21 July 2018 Volume 11, Issue 30

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1 21 July 2018 Volume 11, Issue 30 Summary for week of 23 July 2018 Stocks likely moving lower, especially after Tuesday Dollar likely retesting resistance this week with possible breakout Crude oil could bounce early but bearish in second half Gold likely trending lower US Stocks Stocks were mostly unchanged last week as positive earnings reports were offset by ongoing concerns about possible trade wars. The Dow was fractionally higher on the week at 25,058 while the S&P 500 was unchanged at This neutral outcome was not surprising as I thought the mix of influences was likely to mitigate any big moves in either direction. The first half of the week was generally bullish as expected, however, although as Tuesday s opening low was bought fairly aggressively. And the late week was more negative which also reflected the tense Sun-Moon square and Mars-Lunar Node conjunction. This bull market is definitely doing its best to climb a wall of worry. Earnings have been positive so far but the market has been quite muted in its response. One reason is because valuations have become overstretched this year, especially among a very small number of stocks -- the FAANGs -- that are primarily responsible for the gains of the indexes. Trump s trade battles with China and other countries are still there and could suddenly escalate into something more than a negotiation tactic. Trump has now warned of putting tariffs on all

2 China s goods coming into the US unless changes are made. China is not backing down as it has strategically devalued the yuan in an effort to introduce a de facto tariff on imported goods from the US. The market still isn t jumping to any conclusions yet although I would think that if Trump announces across-the-board tariffs stocks are likely to react negatively. And now Trump has voiced his displeasure with the Fed intending to raise rates twice more in This is beyond the standard jawboning that one often hears although it is unclear what Trump can really do. The astrological outlook looks tense in the short term as we approach this week s Full Moon and lunar eclipse. Recent months have seen significant pullbacks around the time of the monthly Full Moon and I would expect July to be no different. Friday s Full Moon has the added problem of a Mars-Sun opposition which, if anything, ratchets up the possibility for volatility. The major indexes are all fairly close to key resistance levels so a pullback would not be too surprising in any event. But there is a chance that the interim low may occur a little after the Full Moon, mostly likely in the first week of August as Mars squares Uranus. But that remains to be seen. August as a whole could lean bullish as Jupiter aligns with Neptune but it may not be a smooth pathway higher. Venus begins its transit of Virgo on August 1 and will remain in its sign of debilitation until September 1. This is usually a negative drag on stock prices although at this point I m unsure if it will be the deciding factor. The Jupiter-Neptune pairing should produce some upside at least although higher highs above SPX 2872 may be more difficult to achieve. The technicals are still bullish but clouds are gathering. Now that the SPX has pushed slightly above horizontal resistance at 2800, bulls are feeling fairly confident that the alltime high of 2872 is next. However, breakouts are sometimes false as prices can reverse and fall back into a previous trading range. The rising channel of recent monthly highs has resistance at 2850 so there is good reason for bulls to expect more upside before any significant pullback. And yet serious doubts will emerge if we see another down day on Monday and the SPX retests its breakout level of Tuesday s low of 2781 may well be the line in the sand for this potential breakout. A move back below 2781 would likely mean more downside, perhaps back to the 50 DMA at This would also match the previous resistance level around the late June low. The planets are pointing to this kind of move lower at least, but let s see if the technicals play their part and the SPX falls below 2781 this week. Conversely, a move above the Wednesday high of 2816 would strongly argue for at least

3 2850. But pullback or not, the charts look bullish for the medium term. The smallcap Russell 2000 looks more bullish than the SPX as it appears to be on the verge of another breakout above its high of The NASDAQ printed a new all-time high last week but the chart is pushing up against rising channel resistance here. Marginally higher highs are still very possible in the days ahead but another pullback seems likely soon, at least back to the 50 DMA at As always, the trade-dependent Dow is the laggard as the weekly chart still looks vulnerable to a deeper retracement. To be sure, a weekly close above horizontal resistance at 25,500 would make the chart more bullish but if that doesn t happen soon, we could see more selling pressure take place. The 20 WMA of 24,598 may be key support in that respect. If we do see a late July pullback that finds support at that level, then a higher low would be created and the rebound could resume. But a daily or weekly close below 24,598 and especially the previous weekly close to 24,518 would strongly point to a retest of the previous spike lows of 23,500. This week looks more bearish. Friday s Full Moon looks like the most bearish day on paper at least. Wednesday also looks more bearish than other days this week as the Moon conjoins Saturn and Mercury turns retrograde. The early week is more of a question mark, however, as Monday s Venus-Neptune alignment may be seen as somewhat bullish. I wouldn t necessarily expect a positive day on Monday but it s still very possible. Therefore, bears should not get too discouraged is Monday sees the SPX retest last week s high of I don t think it will rise above this level, but if it does, then I would reconsider my bearish forecast for the week. The more likely scenario is for another middling day on Monday with Tuesday looking more bearish. Wednesday should produce some downside follow-through and we could break support at 2781 if we have not yet already done so. The late week looks bearish although it is difficult to predict levels. As long as the early week is not too bullish and the SPX remains under 2800, then the chances are good that we will see 2750 by Friday. There is always the possibility of a deeper decline to the 200 DMA at 2688 at some point here but I would not say it is probable. But if the early week turns out to be bearish, then the test of the 200 DMA would become more doable. Next week (July 30-Aug 3) also contains some bearish potential. The early week could be bullish, however, as Mercury aligns with Venus on Monday and Tuesday. If this Friday has seen some significant selling, then this would suggest a typical oversold bounce after the weekend. But Wednesday sees the Mars-Uranus square which also aligns with Saturn and the Lunar Nodes so there could be some additional volatility. Thursday could go either way, but Friday looks quite bearish on the Moon-Uranus-Mars alignment. I

4 would therefore not rule out the possibility of lower lows by Friday, August 3. The following week (Aug 6-10) looks more bullish as Mercury and the Sun align with Jupiter. There will likely still be volatility here around the late week Venus-Saturn square but the bulls should prevail. The second half of August could be more bullish as Jupiter aligns with Neptune with gains more likely in the final week. Some additional upside is possible in early September. However, the second half of September should see another pullback. So overall, a bearish scenario would see 2688 by early August and then a bounce to a lower high (2780?) by early September and then a pullback to the 200 DMA again in late September. A more bullish scenario would see a pullback to 2750 by early August and then 2850 or even 2872 by early September and then a pullback to 2780 in late September. October looks fairly bullish but November and early December look quite bearish. A strong rally is likely to begin sometime in December and continue through much of Q Q2 looks more bearish and could undue much of the gains of the preceding rally. The second half of 2019 has a more bullish bias. Technical Trends Astrological Indicators Target Range Short term trend is UP bearish (disconfirming) SPX (1 week ending July 27) Medium term trend is UP bullish (confirming) SPX (1 month ending Aug 27) Long term trend is UP bearish (disconfirming) SPX (1 year ending July 2019)

5 Indian Stocks Stocks were unchanged last week as trade uncertainty continued to undermine confidence. The Sensex finished the week fractionally lower at 36,496 while the Nifty ended the week at 11,010. I thought we might have seen more downside, especially later in the week. Monday was lower as expected as the Nifty gap below 11,000 was filled, and Tuesday did produce some upside. The midweek was somewhat bearish but Friday was surprisingly bullish despite the Mars- Ketu conjunction. The fundamental outlook remains largely positive although there is no shortage of worries. Rising global growth is still on pace to fuel further gains in equities but inflationary pressures and the government fiscal crunch could dampen enthusiasm. As the Fed raises rates this year, India could be a tougher sell for foreign capital. But the falling Rupee is likely to fuel exports so this could offset some of the losses on the domestic front as the RBI seeks to contain rising costs. The trade question is still front and centre as President Trump seems determined to remove the US from the existing global trade regime. The trade conflicts with China and the EU are likely to get worse before they get better and this could be a headwind for equities in the near term. The astrological picture looks bearish for the short term. This week s Full Moon and lunar eclipse is likely to put stocks under pressure. Full Moons are often bearish but in this instance the negative potential is greater due to the Mars-Sun opposition that occurs at the same time. Moreover, Mars and the Sun will align with Saturn and the Nodes, Rahu and Ketu. This bearish window should include next week as well due to the Mars-Uranus square which could further dampen sentiment. While it is difficult to predict the magnitude of this imminent pullback, it should be fairly significant. I would be surprised if it only retraced to the 50 DMA at 10,756. It looks large enough to at least test the 200 DMA at 10,507 and it could go lower.

6 The technical situation of the market looks bullish. The Nifty is on the verge of retesting its ATH from January at 11,171. While the correction was sharp, the recovery has been strong and is maintaining the bullish bias in the chart as all the moving averages are sloping upwards. Obviously, with every risk of a previous high there is the possibility of a bearish double top pattern which could signal a reversal lower. It seems likely that some further consolidation will have to take place in any event before we see any new highs. Bulls will naturally expect a shallower pullback as the bullish pattern of higher lows should stay intact. This suggests that a pullback to the 50 DMA at 10,750 is possible in the coming days, regardless of whether the Nifty matches 11,171 first or not. Bears will be keeping a watchful eye in the event that any consolidation may be larger than expected. A pullback below the May low at 10,417 would be more worrisome for bulls as it would introduce some uncertainty about the path forward. Although the long term chart would still be bullish, the medium term would be called into question. This week resistance is at last week s high of 11,076 while support will be at 10,900. A breakdown of support would likely involve a quick decline to 10,700 at least. A move above 11,076 would likely produce a hard retest of 11,171. The weekly Sensex chart shows a predictable pause last week at its high while stochastics are still quite overbought. The long term trend is still up so bulls should feel comfortable that any pullbacks will be bought eventually. Barring some unforeseen calamity, higher highs are the most likely outcome in the coming weeks. Meanwhile, Infosys pushed back up to its recent high as the rally resumed. The ascending triangle upside target is around This chart will only become short term bearish if we get a close below ICICI Bank is attempting to form a double bottom. Currently, it is trading in a narrow range around the April low. A breakout above 270 would be short term bullish and could generate more upside and a retest of the 200 DMA at 299. This week leans bearish. Friday is the Full Moon and eclipse and that happens to coincide with a very close Mars-Sun opposition. I would expect some significant downside on that day in particular. Generally, the Wednesday to Friday time period looks more bearish than Monday-Tuesday. The early week Venus-Neptune alignment could

7 coincide with some upside on Monday or Tuesday. I m not sure there is enough bullish energy for gains to last by the close but it s certainly a very possible outcome. Monday is a bit more bullish in this respect than Tuesday although either day could be positive. Therefore, bears should not be discouraged if there are early week gains. We could see the ATH tested. I don t think the odds favour a significant or lasting move above 11,171, however. But Wednesday s Moon-Saturn conjunction looks like it will give bears a good chance to do some damage. The size of the decline could be significant. Thursday is perhaps less clearly negative although not really positive either. Friday looks like another down day. Even if the early week is bullish, I would think the chances are very good for a negative week. A break below support at 10,900 looks likely and even a test of the 50 DMA at 10,750 could be in the cards. Next week (July 30-Aug 3) could also see stocks under pressure. However, the early week looks quite bullish as Mercury aligns with Venus on Monday and Tuesday. If we have seen a sell-off in the preceding Friday, then the planets here argue for an oversold bounce. Monday could start off a bit bearish but will likely improve by the close as the Moon leaves the influence of Saturn. Tuesday looks more bullish generally. But the late week leans bearish as Wednesday and Thursday will see the Moon under the influence of Rahu. If the early week has been strongly bullish as I expect, then the late week may only produce a higher low relative to the preceding week. The following week (Aug 6-10) looks more bullish although the late week could see some modest selling. August as a whole has a bullish bias as Jupiter aligns with Neptune. Depending on the size of the late July-early August pullback, it is possible we could see higher highs by late August or early September. September may be more bearish, however, as Saturn stations direct and will again align with Rahu and Uranus. This pullback will likely be focused in the second half of September and should be at least a 5-7% pullback. October looks bullish but another sharp decline is likely in November. It is possible we could see some technical damage here, even if the indices have made new highs in Q3. Another strong rally is likely to begin in December and extend into early Q Q2 will likely bring a 10%+ correction which could undermine the medium term technical outlook for the market. However, the second half of 2019 looks more stable so bulls should have another opportunity to take stocks to new highs. Technical Trends Astrological Indicators Target Range Short term trend is UP bearish (disconfirming) 10,500-10,800 (1 week ending 27 July) Medium term trend is UP bullish (confirming) 10,700-11,200

8 (1 month ending 27 Aug) Long term trend is UP bullish (confirming) 10,000-11,000 (1 year ending July 2019) Currencies The Dollar finished the week modestly lower after President Trump criticized the Fed for raising rates too quickly. The USDX closed Friday at while the Euro settled at I had been fairly neutral in my outlook for last week although I didn t expect any significant moves above resistance at 95. But Thursday did see a brief breakout above 95 but it didn t hold once Trump made his statement. Friday s sharp decline suggested a significant reversal as the market is waiting for any pushback from the Fed. Despite the Fed s relatively hawkish tone which indicates two more hikes this year, there may be political pressure from the White House not to raise rates too fast. It is unclear what Trump can actually do, although subtle pressure may have intangible effects which could see the Fed err on the side of dovishness during its decision-making process. The Dollar is trading in a narrow range here just below resistance. Support is near the 50 DMA at 94. Bulls can focus on the apparent rising triangle pattern which has an upside target of 97 or the now gently sloping channel following the breakout. Bears will be regarding the breakout as false and look for a possible retest of key support at 93. The medium term chart still looks bullish although a lower low would change that perception. The weekly Euro chart is not showing any signs yet of forming a possible right shoulder on a head and shoulders pattern. The inability to move above 1.18 is a sign of relative weakness which could make it vulnerable to more downside in the near term. However, it is also possible to see the current narrow range as a basing pattern from which a more durable rally should begin. The next move in either direction will likely indicate the next price trend.

9 This week looks bullish for the Dollar. The Venus-Neptune alignment in the early week should see buyers return and could well coincide with another test of resistance at 95. I am uncertain about the possible effects of the late week lunar eclipse. While this is likely going to increase volatility for stocks, there are no clear corroborating signals in the Dollar horoscope. Normally, financial volatility would produce a rise in the Dollar as a safe haven. So while I would have a bullish bias this week, I would acknowledge considerable uncertainty during the second half of the week. Next week (Jul 30-Aug 3) also lean bullish with gains more likely in the second half of the week. This is likely to produce a breakout above 95 so we could get to 97 fairly quickly by early August, perhaps even higher. But August as a whole looks fairly mixed with some retracement likely in the middle of the month and then more upside at the end of the month. I am uncertain if this will produce higher highs by September. The month of September looks more bearish and we could see a significant retracement that could last into October. November looks more bullish again with Dollar remaining fairly strong into early As a whole, 2019 looks mixed but may begin to trend lower as the year progresses is looking more bearish with further downside likely after that. Technical Trends (Dollar) Astrological Indicators Target Range Short term trend is UP bullish (confirming) (1 week ending July 27) Medium term trend is UP bullish (confirming) (1 month ending Aug 27) Long term trend is DOWN bullish (disconfirming) (1 year ending July 2019)

10 Crude oil Crude oil declined again last week after data showed a sharp rise in inventories. WTI fell 4% on the week to $68.26 while Brent settled Friday just above $73. This bearish outcome was in keeping with expectations as I thought the early week would see some downside. Monday s decline was larger than expected as most of the negative energy was focused in that one day. The rest of the week saw bulls struggle to gain a foothold as rebound attempts were quite weak. While this second leg lower does not seriously damage the bullish perspective, it does increase the risk of a more significant technical setback. Wednesday s intraday reversal suggested that a tradeable bottom was in although the late week only saw modest gains. Last week s higher low was bullish, however, so it seems more likely that the rally can resume from here. The technical outlook would become more complicated if the bulls cannot recapture the 20 DMA at $71. This is the level where the pullback paused in the previous week so resistance on this line essentially divides the short term bullish and bearish trends. If there is a rejection of the 20 DMA in the days ahead, then a retest of the WTI low at $66 would entail added risk for bulls. Failure to hold support there could mean a quick flush down to the 200 DMA at $62. That still isn t a likely scenario yet since most market participants are looking at the rising channel at $66 as good support. The weekly Brent chart shows how current levels are at a key inflection point. Last week s low briefly broke below rising channel support and the 20 WMA. Friday s close was just above that line so bulls will want to see a rebound this week or else run the risk of a deeper retracement. The problem with the weekly chart is that the double top pattern is now more likely to play out with a decline after the break below the previous low. This is clearly not a replay of April s cup and handle bullish breakout pattern. A retest of last week s low would increase the likelihood of reaching the double top downside target of $64. This is close to the 50 WMA (=250 DMA) and therefore would be a plausible scenario if we do in fact get more downside here. This week also leans bearish as Mars opposes the Sun at the time of Friday s lunar eclipse. This isn t always negative for crude prices but the overall alignment appears to activate the key natal horoscopes for crude. For this reason, I would expect more downside pressure here. The early week may see some upside, however, as Venus aligns with Neptune on Monday and Tuesday. Monday looks somewhat more bullish than Tuesday. This could mean we may see crude retest the previous week s highs in the $70 area first.

11 The second half of the week could see another rise in volatility, however. I would therefore expect another retest of last week s lows and a real chance for a break below. While eclipses can be unpredictable in their effects on prices (a rise or decline), it is possible we could see a test of the 200 DMA fairly quickly. More downside is quite possible next week (July 30-Aug 3). The early week may see a rebound, however, as Mercury aligns with Venus. If the preceding eclipse week is very bearish, then a rebound is more likely on Monday and especially Tuesday. The rest of the week could see more downside, however, possibly as a retest of the low. The following week (Aug 6-10) looks more bullish as Mercury and the Sun align with Jupiter. The month of August looks more bullish generally so that suggests that any downside will be temporary. The rally should extend into early September although I am uncertain if it will be strong enough to produce higher highs. The second half of September looks like we could get a pullback as Mars again aligns with Saturn and the Lunar Nodes. October looks bullish so that may indicate that any September pullback is fairly small. Another significant correction is likely by late October or early November, however, and there is a risk it could produce lower lows relative to any late September low. I would be more agnostic on whether it may retest the July low. Another bullish move is likely to begin in late December and continue into Q although again I cannot say if it will be strong enough to produce higher highs. Q2 looks very bearish, however. The rest of 2019 may see a more bullish trend take hold. Technical Trends Astrological Indicators Target Range (WTI) Short term trend is DOWN bearish (confirming) $62-66 (1 week ending 27 July) Medium term trend is UP bullish (confirming) $64-72 (1 month ending 27 August) Long term trend is UP bullish (confirming) $70-85 (1 year ending July 2019)

12 Gold Gold extended its down trend last week as the prospect of more rate hikes by the Fed pushed the Dollar higher. Gold traded as low as 1210 but settled Friday at 1231, for a decline of almost 1% on the week. This bearish outcome was in keeping with expectations as I thought the Mars-Lunar Node alignment through the week would likely coincide with more selling. I was somewhat mistaken in thinking the late week would be more negative, however, as gold rebounded from Thursday s intraday low. The technical outlook for gold is very bearish now. The break below horizontal support of 1240 from the Dec 2017 low now makes rebounds less likely in the near term. In addition to the breakdown of horizontal support, the rising trend line support at was also broken last week. Friday s rebound to 1231 therefore should not be seen as anything other than an oversold bounce back to resistance, which was previously support. A brief move back above 1240 is not impossible in the coming days but in all likelihood it would be sold fairly quickly. The 20 DMA at 1248 is a possible target for any such rebound. It seems likely that a retest of last week s low is quite likely. If gold can find support around 1200, then perhaps it can consolidate for a while before attempting another rally. However, there is no guarantee that 1200 will hold as support. It is possible that gold could fall to a potential measured move target of 1120 ( =120; =1120) if 1200 doesn t hold. If 1200 does hold, then a weekly close above the previous high of 1266 would be more bullish and could entice more buyers. This week also leans bearish. Friday s lunar eclipse looks negative, especially given the simultaneous Mars-Sun opposition. It is difficult to estimate how large a decline we could see from this pattern, but certainly the potential is there for lower lows this week. That said, the early week could be more positive as Venus aligns with Neptune. Monday and Tuesday therefore may see bulls attempt to recapture 1240 or even the 20 DMA at But I suspect the full effects of the lunar eclipse and the Sun-Mars opposition will have the final say this week. So even if we get an early bounce and it may not even happen the downside risk suggests at very least a retest of last week s low of 1210 and quite possibly lower lows.

13 Next week (July 30-Aug 3) also has some downside risk although it looks less potent. The early week could see some upside on the Mercury-Venus alignment. If the preceding week has been bearish, then I would not be surprised to see two up days on Monday and Tuesday. But Wednesday looks bearish as Venus enters Virgo and then Friday s Moon-Mars-Uranus alignment also looks quite negative. It is possible we could see a retest of the previous week s low, wherever it is. The rest of August may see bulls try to mount a rally as Jupiter aligns with Neptune. This should be a sizable bounce but it seems unlikely to significantly change the bearish technical outlook. Late August could see a pullback as Mars stations direct on Aug 27. However, September could see more upside as Venus enters Libra on the 1 st of the month. This is usually a positive influence on gold sentiment although here again, I would not expect a strong or durable rebound to take place. Late September may see another pullback and then another rebound is likely in October and early November. This could be fairly strong and may help to improve the technical outlook. Late November looks quite negative, however, and this down trend should continue into December and early While some stability may return to prices in Q1 2019, it is possible gold may remain fairly mixed until the second half of looks more bullish generally. Technical Trends Astrological Indicators Target Range Short term trend is DOWN bearish (confirming) (1 week ending July 27) Medium term trend is DOWN bullish (disconfirming) (1 month ending August 27) Long term trend is DOWN bearish (confirming) (1 year ending July 2019) 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

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