- Maintain overall bearish stance until mid- to late-December
- Probable early week gains above Dow 9000/SPX 920
- Probable early week gains to Sensex 10,000/Nifty 3000 or above
- Stock rally possible peak this week
- Gold rally to continue until December 1-3
- Maintain overall bearish stance until mid- to late-December
- Probable early week gains above Dow 9000/SPX 920
- Probable early week gains to Sensex 10,000/Nifty 3000 or above
- Stock rally possible peak this week
- Gold rally to continue until December 1-3
With Monday’s triple conjunction of Moon, Venus and Jupiter, the rally will likely extend into this week, although the biggest gains may occur Monday and possibly Tuesday. The closest moment of the conjunction occurs in the morning on Monday (EST) so that may be time of greatest optimism. I would not be surprised to see a large rise at that time, perhaps well above Dow 9200 at some point on Monday. Mercury, the planet of trading and commerce will enter Jyestha this weekend, and this will provide extra support for prices through the week. However, there are a few possible stumbling blocks that may signal the top of the rally. Once the Moon-Venus-Jupiter aspect has become exact Monday, its immediately bullish influence will be exhausted fairly quickly. This may indicate that the bulk of the rise will occur on that day and make the market more vulnerable to retracements. On late Wednesday morning, the Moon enters Dhanistha, and since this is a Mars-ruled nakshatra, it is possible that we may see more declines afterwards. Finally, the Sun will conjoin Mars on Friday afternoon and this may create a more unstable and jittery mood among investors that could spark a late day sell off ahead of the weekend.
Overall, we are likely to see the end to this rally this week. It is possible that there will be a few more up days next week with the chance for marginally higher prices, but the bulk the rise will be behind us by Tuesday, December 2. The larger question remains whether we will retest Dow 7400 in December or indeed, go below that level. At this point, I believe that a retest is the most likely scenario but I recognize that the decline may not go all the way down to 7400. The New Moon of November 27 was sufficiently afflicted that it provides additional evidence that the market is going to make a major move down this month. Mercury’s close conjunction with Mars in Scorpio under the aspect of unstable Ketu speaks to the volatility and fear that will likely stalk the markets in December. That said, if the gains this week take us above 9500, then a lower low below 7400 may be harder to achieve. Nonetheless, the mid-December lows will provide a good opportunity to go long in time for a stronger January rally.
Possible Trading Strategies: With the probable end to the rally, the early part of the week may be a good time to cover any outstanding short-term long positions. Investors with a longer time horizon may wish to wait for higher prices above Dow 10,500 in mid-January to exit the market. Monday or Tuesday will likely see prices significantly above Dow 9000 and perhaps as high as 9500. At the same time, investors may consider building a short position on the market in anticipation for the larger declines in store for mid-December. Depending on how high the market goes this week, I would consider placing shorts fairly early on, especially if the market rises above 9500. Wednesday or Thursday may also be good times to take a short position. This initial short position could be added to next week on any up days that may occur. Ideally, this short position would be closed by December 22.
Stocks rose modestly this week, despite the shocking terror attack in Mumbai on Wednesday evening. Major indices rose 2% as the Nifty closed Friday’s session at 2755 while the Sensex ended trading at 9092. I had thought we would see higher prices earlier in the week as the Nifty did not even manage to trade at the 2800 level. Nonetheless, the Friday close was not far off the forecast. While I had called for declines late in the week with the Moon’s entry into Scorpio, it is perhaps noteworthy that the exchanges were shut Thursday in the wake of the attack. Indian markets bravely etched out marginal gains Friday as a rediscovered global optimism offset domestic nervousness.
The global rally in stocks is likely to spread to Mumbai this week. There is still a very good chance for Nifty 3000 and Sensex 10,000 by midweek as the Moon-Venus-Jupiter conjunction will conjoin the natal Uranus of the NSE horoscope. This has the potential for a very rapid and sharp rally Monday and Tuesday. The transiting Moon conjoins Rahu during Wednesday’s session, however, and this could introduce some volatility and anxiety into the mix. Thursday will feature the Moon in Dhanistha, and given its lord Mars’ close affliction from Ketu, this does not bode well for higher prices. Overall, I think the market will likely top out at some point this week, with possible brief rallies next week that fail to revisit this week’s highs.
The New Moon of 27 November suggests a fairly difficult month ahead for equities. In this chart, the Sun and Moon were in Scorpio in close conjunction with Mercury and Mars. All four planets came under the disruptive aspect of Ketu. While the Venus-Jupiter conjunction was in evidence it was still several degrees away from exact and therefore overwhelmed by the stellium of planets in Scorpio. The strong Ketu influence in this New Moon chart indicates that prices will rise and fall suddenly in December, and declines are likely to outnumber gains. Perhaps most important is the afflicted situation of Mercury, the planet of trading in this chart. Mercury is closely conjunct Mars in this chart and this suggests that traders will be more apt to act without rashly and without sufficient thinking. The afflicted nature of the New Moon dovetails well with the Saturn-Neptune aspect that I have mentioned on previous occasions. Together, these configurations strongly point to a substantial decline in stocks by mid- to late-December. The next New Moon occurs on 27 December and presents the next opportunity for a reorienting of market sentiment in a more favourable direction.
Possible Trading Strategies: Investors with outstanding long positions should consider covering them by midweek as the Nifty approaches 3000. Investors with a longer term view may consider waiting for mid-January before closing out long positions as I expect the Nifty to reach 4000. With the probable end to this rally this week, investors may also wish to establish some short positions as the market rallies. It is conceivable that the Nifty may rise to 3150, so more cautious investors may wish to wait until it has reached that level before shorting. More aggressive investors may consider taking an initial shorting at 3000 with the prospect of taking additional short positions at higher prices should they come, or waiting until the end of the week when the market would be more likely to have passed its peak. With the larger declines more likely in the 15-19 December period, shorts may have to be held for two or three weeks for maximum return.
Most world currencies strengthened against the US dollar this week, as the stock rally siphoned off some support from the greenback. The Euro closed Friday at 1.2692 higher by about one cent on the week. While I had forecast gains for the Euro, I did not expect to see intraweek trades above 1.30 as was the case on Wednesday. With Venus and Jupiter approaching the natal Venus in the Euro chart, we can expect to see prices to rise above 1.30 this week, perhaps as high as 1.32. The Euro is very unlikely to hold onto these levels for very long, however, as Saturn settles in to oppose its natal Jupiter later in the month. The Rupees gains were also quite modest this week as it finished Friday’s trading at 49.575, up less than 1%. We can expect more upside to the Rupee this week as trading may take it below 49 by Friday with some intraday prices near 48.5
As predicted, crude gained last week and managed to hit $55. It ended Friday’s session at $54.43. With Mercury, Sun and Mars all applying to the natal Jupiter in the Futures chart, we can expect the rally in crude to continue this week. Prices may easily move above $60 by midweek. By Friday, it will likely hang on to most of its gains. I am still expecting a near-term bottom in December that is close to $40 before any major rally in crude resumes.
Gold continued its winning ways last week as it closed Friday’s session at $819. For the week, it gained 4% and fulfilled last week’s forecast. This week should see more significant gains in bullion, as the Moon-Venus-Jupiter conjunction activates the natal Venus in the Futures chart. There is a real chance for a very large gain that would push gold to $860 and above by Tuesday. It is unlikely to sustain that level, however, as any gains after Tuesday will be smaller. Gold will become vulnerable to sell offs by the end of the week and into next week. By late December, it will likely be once again flirting with $700.