1 October 2016 Volume 9, Issue 40

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1 1 October 2016 Volume 9, Issue 40 Summary for week of 3 October 2016 Stocks mixed this week with declines more likely in second half Dollar neutral but may rally later in the week Crude oil may retrace somewhat this week but more upside likely in October Gold may bounce this week but a sell-off is coming US Stocks Stocks edged higher last week despite worries over the solvency of the European banking system. The Dow added just 40 points on the week to 18,308 while the S&P 500 finished at I thought we might have seen more upside given the prevailing Jupiter alignments. Monday s decline was most surprising perhaps although Tuesday and Wednesday were more bullish. I thought we would likely see some midweek selling although I thought that Wednesday was more likely on that score than Thursday. Friday s bounce fit neatly with the bullish Moon-Sun-Jupiter conjunction. While the alarm bells are ringing over the precarious position of Deutsche Bank, it s unclear just how damaging this situation may be to US markets. A German government bailout now seems inevitable and that should prevent any worse case scenario from unfolding in the near term. Clearly, all governments have learned the lesson of Lehman Brothers back in 2008 when that investment bank was allowed to go bankrupt. The resulting financial tsunami almost led to a global economic collapse as the contagion effects were not limited to the US alone. The additional risk factor now is that other German banks may also be vulnerable to bankruptcy as the experiment with negative interest rates is now revealing its darker unintended consequences. Despite the threat from European banks, I think we could see stocks will remain firm for another week or perhaps even two. However, there is definitely some rising downside risk now as Saturn tightens its aspect with the North

2 Lunar Node and Neptune in October. However, these aspects from slowing moving planets have only an approximate time of manifestation. That makes it harder to say when they will hit. Certainly, I would not be surprised if we are already in the early stages of this decline/correction. While the exact Saturn-Node square is due this week, my general expectation is that declines are actually more likely in the aftermath of the aspect for the rest of October and into November. But with time running out for the bulls here, it seems less likely that the SPX can push above 2200 and even matching its previous high of 2194 could be challenging. I think the upcoming decline will be larger than a simple bull market pullback. A tag of the 200 DMA looks quite likely by November. Beyond that, we will have to wait and see. I would not rule out a much deeper plunge although I am reluctant to predict it. The technical picture remained mostly bullish. Last week s inability to make a higher high may induce some anxiety for bulls although the higher low at 2140 reaffirmed the strength of the rally. Stocks can continue to meander sideways here as long as support at 2140 is defended. It s worth noting that rising wedge support of the February low is just a little below 2140 now, so any break below that level could create some sudden moves lower. As previously mentioned, rising wedges are bearish patterns which can often resolve into rising channels with much lower support trend lines. Potential channel support here may be close to in the event that wedge support is broken at 2130ish. However, the 200 DMA may act as initial support at 2063 as it did in the post- Brexit sell-off. Bulls would likely choose to enter the market at some point below 2063 but above the previous low of 2000 in order to preserve the bullish pattern of higher lows. Any move below the June low of 2000 would therefore be quite bearish. A sudden decline down to 1950 is a possible downside target in the event of a break below The chart of the percentage of stocks above their 200 DMA shows a potential weakening of the rally. The lower highs validate the indexes lower highs. The weekly Dow chart shows a deepening bearish crossover in the MACD. Stochastics is well below the 80 line although the bearish crossover has been neutralized for now. A move back above the 80 line would be bullish for the medium term outlook. If the market corrects as I expect, it seems quite possible that we will get another tag of the 200 WMA at 16,600. This line has offered approximate support in previous sell-offs, although there is no guarantee it could do so for a third time. Nonetheless, it will induce some buying in any event. Meanwhile, bond yields finished mostly unchanged last week on mixed data. The Fed likely needs the 10-year yield to move above the 200 DMA in order to justify a rate hike in December. Without that market signal, there may not be enough inflationary pressures. And if European banks remain a problem in the near term, we should expect yields to move lower.

3 This week looks mixed as both positive and negative aspects could move stocks in both directions. I would lean bullish in any event, however. The early week looks especially choppy in this respect as Monday s Venus-Node alignment looks bullish. Mercury s entry into Virgo may also boost sentiment. However, Tuesday s Sun-Saturn alignment could signal some selling as we go into midweek. Wednesday s Mars-Jupiter square also contains some additional bearish potential. The late week is hard to call. The Moon is between Saturn and Mars which can increase volatility. However, there is a lack of clearly bearish aspects at that time so I m less inclined to think we will see much downside. Overall, I think the first half of the week could have a better chance of seeing gains with highs of the week more likely on Monday or Tuesday. While I would keep a bullish bias this week, I suspect the SPX may not finish too far from its current level. Next week (Oct 10-14) may bring more downside risk. Tuesday s Mercury-Jupiter conjunction could see some early week gains but the picture becomes more bearish afterwards. The Mercury- Mars square on Thursday and Friday will morph into a multi-planet alignment with Saturn and the Lunar Nodes. There is additional downside risk in this alignment. Overall, the week looks bearish, and we could see a large decline. The following week (Oct 17-21) looks mixed with gains possible on Monday s Sun-Uranus alignment. While a rebound is possible in the first half of the week, the late week looks more negative. Overall, I would lean bearish here. The following week (Oct 24-28) could see a rebound in the early going on the Sun-Mercury conjunction but the rest of the week could be an uphill battle as Mars squares Uranus on Friday. November looks fairly bearish at least to start the month so more downside is very possible. Late November is likely to see a bounce which may continue into December. My expectation here is that a lower high is possible in December and then we will get more downside in early A lower low in Q may therefore be the more likely scenario. Another major rally should take place sometime between March and May or June. I am uncertain if this will make a higher high. It seems unlikely but let s see how much damage the bears can do between now and, say, February. The second half of 2017 looks bearish again. Technical Trends Astrological Indicators Target Range Short term trend is UP bullish (confirming) SPX (1 week ending Oct 7) Medium term trend is UP bearish (disconfirming) SPX (1 month ending Nov 7)

4 Long term trend is UP bearish (disconfirming) SPX (1 year ending Oct 2017) Indian Stocks Stocks fell sharply last week as renewed tensions in Kashmir cast a shadow over the market. The Sensex lost almost 3% closing at 27,865 while the Nifty finished the week at This bearish outcome was surprising as I thought we might have seen more early week gains on the Sun- Jupiter conjunction. Stocks were weak even in the early going, however, before Thursday s sell-off. While I had expected some profit taking in the second half of the week, I did not foresee a decline of this magnitude. Friday s bounce was very modest but reflected the bullish Moon-Jupiter conjunction. Besides this latest Indo-Pak flare up, investors are now also considering the possible impact of an incipient European banking crisis. Deutsche Bank may be on the verge of bankruptcy following the US government s decision to demand a multibillion dollar fine for breach of its bank laws. Markets stabilized at the end of the week on the expectation that the German government would step in and do whatever necessary to avert a complete collapse. While a bail out is a reasonable expectation here, what is less well known is the extent of the rot in German banking. Banks were not subject to reforms following the 2008 meltdown as in the US and now their bottom lines have been squeezed as a result of the ECB s experimental negative interest rate policy. Europe may be the source of global instability once again if the banking sector woes get out of control. Astrologically speaking, I think a possible European banking crisis is the kind of catalyst we would need to see the decline I foresee in the weeks ahead. In fact, that decline may already be underway. For what it s worth, I don t think the border tensions with Pakistan are likely to get out of hand in the near term. But I still think we will see a significant pullback in October which could extend into November. I had thought we could see more upside here in early October given the ongoing transit of Venus through Libra. While some up days are still likely, it seems very unlikely to return the bulls to the driver s seat in the market. In other words, the early September high may be last for a while as we enter a protracted corrective phase.

5 The technical picture significantly worsened last week. Thursday s close was the first close below the 50 DMA since February is approximate horizontal support so we could see a bounce from here. While Friday s rebound hinted at a possible reversal after a test of support, bulls may find a new level of resistance at the 50 DMA near The 50 DMA is not just a convenient line in that sense, but is also marks the channel support that has guided this rally through With that channel now broken, stocks will be seeking a new trading range. Suddenly, that mid-september gap fill that formed a possible island reversal is looking ominous for the market. If Thursday s low is broken, then the bears will begin to gain more confidence that the island reversal pattern was real and that the early September high could mark the beginning of an extended correction. Cautious bulls may be waiting for a pullback to the 200 DMA at 8000 before they commit new money to the market also marks a significant horizontal support level so that is another plausible reversal point in the event we see more downside in the coming days. And it s worth noting that 8000 would constitute a 50% retracement from the February low. Stochastics are already oversold, however, so that could mean we get a bounce of some size in the near term. The MACD bearish crossover has now crossed below the zero line and is threatening to demarcate a much larger move lower. Even more telling, the weekly Sensex chart is now showing a clear stochastics bearish crossover which is below the 80 line a classic sell signal for the medium term. MACD is on the verge of a bearish crossover now while RSI has come off its recent high near the 70 line. Taken together, the technical indicators offer some evidence that a correction is at hand. Meanwhile, Tata Motors moved lower on the week as it broke through September s horizontal support. However, it is now sitting at channel support which matches the 50 DMA. One would expect more of a rebound from here, even if it ultimately doesn t match its high. The chart is still bullish but may be entering a period of consolidation. ICICI Bank (IBN) also tested its rising channel support last week and is now poised to extend its rebound. Thursday s low was a higher low but any close below the August low would be bearish. This week has a neutral to bearish bias although we could see moves in both directions. Monday s Venus-Saturn-Ketu alignment leans bearish so we could get a retest of Thursday s low early in the week. On Tuesday, Mercury enters Virgo where it tends to do well. For this reason, I would expect some upside on Tuesday or Wednesday. But Thursday and Friday look less bullish as the Moon conjoins Saturn and Mars squares Jupiter. Thursday looks somewhat more bearish than Friday although it is only a matter of degree of probability. Just from these short term aspects, I

6 would think there could be more downside. Even from a momentum perspective, the size of last week s decline suggests more downside is likely in any event. And then when we factor in the bearish medium term aspects, downside still looks like a safer position. Gains are still conceivable here, of course, but they are more likely to be short-lived and/or modest. Next week (Oct 10-14) looks more bullish to start the week as Mercury conjoins Jupiter on Monday and Tuesday. Some of that upside may be limited given the holiday closing on Tuesday and Wednesday. But the late week looks quite bearish as Mars aligns with Mercury and Saturn. Even if we get a big rebound on Monday, the late week looks bearish enough to produce lower lows. The following week (Oct 17-21) could again some a rally attempt early in the week but the second half of the week looks bearish as Mars conjoins Pluto. I m less certain the Nifty will trade at lower lows here, but certainly there is significant downside risk. A brief bounce is possible in the last week of October, but the Mars-Uranus square on the 30 th looks quite nasty and even more downside is quite likely in early November. I would therefore expect the down trend to continue. Perhaps the Nifty will end up tagging the 200 DMA at 8000 after all. The second half of November and early December look bullish but I would expect a lower high. A bottom is likely in January after which we should see a significant rebound begin in Q Another interim high is likely in May or June but then the second half of 2017 looks more bearish. Technical Trends Astrological Indicators Target Range Short term trend is DOWN bearish (confirming) (1 week ending 7 October) Medium term trend is UP bearish (disconfirming) (1 month ending 7 November) Long term trend is UP bearish (disconfirming) (1 year ending October 2017)

7 Currencies The Dollar was largely unchanged on the week as weak economic data was offset by enhanced safe haven appeal following the European banking uncertainty. This fairly neutral outcome was not unexpected as I thought the Dollar might be vulnerable to late week selling. Friday was only modestly lower, however. The Dollar is looking more bullish here as it approaches the 200 DMA. It has been following a rising trend line off its summer low and may be able to attempt a close above 96 fairly soon. The current ascending triangle has an upside target of 98. That is a fairly selective interpretation of the chart, however, as from a slightly longer term perspective the Dollar is carving out a more neutral pennant pattern. The clustering of the moving averages at continues to highlight the current period as a time of indecision in the currency market. As long as the Fed has a viable excuse to avoid raising rates, it seems the current neutral outlook will continue. A hike, however, would catapult the Dollar above this key support/resistance zone. The weekly Euro chart remains nominally bullish as it trades in the upper half of its two-year trading range. A Fed rate hike would likely force it below 1.10 but until that happens, it seems more likely to extend this sideways trend. This week looks more bullish for the Dollar. The early week entry of Mercury into Virgo could coincide with some selling but the midweek looks more bullish as Venus aligns with the South Lunar Node (Ketu) into Wednesday. I would not expect any dramatic moves this week but I would lean bullish on the whole since October should see significant gains. Next week looks more bullish especially later in the week when Mars squares Mercury. A large move higher seems likely and perhaps this is the time when we see a decisive close above the 200 DMA. Early November may bring a pause in the rally but more upside looks likely in the second half of November. I would expect any pullbacks in November to be buying opportunities for the bulls as more upside is quite likely in December and January. A possible interim high may occur in January and February. This could well be in the vicinity of the top of the range at 100. While some retracement is likely in Q2, I think the Dollar will likely stay bullish for most of Higher highs are very possible in the middle of the year.. Technical Trends (Dollar) Astrological Indicators Target Range Short term trend is UP bullish (confirming) (1 week ending Oct 7)

8 Medium term trend is DOWN bullish (disconfirming) (1 month ending Nov 7) Long term trend is UP bullish (confirming) (1 year ending Oct 2017) Crude oil Crude oil rallied strongly last week as OPEC finally agreed to a production freeze. WTI soared 8% and closed above $48 while Brent settled Friday above $50. This bullish outcome was in keeping with expectations although I did not anticipate the size of this move. After their defense of support at $43, bulls are looking more confident here as they push price up to previous highs. Even a retest of $49 would look somewhat bullish and approximate an ascending triangle. A move to $52 would be even more bullish obviously, as it would put more pressure on short sellers to capitulate. A test of resistance at $52 would also suggest that any future retracement would be shallower than the recent $43 retracement. With price above the 200 DMA for now, we can see the longer term viability of the rebound off the 2015 low. On the other hand, failure to get a close above $49 would be bad news and if that was accompanied by another retest of $43, there would be a heightened probability of a technical breakdown. It seems unlikely at this point but it s still possible. The weekly Brent chart shows the current sideways move as a plausible prelude to a larger rebound. The risk of a retest of $26 will remain as long as Brent does not climb above $55. Once it does, then the likelihood of a retest of the low will diminish. This week looks somewhat more bearish although I would definitely not rule out more upside. Further gains are possible but it may be more likely to occur in the first half of the week. Monday could go either way as there is a mix of influences. Tuesday and Wednesday may be more bullish as the Moon enters Scorpio. If we have see more gains in the first half then Thursday and Friday could see some retracement. This is more likely if WTI has tested resistance at $52. I m not certain it will move that high, but it is certainly possible. More gains are likely early next week on the Mercury-Jupiter conjunction on the 11 th. After that, however, crude may be more subject to retracement. The second half of October looks bearish and could produce another retest of support at $43. Whether or not that holds is hard to say. November and December should be mostly bullish although it is difficult to say at what level the rebound will end. A higher high (above $52) is definitely possible. But a major correction looks likely to begin in January and extend into February. This could form a significant low which could

9 conceivably retest the recent low of $26. We shall see. Q looks more bullish and should coincide with another major move higher. Technical Trends Astrological Indicators Target Range (WTI) Short term trend is UP bearish (disconfirming) $46-49 (1 week ending Oct 7) Medium term trend is UP bearish (disconfirming) $38-44 (1 month ending Nov 7) Long term trend is DOWN bearish (confirming) $30-50 (1 year ending Oct 2017) Gold Gold moved lower last week as all signs pointed to a German government bail out of Deutsche Bank. Gold lost almost 2% on the week closing at I mistakenly thought we could see more upside on the early week Venus-Jupiter alignment. As it turned out, we only saw one day of modest gains before sellers prevailed for the rest of the week. While I had wondered if we could see some late week declines, the extent of the selling was surprising. Overall, it was a bad week for the bulls as gold again appeared to adhere to the bearish descending triangle pattern. Monday s lower high confirmed the pattern that has been evolving since July. Now bulls will have to step in once again to defend horizontal support at 1310 or else risk a possible sudden decline down to 1250 or so. The technical picture is looking rather bleak I would say as the chart is strongly indicating a breakdown. Of course, there could be financial developments which prevent this outcome but all other things being equal, it seems more likely that gold will move lower in the coming weeks. That basically conforms to my astrological understanding also, although I had thought the decline may occur in the second or third week of October once Venus had moved out of Libra. It is possible the correction has already begun.

10 This week looks mixed. The early week leans bullish as the Moon conjoins Venus on Monday. Tuesday may be somewhat less positive, however, as the Sun aligns with Saturn. Wednesday is harder to call although I would lean a bit bullish. But Thursday s Moon-Saturn conjunction seems more negative. Friday could be somewhat bullish as the Moon conjoins Mars. Given the real mix of aspects here, I would be reluctant to predict a strong move in either direction. I don t think there is enough evidence to forecast a breakdown of support at 1310, however. A retest is definitely possible but there are enough positive aspects to suggest a bounce will be forthcoming. Similarly, there are enough negatives in play this week that makes a strong move back up to resistance at 1340 less likely. Next week (Oct 10-14) looks more bearish. The early week Mercury-Jupiter conjunction should produce some upside, but I wonder if it will be a bulls last chance sort of situation. As Venus enters Scorpio on the 13 th, I would think we are more likely to see gold come under pressure. A break down of 1310 is likely by the third week of October. The down move should continue into early November. A rebound should begin in November but it may not get too far. I am expecting a lower high in December (1250? 1310?) and then more selling in late December and into January. A test of that crucial 1200 level is likely by that time and there is a reasonable chance it could fail to hold. Technical Trends Astrological Indicators Target Range Short term trend is DOWN bullish (disconfirming) (1 week ending Oct 7) Medium term trend is DOWN bearish (confirming) (1 month ending Nov 7) Long term trend is DOWN bearish (confirming) (1 year ending Oct 2017) 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