29 December 2018 Volume 12, Issue 1. Summary for week of 31 December 2018

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1 29 December 2018 Volume 12, Issue 1 Summary for week of 31 December 2018 Stocks choppy but upside likely on midweek strength Dollar may rebound this week Crude oil likely to test resistance at $47-50 this week Gold may move higher again amid choppy trading US Stocks Stocks bounced last week on strong holiday retail data and the absence of any more bad news. The Dow jumped almost 3% to 23,062 while the S&P 500 finished at While I had been uncertain if we would see a positive week I maintained a bullish bias in any event. The week unfolded more or less as expected as Monday saw lower lows on the Mercury- Neptune square and then surged on Wednesday and Thursday on the Mercury- Venus alignment. Friday was bearish as expected on the Moon-Mars opposition. Given the size of this bounce, it is tempting to think the low is in. And yet powerful gains like we saw on Wednesday are more typical of bear market rallies then bull markets. A retest of Monday s low of 2350 is therefore quite possible at some point. I tend to think a retest is more likely late in January and in February than, say, this week but we shall see. A lot will depend on what happens in Washington with the government shutdown. Congress will reconvene on Thursday Jan 3 so that may be the first chance for some kind of solution to the funding impasse over Trump s border wall. I would think that an end to the shutdown would be bullish and even just signs of progress

2 in the negotiations would be bullish for stocks also. But Trump is also likely to become more unpredictable starting next week as the Democrats assume control over the House. They are likely to launch several investigations into his affairs. This increased pressure will only make him more likely to lash out and say and do unpredictable things. Needless to say, this is a huge wild card for stocks which could abruptly end any incipient rebound in the making. The planetary indications suggest this rebound could have further to go in January. The approaching Jupiter-Neptune alignment will help to underwrite sentiment and could prevent any hard retest of 2350 in the next two or three weeks at least. I would therefore expect these relatively bullish planets to take stocks higher in the short term, perhaps to And yet January contains the eclipse period so that is likely to keep volatility higher than normal even if the rebound continues. The solar eclipse of Jan 5 th could generate some uncertainty but the lunar eclipse of Jan 21 st looks more bearish. Downside risk is likely to rise after this eclipse as Mars aligns with Saturn, the Lunar Nodes, and Uranus as we move into February. It is hard to say if we will fall to a lower low in February. It is certainly possible although a strong bounce in January could preclude that more bearish scenario from coming to pass. The technicals still look bearish. Last week s bounce came off a near-exact tagging of the long term 200-week moving average at This may be considered a more stable source of support from which a rebound can be launched. Bulls can therefore plausibly argue that the low may be in and that the market could rally back to new highs as it did in Friday s bearish reversal at 2500 was not very encouraging, however, as it may foretell a quick retest of last week s lows. But if bulls can step in on Monday the 31 st push it higher again, there is good reason to think this oversold bounce can continue. If we do get more upside this week, then resistance will be Friday s high of If that is broken, then a push to and the 20 DMA is likely. It may be more difficult for bulls to push above 2600 in the near term, however. In terms of support, I would think that Thursday s range could be important. Any move below the open at 2440, would be bearish and would likely signal a hard retest of 2350 is imminent. The NDX is quickly approaching its area of heavy resistance at the 20 DMA near If that is broken to the upside, then falling trend line resistance at 6800 and the 50 DMA at 6759 would be another possible area where the rebound could run out of steam. The weekly Dow chart printed a strong weekly candle last week. Stochastics remain below 20 and have not yet produced a bullish crossover, however, reflecting how much technical damage has been

3 done. Resistance is likely near 24,000 in the short term. Long term prospects don t look too promising here as the 20 and 50 WMA may form a bearish crossover in the coming weeks. It s definitely one indication to watch. Meanwhile, yields of the 10-year continue to fall as investors seek safe havens. But last week saw smaller moves as a reflection of the movement back into equities. If yields rebound higher, then that will be a confirmation that the rebound in stocks will continue. This week looks bullish, especially after Tuesday s holiday closing. Monday is less clear, however. The Sun-Saturn conjunction is a bearish influence but the ongoing Mercury-Venus alignment is more positive. I would not rule out any outcome here. The Moon s alignment looks somewhat more bullish in the morning while the afternoon leans a bit bearish. If the morning is positive then gains may be vulnerable by the close. Wednesday the 2 nd looks more bullish as Venus and the Moon join Jupiter in Scorpio. Thursday also looks more bullish as Mercury and Venus align with the Lunar Nodes. A sizable gain is possible on either of these days. Friday is harder to call. The morning looks more bullish perhaps as the Moon conjoins Mercury. But there is a risk of some afternoon selling which may prove to be bearish for the day. Nonetheless, the influences look more bullish for the week so I would think even if Monday is bearish, the SPX has a good chance to push above Friday s high of Whether or not it can test resistance at is hard to say. If Monday turns out to be positive, then a move up to the middle Bollinger band of 2588 is more likely. Next week (Jan 7-11) looks mixed and choppy. Generally, the week looks less bullish than the preceding week. We are very likely to see some downside early in the week as Mercury squares Mars on Monday and Tuesday. This is a strongly negative influence although it may only manifest for one trading session. If we hit resistance (2588?) in the previous week, then this could signal some consolidation. The second half of the week looks more bullish, however. The following week (Jan 14-18) also looks mixed and therefore is hard to call. The first half of the week looks vulnerable to some selling although it is possible stocks may simply go sideways. The second half of the week looks more bullish, however, so it is possible the week could finish in the green. But that is far from certain so bulls should be careful in holding any long positions the further we go into January. I think the decline will likely begin in earnest by the week of the 21 th but it may well begin earlier. The pullback is likely to extend into early February and therefore it is quite possible we could revisit But I must admit I do not have a strong opinion on where this second low may be in relation to My bias is that it will be equal or higher and thus will provide the technical basis for

4 more upside later in February and into March. I would keep an open mind about where we could top out at in March or April. A significant correction is likely to begin in May or perhaps June with a steep fall likely in summer. Lower lows are possible by September although a lot will depend on where the market tops out at most likely in Q2. Technical Trends Astrological Indicators Target Range Short term trend is UP bullish (confirming) SPX (1 week ending Jan 4) Medium term trend is DOWN bearish (confirming) SPX (1 month ending Feb 4) Long term trend is UP bearish (disconfirming) SPX (1 year ending Jan 2020)

5 Indian Stocks Stocks pushed higher on positive global cues and a more tempered interest rate outlook from the Fed. The Sensex rose by 1% on the week to 36,076 while the Nifty finished at 10,859. This bullish outcome was unexpected, however, as I thought the early week Mars influence might have inflicted more damage. While Monday was lower as forecast and Wednesday saw the low of the week, stocks rallied back before the close and then extended their rebound for the rest of the week. As worries emerge over the US economy, interest rate forecasts for 2019 have been slashed. The dysfunction of the Trump administration may finally be taking its toll on the economic outlook as the government shutdown foreshadows greater problems down the road. With the incoming Democratcontrolled House of Representatives, President Trump is likely to come under increased scrutiny and investigation. This could further handcuff the government which will increase investor uncertainty. While Indian stocks are still firm here, the current state of US politics is a new global headwind which threatens to undermine the rebound following the Sep-Oct correction. The upcoming 2019 Indian election is also important, of course, but Modi looks more vulnerable now. His defeat in the polls would be bearish for markets as economic reforms would no longer be forthcoming. The astrological indications are very mixed here. Further upside is possible in early January on the Jupiter-Neptune alignment but January as a whole looks less positive as the eclipse period could bring about new uncertainty. The solar eclipse of 6 th January may only prove to be temporarily bearish but the lunar eclipse on 21 st January looks more disruptive. The problem is not the eclipses themselves, but rather the orientation of planets at the time of the eclipses. On 21 January, for example, Saturn aligns with Mars while Mercury conjoins unpredictable Ketu. It is not a bullish set up at all. Bulls should therefore be extra cautious in January as this rebound is more likely to come under pressure. The technical outlook still looks fairly bullish. Wednesday s low tagged the lower Bollinger band and the 50 DMA. This provided a fair amount of upward fuel for bulls although they have yet to test resistance at 11,000. One problem is that the rebound appears to be flattening out. The Nifty could end

6 up trading in a range before any new direction takes hold. Any move below last week s low at 10,500 would be bearish and could signal a retest of the October low at 10,000. Bulls can silence the doubting bears with a close above 11,000. This would allow the rebound to continue and for a run up to the September high at 11,760. The weekly Sensex chart looks a bit sluggish here in light of the difficulty in climbing above the middle Bollinger band. Some consolidation is normal, of course, but bulls may begin to have second thoughts if last week s high isn t taken out. Moreover, the 20 and 50 WMA are converging here and may set up a bearish crossover. While this may not prove to be significant, it definitely increases anxiety for the bulls if there is a failure to climb above 36,500 in the coming days. Failure to close above this level would invite a retest of the previous low at 33,000. Longer term, the 200 WMA at 30,000 is acting as support in the event that there is a second leg lower in Astrologically, I think this kind of decline is quite possible, although the technicals are less clear on this point. Meanwhile, ICICI Bank enjoyed a modest bounce last week as it continued to trade in a narrow range just below resistance. With the 50 DMA acting as support at 350, this chart is still quite bullish. A close below 350, would force participants to re-assess their situation, however. Infosys is looking more mixed as last week rejected the 50 DMA as resistance. After the previous lower high, there is some reason to be skeptical about this chart going forward. But as long as support of the 200 DMA at 638 holds, then the chart will remain bullish. Indeed, the inverse head and shoulders pattern offers significant upside potential as long as 638 holds as support. This week leans bullish again. Monday is difficult to call, however, as the Moon-Uranus alignment hints at unexpected developments. But given this uncertainty, I would nonetheless tend to think the odds of a gain are a bit higher than a decline. The midweek period looks more bullish as Mercury aligns with Venus. In addition, the Moon conjoins Venus on Wednesday and Jupiter on Thursday so that increases the probability of gains on those days. Depending on Monday s outcome, we could easily see the Nifty test

7 resistance at 11,000 this week and even rise above it. The late week looks less positive, however, as the Sun aligns with Saturn. Friday would appear to have a higher downside risk than other days, although a decline on Thursday from this aspect is not out of the question. A push above 11,000 seems quite possible here although bulls should not get too comfortable given the probability of declines later in the month. While I think some kind of pullback is likely in January, I am less inclined to think it could happen this week. Next week (Jan 7-11) looks more bearish. The solar eclipse on the 6 th (Sunday) looks unhelpful given how close it will be to Saturn. Mars will square Mercury on Tuesday and Wednesday so that is another potential source of difficulty for the market. Some kind of pullback is therefore very likely here, especially if the preceding week has been bullish as I expect. But the eclipse influence could mean the pullback could be sizable, and therefore greater than a simple consolidation under resistance. The late week looks somewhat more positive, especially Friday as the Moon aligns with the Jupiter-Neptune square. Overall, I would lean bearish here, although a positive outcome would not be out of the question. The following week (Jan 14-18) also leans bearish as Mercury conjoins Saturn early in the week and the Sun conjoins Ketu. While we could see the Nifty still fairly strong here, the rest of January would seem to tip the balance more in favour of the bears as Mars squares Saturn and the lunar eclipse on the 21 st looks tense. I am uncertain how deep of a pullback we should expect in Jan-Feb. If the pullback lasts until mid-feb and the Mars-Rahu-Uranus alignment, we could see a retest of support at 10,000. A rebound should begin in mid to late February and continue through March and perhaps into April. While we cannot rule out the possibility of higher highs by April, they seem unlikely. Another significant correction is likely starting in May and lasting until September or perhaps October. The Nifty could easily test 9000 during that time and we could well fall much further. Technical Trends Astrological Indicators Target Range Short term trend is UP bullish (confirming) 10,700-11,200 (1 week ending 4 Jan) Medium term trend is UP bearish (disconfirming) 10,200-10,500 (1 month ending 4 Feb) Long term trend is UP bearish (disconfirming) 9,000-10,000 (1 year ending Jan 2020)

8 Currencies The Dollar pulled back last week as the equities bounce saw a move into risk assets. The USDX fell half a cent to while the Euro finished at I had been fairly neutral about last week as I thought the early week looked bearish but wondered if we might see a bounce on Wednesday or Thursday. We did see a retest of immediate resistance at 96.5 on Wednesday but bulls could not keep control. The Dollar chart is looking more bearish here after bulls failed to move above the key 96 level. This is the area of the convergence of the 20 and 50 DMA and could prove pivotal for both bulls and bears. It is also worth noting that Wednesday s high of 96.5 was a back test of the previous rising trend line support. Bulls may be able to take some solace from the fact that the measured move downside target of 95.5 has been reached and that buyers may be more willing to step in. Conversely, this larger topping pattern over the past two months is now testing horizontal support at 95.5 and has a measured move downside target of This would put it in the proximity of the 200 DMA. Despite last week s gain, the weekly Euro chart is still trending down, albeit in a bullish falling wedge pattern. A weekly close above 1.15 could encourage more bulls to go long. The narrowing trade range does point to a significant breakout eventually, although the direction is uncertain. The Dollar looks stronger this week. Monday could well be weaker, however, as the Sun- Saturn conjunction could see further downside testing. This is not a high probability but merely an elevated downside risk. Wednesday and Thursday look more positive as the Moon conjoins Venus and Jupiter. Friday looks less bullish but could still go either way. I would expect at least a retest of the 20 DMA at 96.6 and a push above that key resistance level is also possible. Next week (Jan 7-11) also looks bullish although the early week looks more bearish. However, I would expect the Dollar to be fairly strong until Jan 22 or so and the Venus-Jupiter conjunction. A push to the recent high of 97.5 looks likely and a move above that is definitely possible. The rally may run out of steam by late January and February should bring a retracement and possible downtrend. There is a risk that the Dollar will correct significantly in March and April. This is likely to test the 200 DMA at 94 at least. Another up trend will likely begin in May or June and last through the summer. The longer term outlook is bearish as 2020 is likely to see the Dollar trade in a lower range.

9 Technical Trends (Dollar) Astrological Indicators Target Range Short term trend is DOWN bullish (disconfirming) (1 week ending Jan 4) Medium term trend is UP bullish (confirming) (1 month ending Feb 4) Long term trend is UP bearish (disconfirming) (1 year ending Jan 2020) Crude oil Crude oil had a choppy week as revised demand forecasts offset any bargain hunter buying impulses. WTI ended the week fractionally lower at $45.33 while Brent was down 1% to $ This bearish outcome was not surprising as I noted the mix of influences made a decisive move either way less likely. Monday was bearish as expected on the Mercury-Neptune square as WTI fell to $ We did see a midweek bounce as expected with Wednesday s oversold rally although bulls could not keep control until Friday. We saw the beginnings of a bounce last week as support held for WTI at $45 on Friday. If that level can hold on Monday, then the rest of the week could see more upside. Obviously, it won t take much for a retest of Monday s low of $42.5. Nonetheless, cautious bulls may be looking to buy there and form a more stable double bottom. From a longer term perspective, the weekly Brent chart still makes a good case for bulls to buy here, although the exact low may not be clearly defined. A decline to the previous low of $45 is still quite possible, although it could just as easily bounce from here given this $50-55 level is an area of horizontal support.

10 This week looks more bullish. Monday is still a question mark, however, as the approaching Sun-Saturn conjunction contains some downside risk. If crude does decline on Monday, then I would think that increases the chances significantly for a strong bounce on Wednesday and Thursday. The midweek alignment of Mercury and Venus looks fairly positive and should translate into at least a test of resistance at $47 (WTI) and possibly the 20 DMA at $49. Of course, the key level is $50 so bulls may not be ready to hold positions in the event of a rally to that level. Next week (Jan 7-11) also offers a plausible bullish set up although it looks more choppy than the previous week. The early week looks more bearish in this respect so it is possible we could see any gains from the previous week erased. The late week looks more positive but I would be reluctant to predict a bullish week overall. Let s say it s more The following week (Jan 14-18) is similarly mixed with some selling possible early in the week but with buying more likely later in the week. I would not rule out more downside pressure here although I would not say that lower lows are probable. I think crude is more likely to rise late in January although it is possible that a technical bottom may form in early January. February looks more bullish generally and should begin a more sustainable rally that lasts into April and May. A significant correction is likely over the summer and it could begin as early as May. Depending on how strong the preceding rally is in Q2, we cannot rule out the possibility of lower lows by October. Technical Trends Astrological Indicators Target Range (WTI) Short term trend is DOWN bullish (disconfirming) $45-50 (1 week ending 4 Jan) Medium term trend is DOWN bullish (disconfirming) $50-60 (1 month ending 4 Feb) Long term trend is UP bullish (confirming) $50-70 (1 year ending Jan 2020)

11 Gold Gold extended its winning streak last week given the ongoing volatility in the equity markets. Gold rose 2% on the week to This bullish outcome was somewhat unexpected as I thought we would see a more mixed performance. Gold is showing good strength with a close above The test of support from the 200 DMA in the previous week was a sign that the rally had further to go, even if it is unclear if it can reach 1300 before consolidation. But the chart is looking more bullish here as the 20 and 50 DMA are turning up and are poised to cross above the 200 DMA. There is considerable overhead resistance at so the next phase of this rally could be more difficult. In addition, we can see that RSI is now overbought at 70 so there may be more caution in the market. Current support is 1270 so any pullback to that level will initially be bought. It would maintain the series of higher lows and keep the rally going. However, a move below 1270 would test the mettle of gold bulls as it could translate into a second test of the 200 DMA at This would not be bearish, of course, but it may begin a longer process of consolidation after this significant run-up. This week could well see the rally continue, albeit with some downside mixed in. Monday could be one such down day as the Sun conjoins Saturn. But Wednesday and Thursday may well see the bulls run once again as Venus aligns with the Lunar Node and Mercury. This is a fairly good bet for some upside. Friday s Moon-Mercury conjunction also leans bullish, although perhaps less convincingly so. Overall, I think there is a decent chance for more upside this week. Next week (Jan 7-11) looks more bearish as Mercury squares Mars early in the week. Even the late week doesn t look particularly bullish as the Sun conjoins Pluto. I would think there is a significant downside risk here so another test of the 200 DMA is quite possible. The following week (Jan 14-18) also leans bearish as the Sun conjoins the South Lunar Node. The late week could bring some recovery as the Moon aligns with Venus and Jupiter. I would think gold may resume its rally in late January and into February as Jupiter moves towards its alignment with Pluto. I think there is a good chance for a

12 return to the previous trading range of although we will have to see how January plays out first. The rally will likely top out sometime in March and then reverse lower in April and May with some force as Jupiter and Saturn turn retrograde. I am expecting a retest of support at 1200 at least during Q2 and Q3. Gold will then likely rally by Q4 and extend its gains to higher highs above 1375 in Technical Trends Astrological Indicators Target Range Short term trend is UP bullish (confirming) (1 week ending Jan 4) Medium term trend is UP bearish (disconfirming) (1 month ending Feb 4) Long term trend is DOWN bullish (disconfirming) (1 year ending Jan 2020) Disclaimer: For educational purposes only. The MVA Investor Newsletter does not make recommendations for buying or selling any securities. Any losses that may result from trading are therefore the result of your own decisions. Financial astrology is best used in conjunction with other investment approaches. Before investing, please consult with a professional financial advisor Christopher Kevill