25 November 2017 Volume 10, Issue 48

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1 25 November 2017 Volume 10, Issue 48 Summary for week of 27 November 2017 Stocks more prone to declines this week Dollar could bounce off support here Crude oil may be under pressure, especially late in the week Gold could extend declines this week US Stocks The relentless bull market continues. Stocks returned to their winning ways again last week on expectations for strong holiday shopping data and renewed hope for Trump s tax cuts. The Dow rose by almost 1% to 23,557 while the S&P 500 finished at I had thought there was a reasonable chance for some downside on the early week Mars-Node alignment but, alas, as has been the case recently, negative planetary influences do not seem to be able to shake the optimism of the market. The late week was more positive as expected around the Mercury-Uranus alignment. It s still all systems go for the Trump rally as the tax reform bill still looks doable before the end of the year. Certainly, it is not a slam dunk as a few of the usual moderate Republicans have stated their opposition to it. However, getting to 50 votes in the Senate is still possible. The Alabama special Senate election on December 12 th is another source of uncertainty but Trump has lined up with Roy Moore, despite the sexual misconduct allegations against him. So far, polls are showing a close race (the GOP usually wins the seat by 20 points or more) but Moore is definitely still in contention and could conceivably still win. A Moore victory would make the path to 50 Senate votes that much easier where tax reform is concerned. Investors will have the Fed in focus this week as incoming Chair Jay Powell will provide testimony for his confirmation while outgoing Chair Janet Yellen will also appear in a Congressional hearing. Markets will be looking for clues for possible paths to interest rate normalization. Any hint of multiple rate hikes in 2018 would likely prompt some alarm on Wall St and could further flatten the yield curve.

2 The astrological outlook still indicates that a pullback is more likely than not in the weeks head. To be sure, last week was a plausible down week but it didn t happen. However, a more likely scenario is still the Mercury-Saturn conjunction in early December. This does not preclude further gains in the coming days although it does suggest risk is still rising for the bulls. While we could see the Santa Claus rally after Christmas and into early January, there is another window of elevated risk in February and March. Higher highs are therefore still possible in January, even if we get a pullback in December. But my basic view is that a deeper decline is looking more likely sometime in the February to May period. This is perhaps the best bet for a decline that tests the 200 DMA at The technical outlook remains bullish on all time frames. Any dips that may occur will therefore be bought given the strong upward momentum. The SPX closed at all-time highs on Friday and are maintaining the bullish pattern of higher highs and higher lows. Key horizontal support is therefore the previous interim low of 2560 since a break below that level would interrupt the bullish pattern. The 50 DMA at 2555 is near this level so a brief piercing low below 2560 may not decide the matter conclusively. Resistance is the rising trend line now near MACD is entering a new bullish crossover so more upside is possible in the short term. And yet the negative divergence with the higher highs is also apparent. As we know, this kind of overbought and strongly trending market can go on for some time before its exhaustion becomes apparent. Complacency is everywhere with few investors anticipating what if scenarios that may require a Plan B. But earnings can still grow if tax reform gets passed without significant changes. Therefore, it is reasonable to expect more upside if the GOP can get its act together and get it through the Senate. A defeat or significant delay would be bad news, however, as stocks could fall 5% or more very quickly. Breadth is turning more positive here as the Bullish Percent Index finally pushed higher last week. Coupled with the bullish crossover of the 5/10 EMA, the technicals are hinting at further upside in the days ahead. The weekly Dow chart did not post a higher high last week but the chart is looking like it will eventually. The momentum is very strong and bulls have to be favoured over bears. That said, stochastics is in a bearish crossover as the rebound after the brief consolidation has been modest. Meanwhile, yields on the 10-year continued to slip last week and now stand at 2.34%. It is finding support at its 200 DMA so that could protect the up trend in yields in the event of further delays to the tax overhaul plan. The bond market will be paying close attention to testimony from Yellen and Powell this week as it tries to glean the pace of rate hikes next year. The 2/10 yr spread is still quite narrow and suggests the Fed may be getting ahead of the market on rate hikes. Stocks will likely continue to do well as long as there are no major moves in yields in either direction. A sharply rising short or long end would create too much competition for equities as money would begin to move out of bonds.

3 This week looks mixed with further gains possible. The Mercury-Saturn conjunction takes place on Tuesday and could bring with it higher prices. Venus is also involved in the alignment so that boosts the likelihood of gains a bit higher. For this reason, I would lean bullish at least until Tuesday or Wednesday. Monday could go either way and it is possible that it could bring some consolidation. Nonetheless, I would think that the midweek planets offer a decent chance of at least one up day. Anyway, the entry of Mars into Libra on Thursday casts a bit of a shadow over the second half of the week. Moreover, it forms a 180 degree aspect with Uranus and therefore increases its potential for declines. I am open-minded about where the indexes will finish this week. It could be higher or lower depending on the relative size of the moves. There isn t a compelling planetary reason to expect significant downside here as long as the early week is positive. If the bulls do not show up by Tuesday, however, then the risk of a negative week rises. Next week (Dec 4-8) looks more bearish still as Mercury turns retrograde on Sunday the 3 rd. This will create an additional contact with Saturn which tilts the balance towards the bears. Mars will align with both Mercury and Saturn in the second half of the week so that also offers the bears some hope. I think some downside is probable here, although I am reluctant to predict how large a pullback it could be. The way the market has been behaving lately, it may be fairly modest, such as what we saw in early November. Nonetheless, there is a potential here for some larger moves which could retest and break below horizontal support at Let s see. The following week (Dec 11-15) also leans bearish as retrograde Mercury conjoins the Sun on Tuesday. This is likely to produce some additional downside in the first half of the week. Lower lows are very possible here relative to the previous week. But the second half of December looks less volatile as some kind of Santa Claus rally looks possible. Further upside into January also seems likely and higher highs in January 2018 may be in store. However, the risk of a much larger decline will rise as we move into February and March. It may begin as late as April when Saturn turns retrograde. This looks likely to coincide with at least a 10% correction or more. Although it could shock the bullish complacency out of the market, I would expect a rebound to take place in the second half of More upside is likely in 2019 as well, presumably to higher highs. Technical Trends Astrological Indicators Target Range Short term trend is UP bearish (disconfirming) SPX (1 week ending Dec 1) Medium term trend is UP bullish (confirming) SPX (1 month ending Jan 1)

4 Long term trend is UP bearish (disconfirming) SPX (1 year ending Dec 2018) Indian Stocks Stocks pushed higher last week on optimism over corporate earnings and an inflow of domestic capital. The Sensex gained 1% on the week to 33,679 while the Nifty finished at 10,389. This bullish outcome was not hugely unexpected as I thought the upside from the second half of the week could offset the early week jitters. As it happened, the early week wasn t bearish at all and the bulls carried the baton without difficulty. It s still mostly a good news story for Indian equities as liquidity remains high and growth is strong. Global cues are also generally positive, although bears don t have to look too far to find areas of concern. S&P kept its ratings on Indian debt unchanged while some observers had hoped for an upgrade. Nonetheless, the ratings agency was generally optimistic about growth prospects going forward. Also we get testimony from the outgoing and incoming Fed Chairs this week as both Yellen and Powell are due to speak to Congressional hearings. This could give more clues about the strength of the US economy and the possible trajectory for rate hikes in The hike in December is already priced in, as well as at least one more in Anything more than that would be seen as too much for the liquidity trade to continue and could be bad news for stocks. As I noted last week, the US yield curve is flattening as the bond market remains skeptical about growth prospects. While worries over the US tax overhaul seems to have shifted to the back burner somewhat, new concerns about Germany political stability have emerged following the collapse of the Merkel coalition. A weakened Germany could be a drag on European growth and this could hurt exports. The astrological outlook for December looks fairly mixed. November looks like it will end fairly flat and we could get another month of indecision in December. Some downside in the first half of the month still looks more likely than not as Mercury turns retrograde and conjoins Saturn. Whether this takes out the November low of

5 10,100 is difficult to predict, however. It is possible but I would not say it is probable at this point. The second half of December looks more positive as Jupiter aligns with Pluto. More upside is also fairly likely in early January. That kind of Santa Claus rally scenario therefore raises the possibility of a retest of the high of 10,500 as well as higher highs such as the upside target of 10,600. But the rally is likely to stall in January with some downside likely in Jan-Feb. This Q1 pullback is likely going to be larger than the November pullback and anything we see in December and is likely to produce lower lows below 10,000. The technical outlook remains bullish. The indices are range bound at the moment just below their all-time highs. This is a normal period of consolidation before optimism rises once again to take prices higher. The picture becomes murky only if it is taking too long for stocks to eclipse previous highs. The previous interim high took about 6 weeks to achieve from the preceding low so a similar period of time would be a normal bullish pattern. That gives the bulls until the end of December to duplicate that pace. If there is a failure to make higher highs in December, then it could introduce a new sense of caution into the marketplace. But for now, support is at the 50 DMA at 10,100 with resistance at 10,400 and then 10,500. Channel resistance is also near 10,600. The technical indicators are looking bullish also as stochastics is not yet overbought and MACD is just beginning a bullish crossover. This suggests that more near term upside is more likely than not. In the event of a deeper pullback, the 200 DMA is looking more plausible as it is near horizontal support at That would be a place where more cautious bulls may be waiting to enter the market. The weekly Sensex chart reflects the strong up trend where pullbacks are buying opportunities. Weekly stochastics is in a small bearish crossover but has yet to fall below the 80 line. This would be a bearish development and would reflect the inability of the market to push to higher highs in the near term. However, it is very possible that we could see stochastics fall below 80 while still in December and hence not triggering that bear alarm of the rebound taking too long. Therefore, bears should perhaps not put too much faith in the stochastics indicator alone. With the astrological alignments of 2018 looking more bearish than 2017, it is quite likely that we will finally get a test of the 50 WMA at 30,400 and even a test of the 200 WMA at 27,300 is possible at some point in the upcoming year. Meanwhile, Infosys (INFY) had a good week as it reached its previous high. With significant resistance here at the July high, a gap fill retracement from the early part of the week is very possible. However, the momentum is clearly higher. HDFC Bank (HDB) also moved higher last week as it prepares to retest its previous high. While the long term prospects for the stock are bullish given the rising 200 DMA, it is currently carving out a descending triangle pattern. This has a bearish bias the longer price cannot move above horizontal resistance of the previous high.

6 This week looks somewhat more bearish than last week. The early week could see some gains as Venus enters Scorpio and aligns with Mercury and Saturn into midweek. The midweek actually looks a bit more bullish than Monday. Some profit taking is a plausible enough scenario on Monday although I would not expect a large decline. If the midweek rebound materializes, then we could see last week s highs retested and perhaps exceeded. Therefore 10,400+ is a real possibility this week at some point. But the late week entry of Mars into Libra adds a bearish tone, especially given its alignment with Uranus. Thursday s alignment also involves the Moon so that could be a day of significant moves. While there is some downside risk in the late week it is difficult to say where the market will finish. I would lean bearish just in case, especially since I think December is likely to lean bearish. While there is an overall slight bearish bias here this week, I should also add there is an elevated risk of a larger than normal decline. This isn t really probable in the late week but it is a possibility worth considering. A gap fill to 10,250 would therefore not be surprising by Friday. Next week (Dec 4-8) also looks bearish, perhaps more so as Mercury turns retrograde on the 3 rd and then conjoins Saturn. In addition Mars aligns with Saturn so there is again a reasonable set up for the bears here. The clustering of planets makes it more difficult to identify what part of the week is likely to be more vulnerable to declines. Nonetheless, I would think it is very likely that we get a gap fill of 10,250 (if it hasn t already occurred) and a retest of 10,100 is also possible. The following week (Dec 11-15) also looks bearish as the Sun conjoins retrograde Mercury. Lower lows are very possible here while more upside looks less likely. A rebound is more likely to take place in the second half of December as Jupiter aligns with Rahu and Pluto. The rebound could well extend into early January. Higher highs (10,600) are possible. Another pullback becomes more likely by the end of January and into February. This looks like it could be a larger pullback than the one in November or December. After a rebound into March-April, more downside looks likely in April-May. Given the relatively short preceding rebound, it is possible we could see lower lows in Q A test of the 200 DMA (9700) is therefore likely by this time and the Nifty could well fall further than that. The second half of 2018 looks more bullish with higher highs likely by Technical Trends Astrological Indicators Target Range Short term trend is UP bearish (disconfirming) 10,200-10,400 (1 week ending 1 Dec) Medium term trend is UP bullish (confirming) 10,200-10,500 (1 month ending 1 Jan)

7 Long term trend is UP bearish (disconfirming) ,500 (1 year ending Dec 2018) Currencies The Dollar lost ground last week after Fed minutes revealed some concern about the stubbornly low rate of inflation. The USDX finished the week below 93 while the Euro climbed to The Yen Index fell below 112 while the Indian Rupee was stronger closing near This bearish outcome for the Dollar was unexpected. While the early week was higher as forecast, the late week was much more bearish than I thought. The breakdown below support at 93.5 was abrupt on Wednesday with more follow through on Friday. Dollar bulls will have extend their time horizon out a bit further now as the rising channel from the September low has been broken. If this dip is bought here, then bulls could still enjoy a higher low and keep the rally story intact. A shallower slope is now visible which connects the August highs and the November highs. By this reckoning, the Dollar is sitting on channel support now. There is also some horizontal support here as it matches the October low at A retest of the September is looking somewhat more likely now. Bulls may be on safer ground in that case, as the double bottom would be a bullish starting point for a more enduring rally. The weekly Euro chart suggests the pullback may be over and that there is a push on to retest the high at The up moves in the past three weeks would suggest there should be some more follow through on the upside. This week offers a plausible bounce scenario. The Mercury-Saturn conjunction looks bullish although it could manifest at different times this week. I might be a bit more bullish in the first half of the week and become more cautious about the Dollar in the second half. Given the current level at support, we could see a bounce here although it may be fairly modest. Next week also looks fairly bullish as Mercury turns retrograde. A retest of the recent high of 95 is possible. I would expect more choppy trading as we get further into December, however. Additional gains are still possible, but volatility could increase also. By January, I would think the Dollar will be more

8 bearishly biased. It is difficult to say where this rebound could top out at. Perhaps we will only see 95 for a second time. Or we could get a proper tag of the 200 DMA at 96 that would be my preferred scenario. But the period from January to April seems more problematic for the Dollar. Higher highs are less likely then, and it seems quite possible that we will get a retest of significant lows such as 91. Lower lows are also possible at various points of Q1. The Dollar should begin to rebound again starting in April-May and continuing for much of the summer. Depending on how deep the preceding pullback is, the Dollar could very well put in new highs above the 200 DMA in the summer. Technical Trends (Dollar) Astrological Indicators Target Range Short term trend is DOWN bullish (disconfirming) (1 week ending Dec 1) Medium term trend is UP bullish (confirming) (1 month ending Jan 1) Long term trend is DOWN bullish (disconfirming) (1 year ending Dec 2018) Crude oil The bulls were on parade again last week as hopes for an imminent OPEC-Russia production deal boosted sentiment. WTI added 4% on the week to just under $59 while Brent finished below $64. This bullish outcome was somewhat unexpected. I had thought we would see more early week downside but only Monday posted a modest retracement. And while I did expect the bulls to prevail the rest of the week, the size of the gains were larger than expected. The technicals look very solid here as prices have been steadily climbing since their June low. Last week s move above resistance at $57 was bullish and suggests that $60 is likely fairly soon. In the event of a pullback, support should be close to the 20 DMA which is now at $56. Bears likely need to wait for a move below the previous low of $55 before there is much chance of a deeper retracement. But one would think that most dips will be bought fairly quickly at this point. The weekly Brent chart is moving sideways here but the trend line resistance is likely at the $65-70 level. In other words, probable upside is fairly small and there may be a rising risk of a deeper retracement. One possible area of support would be $50-52 which is where the rising channel trend line support is located. This is not to say that a decline of that size is likely in the near future, but it

9 is important to note that a move down to that level is still within the parameters of the up trend that began in January This week could see the beginnings of a pullback as Mercury conjoins Saturn. This is a bearish pairing under normal circumstances but the up trend has been quite strong this month. Venus joins this alignment in the first half of the week so that could indicate more strength or at least reduce the likelihood of declines. Perhaps the second half of the week is a better bet for a pullback with the Moon aligning with Mars on Thursday. Interestingly, the OPEC-Russia deal is slated for Thursday so we could have a sell the news event or even outright disappointment. There are enough positive alignments this week to give WTI a decent chance at $60. I am more uncertain about where it could finish, however. I would be open-minded about net weekly outcomes. Next week (Dec 4-8) looks more bearish as Mercury turns retrograde in the vicinity of Saturn. The first half of the week has an elevated downside risk. A test of support at $57 is more likely. Thursday Dec 7 th looks more positive as the Moon transits Cancer while aligning with the Sun. That suggests a good chance for a late week rebound. The following week (Dec 11-15) looks mixed with sizable moves in both directions likely. I would have a bit of a bearish bias here in any event. The second half of December looks more bullish as Jupiter aligns with Pluto. It is possible we could see higher highs by January. In that sense, I think the December pullback may be small enough that it is less likely to upset the bullish technical outlook. However, late January and February look less positive and could produce a significant pullback. It is unclear if this will break the bull trend, however. More upside is likely in March and April so it is possible that the bull market could extend into Q2. I would think a larger pullback looks more likely starting in the summer, however. Technical Trends Astrological Indicators Target Range (WTI) Short term trend is UP bearish (disconfirming) $56-60 (1 week ending Dec 1) Medium term trend is UP bullish (confirming) $56-62 (1 month ending Jan 1) Long term trend is DOWN bullish (disconfirming) $50-70 (1 year ending Dec 2018)

10 Gold Gold pulled back a bit last week after Fed minutes revealed members concerns about unusually low inflation data. Gold lost less than 1% to This bearish outcome was not unexpected as I thought the early week Mars-Node alignment could translate into some downside. Monday was significantly lower in that respect. This week could be important as both Janet Yellen and Jay Powell are due to make statements on Fed policy. Their comments could reveal additional information of the likely speed of rate normalization next year. While inflation remains low, the Fed is keen to return rates to their normal level so that it has room to maneuver in the event of a recession. The December 13 th hike is already priced into the market but forward guidance could also be significant. Higher rates and a higher Dollar are anathema to gold, of course, so bulls will be looking for a more dovish stance. The technicals are looking more equivocal here as the chart is forming a pennant pattern of lower highs and higher lows. Pennants are often continuation patterns so that gives the bears a very slight edge. A move above 1310 would be a decisive short term breakout and could signal a rally to retest As before, the 200 DMA is looking like the line in the sand so any close below that line could be bearish and trigger a lot of stop losses. A move down to 1210 may happen fairly quickly after that. This week leans more bearish. Mercury conjoins Saturn while Mars opposes Uranus. There is a higher likelihood of large moves in both directions on these alignments. Both involve malefic planets to that tips the scales towards the bears somewhat. At the same time, I should note that a sharp rise is also not impossible with these alignments. However, I would tend to think the current situation favours the bears. These alignments therefore raise the chances of a break out above or below resistance/support this week. My preferred scenario would be 1270 could be tested. Next week (Dec 4-8) also offers the bears another chance to break support. Mars aligns with both Mercury and Saturn during midweek and could produce more downside. Just to be clear, I think the larger downside move is more likely to take place in January-February around the eclipse period. That would mean that we may only get a smaller pullback here in December. Therefore I would caution bears about expecting too much too soon. A bounce could take place in late December but I suspect it won t go very far. Presumably after a lower high (1300? 1270?), gold will try to sell-off again in January. This should produce a low below 1270 and it could test Another rebound is likely to begin in February and it could extend into Q2, possibly into May. This could again give hope to gold bulls although I would be skeptical about the possibility of higher highs above The summer looks bearish again, however, and significant correction is likely in Q3. However, I think the long term outlook for gold is fairly bullish with 2019 and even 2020 looking more positive.

11 Technical Trends Astrological Indicators Target Range Short term trend is UP bearish (disconfirming) (1 week ending Dec 1) Medium term trend is DOWN bearish (confirming) (1 month ending Jan 1) Long term trend is DOWN bullish (disconfirming) (1 year ending Dec 2018) Disclaimer: For educational and entertainment 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