1 December 2018 Volume 11, Issue 49. Summary for week of 3 December 2018

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1 1 December 2018 Volume 11, Issue 49 Summary for week of 3 December 2018 Stocks vulnerable to declines this week Dollar prone to downside pressure Crude oil could move significantly in both directions Gold with downside risk this week US Stocks Stocks rebounded last week on growing hopes for the US-China trade deal and the possibility that the Fed may take a go slow approach in The Dow surged 5% to 25,538 while the S&P 500 finished the week at This bullish outcome was in line with expectations as the midweek Sun-Mercury-Jupiter conjunction delivered the goods. The upside was somewhat stronger than I anticipated since we only got one very modest down day on Thursday. Markets are awaiting the outcome of Saturday s Trump-Xi meeting on trade. Any announcement of a deal would be bullish for the short term although there is a considerable range of possible deals. Since I am leaning bullish here in December, I would think a fairly substantive deal is more likely than not. If it is comprehensive in scope, then the market could rally back to all-time highs fairly quickly. This week will also have the jobs data in focus with the NFP report due on Friday. There are growing hints of economic slowing recently so more weak data could be bearish. The Fed is sounding more dovish now so that is another factor to watch as rates hover near 3%.

2 The planetary outlook is looking more bullish over the medium term. I still expect some significant downside this week at least and perhaps into next week but the chances of a lower low (below 2603) are looking slim. There are two key alignments in play: the Sun-Mars-Neptune square and then the Mercury-Lunar Node alignment. But neither of these patterns will last long so I am reluctant to predict any second leg lower. Jupiter is due to align with Neptune in early January so that could well be enough to keep stocks moving higher into early But the Saturn-Neptune aspect could undermine confidence in February. Depending on how big a pullback we see, it is possible we could see stocks top out as early as January (presumably to a lower high) and then begin to trend lower through Q1 and Q2. Or we could see a slightly higher high by April or May. But 2019 looks bearish given the nasty Saturn- Lunar Node-Pluto conjunction that extends through the summer. A bear market looks likely. The technical outlook looks fairly bullish. The formation of a W pattern with a double pattern portends more upside eventually. Friday s rally stopped at key resistance at the 200 DMA at The convergence of the 50 and 200 DMA (the death cross) at this level suggests it could prove to be formidable resistance. However, a daily close above that interim high at 2820 would likely indicate that any pullback is done and stocks will be moving higher once again. Thursday s pullback to the middle Bollinger band (20 DMA at 2722 was an important bullish development. This is now a key support level. Any move below 2722 would therefore raise concerns that this strong rebound may be in trouble. Bears will be looking for a failed breakout above 2775 and the 50 DMA and a subsequent break below Bulls can likely tolerate some consolidation here below resistance but without any sharp declines below 2722 and The weekly Dow chart shows the logic of last week s bounce off the lower Bollinger band. Friday s close above the previous week s high was bullish, although the Dow has yet to retest its 20 WMA at 25,619. If we get more upside this week, that level may determine whether or not the rally will continue in the short term. Tech stocks also rebounded last week as investors are hoping a trade deal will revive Apple s fortunes. The NDX is looking weaker, however, as it needs to climb above the 50/200 convergence level and push above the previous high at That seems less likely in the short run as the more likely technical outcome would be a retest of the Nov 20 low of If bulls can defend that level, then the rebound will take a big step forward. Meanwhile, the 10-year yield is falling and may retest support at the 200 DMA at 2.96%. The double top pattern now suggests we could see a pause in the

3 upward climb in rates for a while. There is key support here at 3% from previous highs so any daily close below that level could signal a bigger move lower. This week gives the bears a real chance. Monday s Moon-Venus conjunction looks more bullish, however, so I would lean towards a positive day, perhaps on optimism from a Trump-Xi trade deal. Bears should not be discouraged if we see some early week gains since the Sun-Mars-Neptune alignment will tighten by Wednesday. Thursday may be somewhat bullish on the Moon-Jupiter conjunction in the morning but I would be skeptical about the strength of this pattern. Friday could go either way as the bullish New Moon confronts the Mars-Neptune conjunction. One possible scenario this week could be an early week rise to or so followed by some selling, perhaps down to I would lean bearish overall, although I would be surprised to see any major technical damage. The planets look bearish, but may not that bearish. Next week (Dec 10-14) is harder to call. While the medium term influences look positive enough to take stocks higher, the short term aspects lack any clear bullish qualities. Therefore, I would keep an open mind about this week. Downside is perhaps more likely on Monday the 10 th as the Moon conjoins the Lunar Node, and again on Friday the 14 th as the Moon is aspected by Saturn. This week could well test the bulls patience. The following week (Dec 17-21) is the last full week before Christmas. The planets look quite bullish as Mercury conjoins Jupiter throughout the week and Venus aligns with Neptune. This strongly inclines stocks to rise here, perhaps breaking above key resistance levels (2780? 2820?). The last week of December looks mixed as the 26 th could see some selling on the Mars-Lunar Node alignment while the end of the week seems more bullish. January could begin on a bullish note as Mercury and Venus align with the Lunar Nodes. Further gains are likely in January but I am uncertain how high stocks could go. Higher highs are not out of the question, but it may be a bridge too far for bulls to climb above 2940 by January. We shall see. After a pullback into February, March should be more bullish. However, the planets may worsen by April as Saturn aligns with the Lunar Node and Pluto for the next several months. This is a very difficult pattern that is likely to see a major correction and will probably mark the end of the bull market in Technical Trends Astrological Indicators Target Range

4 Short term trend is UP bearish (disconfirming) SPX (1 week ending Dec 7) Medium term trend is DOWN bullish (disconfirming) SPX (1 month ending Jan 7) Long term trend is UP bearish (disconfirming) SPX (1 year ending Dec 2019) Indian Stocks Stocks rebounded sharply last week on dovish Fed comments, continued weakness in crude and a rising rupee. This bullish outcome was in keeping with expectations as I thought the Sun-Mercury-Jupiter alignment would coincide with some buying. While Monday did not produce any major losses as I thought it might, we did at least see a retest of Friday s low on an intraday basis before bulls took over. Stocks gained in all five sessions and closed above the 200 DMA. Maybe the glass is half full after all. The prospect of a US-China trade deal this weekend gives hope to bulls that the market can extend its upward climb as we move into December. If the trade issue can be solved in a comprehensive way, a significant headwind will be removed from the market. Friday s GDP number came in lower than expected, however, even if Indian growth is still outpacing China. With the Fed likely to take a more cautious route in 2019, there will be greater incentive for FII to bring money into Indian stocks. State elections still have to be decided and are a source of uncertainty but there is now a better fundamental case for bulls.

5 The planetary situation is gradually improving. This week s tense alignment of the Sun, Mars and Neptune is likely to coincide with some declines but I suspect it won t be enough to seriously damage the rebound that is now underway. Jupiter will remain conjunct Mercury in Scorpio for the rest of December and that could generate a bullish bias for several weeks and into early January. My general expectation is for the rebound to continue until the middle of January. I am uncertain if the rebound will be strong enough to challenge the all-time high of 11,760, although I suspect it will fall short. The second half of January will feature a tense lunar eclipse which looks like it will spark a pullback of some size. While the pullback may last into February, my current thinking is that it will create a higher low. Another leg higher is likely in March but this does not look very strong. One possible scenario would be a range bound market in Q (10,400-11,400?) which then leads to another major correction by Q2. The technical outlook is more positive after last week s close above the 200 DMA. The breakout created a higher high although the Nifty is now near horizontal resistance at 10,900. This was a previous support level so traders will be watching to see if this level sparks some profit taking. The close above the upper Bollinger band may lead to some selling in the days ahead. Support is provided by the 20 and 50 DMA at 10,610. Dips at or below these lines will likely be bought initially. A move below those lines could encourage bears to take short positions. Bears may also be watching support from the rising wedge which happens to match the 50 DMA. If wedge support is broken, the next support level could be 10,300. The weekly BSE chart is still bullish for the medium term. Stochastics are in a bullish crossover and have further to run. Last week s close matched the middle Bollinger band (20 WMA). Previous tests of this line have produced a pullback as in early We should also note that the current 36K level has previously acted as resistance this year. But a weekly close above the 20 WMA could spark another leg higher and a possible retest of the alltime high. Key support is the previous week s close at 34,900. Meanwhile, Infosys did enjoy a nice bounce off its 200 DMA last week as it closed at resistance at the 50 DMA. Wednesday s break above the falling trend line was an indication that the current pullback is most likely over. A back test of that line is still possible at 650, however. Most likely, the dip will be bought. ICICI Bank is sitting on key support at 350. A daily close below that level could lead to more downside, possibly back down to the 200 DMA at Even if we were to see a test of the 200 DMA, the chart is still bullish and argues for more upside.

6 This week could see some downside. The early week looks more bullish, however, as the Moon conjoins Venus on Monday. I would expect a positive day. But the chances for declines will increase as the week progresses. Tuesday could go either way, but Wednesday looks more bearish. Thursday also leans bearish, although less than Wednesday. Friday has a modest bullish bias due to the New Moon. If Monday is positive, then we could see 11,000 but then the Nifty will be more likely to pull back after that. There is some real downside potential here although I would not expect a move down to, say, 10,300, especially if we have seen 11,000 on Monday. But another test of the 20 and 50 DMA at 10,600 is possible. Even if Friday is bullish, I think we are more likely than not to see a down week. Next week (Dec 10-14) looks mixed so it is difficult to say where stocks will finish. I would tend to have a bullish bias, if only because the preceding week looks more bearish. The Venus-Jupiter alignment in the second half of the week also leans bullish. The following week (Dec 17-21) looks more clearly bullish as Mercury conjoins Jupiter at the end of the week. Depending on how the preceding weeks go, we could see the Nifty move above 11,000 before Christmas or at least New Year s. The last week of December looks more mixed, however, as Mars aligns with Rahu. This could represent some profit taking after previous gains. Early January also looks fairly positive although I am expecting the rally to run out of steam by the middle of the month at the latest as the lunar eclipse and the Mars-Saturn square are likely to coincide with a pullback. I would expect a higher low in February, however, with more upside likely in March and April. New all-time highs are possible. But the whole period after April looks quite bearish as Saturn conjoins Ketu and Pluto. This could coincide with a significant correction which tests long term support at 9000 on the Nifty. Technical Trends Astrological Indicators Target Range Short term trend is UP bearish (disconfirming) 10,500-10,700 (1 week ending 7 Dec)

7 Medium term trend is DOWN bullish (disconfirming) 10,800-11,400 (1 month ending 7 Jan) Long term trend is UP bearish (disconfirming) 9,000-10,500 (1 year ending Dec 2019) Currencies The Dollar moved higher last week on hopes for a trade deal with China. The USDX closed off its highs for the week at while the Euro slipped further to This bullish dollar outcome was in keeping with expectations as I thought the Mercury-Jupiter alignment at midweek could coincide with some gains. Tuesday was the high point with some selling taking place on Wednesday after dovish comments from the Fed Chair. The technical chart looks fairly bullish as buyers are coming in at the 20 DMA. The most likely outcome is a break above horizontal resistance and a move up to the level. The outlook would become more bearish if we see a break below the trend line from the September low at Even then, a test of the 200 DMA at would be in keeping with this rally in the Dollar. With the 200 DMA is still sloping upwards, there is good reason to buy dips for the foreseeable future. The weekly Euro chart continues to hug the declining 200 WMA. This down trend could continue in the short term but the falling wedge pattern can be bullish if there is a break above resistance at 1.15 and the 20 WMA.

8 This week contains more downside risk on the Sun-Mars-Neptune alignment. A large move lower is possible and we could see a test of the 20 DMA at 96.5 or lower. The late week could see a significant move in either direction, however, as Friday s New Moon aligns closely with the USDX horoscope. It is possible we could see the Dollar finish with a gain here but I suspect it is more likely to go lower. Next week looks unclear. I suspect the Dollar will move in the opposite direction from the previous week. If it falls in the first week of December, then a bounce higher in the second week is a more likely outcome. I expect the Dollar to rally further into Christmas as Mercury conjoins Jupiter with more upside is likely in January. Some retracement looks likely in Q with a probable test of the 200 DMA in the 94 area at least. The Dollar should gradually strengthen in Q2 and Q3 with new highs possible in the summer. The Dollar should begin a downtrend later in 2019 which should extend well into Technical Trends (Dollar) Astrological Indicators Target Range Short term trend is UP bearish (disconfirming) (1 week ending Dec 7) Medium term trend is UP bullish (confirming) (1 month ending Jan 7) Long term trend is UP bearish (disconfirming) (1 year ending Dec 2019)

9 Crude oil Crude oil went sideways last week as supply glut fears were offset by technical buying. WTI edged higher on the week to $50.93 while Brent was unchanged at $ This neutral outcome was not unexpected although I thought we would see more upside in the first half of the week. Monday was higher but there was no follow through in subsequent days. The late week was mixed as expected. It seems that crude is in the process of forming a bottom as $50 is holding as support for WTI and $57-60 is holding as support for Brent. The sell-off has been so sharp that we have yet to see a bounce even to the 20 DMA. V-shaped bottoms are possible but one would think that any initial bounce will be followed by a retest of the low. Lower lows are still possible, of course, although they may only be marginally lower than current levels. If we do see a bounce, then resistance may be the previous level of support at $64 for WTI. This is the approximate level of the death cross of the 50 and 200 DMA and would likely see weak bulls take profits. The weekly Brent chart is showing signs of approaching a bottom as price is close to the long term 200 WMA. Last week s low also tested the previous horizontal resistance dating from This is a more solid technical set up for a bottom, even if we could see some marginally lower lows in the days ahead. But if support at $55-57 doesn t hold, then a retest of the lows of $45 could be possible. When the oversold bounce finally comes, there will likely be sellers waiting near the 50 WMA at $ This week could be interesting. The Sun- Mars-Neptune alignment looks bearish and is likely to coincide with some downside in the middle of the week. Monday could go either way, although I would have a bullish bias given the Moon-Venus conjunction. Tuesday and Wednesday lean bearish, however, and it is possible we could see a large move down. A retest of last week s low is quite possible. Thursday looks more bullish as the Moon conjoins Jupiter. Friday is hard to call although I would have a bullish bias. I m not sure where crude will finish this week but I do think we could see significant moves in both directions. Next week (Dec 10-14) looks bullish. Monday could go either way, but the planets look bullish by Tuesday and Wednesday. I would expect a positive week overall. The following week (Dec 17-21) also leans bullish as Mercury conjoins Jupiter. Generally, I think crude should rally through the rest of

10 December and into January. I would think there is sufficient bullish energy upcoming to at least retest the 200 DMA by January. A pullback is likely in late January and early February. This should be a higher low and may be the basis for another leg up that lasts into May. A larger correction will likely occur during the summer of Technical Trends Astrological Indicators Target Range (WTI) Short term trend is DOWN bullish (disconfirming) $50-55 (1 week ending 7 Dec) Medium term trend is DOWN bullish (disconfirming) $60-65 (1 month ending 7 Jan) Long term trend is UP bullish (confirming) $60-75 (1 year ending Dec 2019)

11 Gold Gold remained in a narrow trading range again last week despite dovish comments from the Fed. Gold slipped a bit and closed at This bearish outcome was somewhat unexpected as I thought we might see more upside in the first half of the week. But buyers didn t enter the market until Wednesday and could not produce a sustained rally. The late week was more mixed as expected and gold failed to retest resistance at Could gold merely be coiling in a tighter trading range before breaking out higher? It s possible, although bears may see last week s lower high as simple weakness. Certainly, if last week s low of 1210 is broken, then the chart will become more bearish. And yet the longer gold goes without making a new low below 1167 or retesting that level, the more plausible is the bullish case that it is forming a long term bottom. Even if we don t see a breakout above 1240 soon, this sideways move is a basing pattern that seems more likely to move higher than to fall to new lows. This week looks bearish as the Sun-Mars square is likely to coincide with some selling. Monday may be more bullish, however, as the Moon conjoins Venus. But Wednesday s Moon-Mercury conjunction aligns with the Lunar Node so that seems more likely to bring some downside. Thursday looks bullish while Friday is harder to call. I would lean bearish overall here. A test of 1200 is very possible, assuming that the early week does not trade above Next week (Dec 10-14) looks mixed with a bullish bias. The early week could see some selling as the Moon conjoins the Lunar Nodes on Monday. But the second half of the week could see buyers return as Venus aligns with Jupiter. The rest of December looks less positive, however, as Mars aligns with the Lunar Nodes. January also leans bearish on the lunar eclipse and the Mars-Saturn square. I would expect gold to trade below 1200 by January and possibly well below that level. A recovery should begin by February and the rally may extend into April and May. I am not necessarily expecting a major rally although a test of the 200 DMA looks more likely than not, and even 1300 could be in the cards. Gold should correct more sharply after May as the summer looks bearish around the Saturn-Lunar Node-Pluto conjunction. As long as we don t see significant new highs by May, I would think the lows for 2019 will occur in summer. Gold is more likely to build a sustained rally in late 2019 and into 2020.

12 Technical Trends Astrological Indicators Target Range Short term trend is DOWN bearish (confirming) (1 week ending Dec 7) Medium term trend is DOWN bearish (confirming) (1 month ending Jan 7) Long term trend is DOWN bearish (confirming) (1 year ending Dec 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