrograde, the greatest problems tend to occur near the beginning and end of retrogradation cycles.
While I do think the Nifty will finally reach 3150 In January, I don’t think it can do so this week. While some midweek gains are likely, Monday’s probable bearishness will mean the markets can at best tread water. The second half of the month generally looks more favourable for stocks although the period after January 23th could be quite negative as retrograde Mercury conjoins Mars. Any lows made in January will likely be above Nifty 2750, with February and March looking sufficiently bearish to take the market back down to retest October lows.
Trading Outlook: Any short term short covering is perhaps best done on Friday, even if levels are not as attractive as we had hoped. Investors with longer term short positions may wish to wait until lower prices in February and March to close out their positions. On the long side, the uncertainty surrounding the current rally makes it difficult to play, except for very small positions. More conservative investors waiting for the right time to take a long position should consider waiting until lower lows below 2700, and preferably below 2600 are made in March.
The US dollar finally showed a modicum of strength last week as it rose to 1.3922 against the Euro. Interestingly, the Euro enjoyed its 10th birthday last week and the planetary position for the solar return gives us an important clue for the year ahead. The Sun returned to its natal position very close to the time of the Mercury-Jupiter conjunction. Given the benefic nature of both of these planets, this is a very bullish signal for the Euro and negative for the dollar for this year. Of course, this does not tell us when the dollar will head down, but it is further evidence that a significant decline is in the cards. The dollar should strengthen this week, particularly towards the end of the week when the transiting Sun falls under the aspect of the natal Mars in the Euro chart. Some early week strength is possible, although there is a chance for a big move towards the end of the week. The Rupee held up strongly against the dollar last week and finished Friday’s session around 48. Look for some slippage back to 49 this week, particularly in light of the fear and confusion surrounding the approaching Mercury station conjunct Rahu at the end of the week. This configuration may create a situation of anxiety that may push investors into the US dollar as a safe haven. I expect the US dollar to continue strengthen against most currencies until at least late January.
As Middle East tension grew with Israel’s attack on Gaza, crude oil pushed higher and closed above $46. While I had expected more weakness last week, crude is unlikely to extend this rally much further as transiting Ketu continues to afflict the natal Sun in the Futures chart. Some early week strength is possible as transiting Venus is in good aspect to the Moon-Saturn conjunction. However, late week sees transiting Mars aspecting the natal Sun, so this should be the reversal of the trend which will push crude back towards $40. January 22-23 looks to be a key moment for crude as Venus will conjoin Uranus and both will oppose Saturn. This would seemingly signal a reversal in the current trend, whether positive or negative. If prices are generally rising before that date, then that date may mark the beginning of another leg down.
Largely the result of Middle East tension, Gold remained firm last week as Futures rose modestly to $879. A fairly large move is possible Monday as transiting Sun conjoins 12th house Mercury in the Futures chart. While I am still bearish on Gold, this move could be to the upside as transiting Venus simultaneously aspects Uranus which might be enough to offset any negativity in the Sun’s condition. Prices are likely to moderate or fall after that, with the end of the week looking the most bearish as Mars conjoins the Futures natal Sun. Gold should break sharply lower as Mercury will go retrograde while under aspect from the natal Mars in the GLD chart. There is a potential for Gold to be back in the $850 range by next week.