15 September 2018 Volume 11, Issue 38. Summary for week of 17 September 2018

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1 15 September 2018 Volume 11, Issue 38 Summary for week of 17 September 2018 Stocks likely to fall this week Dollar may test support this week Crude oil likely trending lower Gold more prone to declines US Stocks Stocks bounced last week as trade worries eased and the macro data stayed strong. The Dow added 1% to 26,514 while the S&P 500 finished at This bullish outcome was somewhat unexpected as I thought the bearish-looking days (Mon,Thu) would have been big enough to offset the likely up days. That view was incorrect, however, as the major indexes actually rose on all five days. While I thought we could see the SPX test 2900 at some point, I didn t fully expect that it could finish the week there. It is still a very bullish market here as the indexes are just a stone s throw from their alltime highs once again. Most investors are largely ignoring trade news as it seems that there may not be any resolution with China or NAFTA for weeks, if not months. It is possible the situation could change suddenly, but for the most part this protracted period of threats and negotiations is no longer moving markets. Meanwhile, the 10-year yield touched 3% again on Friday and may be worth watching once again. If rates move above their May high of 3.11% it could be a game changer. We should play close attention to how the markets react if it rises above 3% next week.

2 Gently rising rates are likely bullish for stocks since they signal strong economic growth but sharply higher rates could throw the global financial system out of whack. Emerging markets are already vulnerable to a rising dollar but higher US rates would magnify the volatility. The astrological outlook is still bearish for the short term. So far, September has been more bullish than expected. While I thought we could get some upside form the Jupiter-Pluto alignment in the middle of the month, I did not expect those gains to hold up this week. But as I have written previously, the more bearish period of September was the second half. The next two weeks therefore have elevated downside risks and offer bears the best chance for some significant selling. This week will likely see some upside along the way but the overall prospects look bearish. Next week looks comparatively worse so that will likely give bears another shot. It is also possible the pullback will extend into early October. The technical outlook is bullish. Last week saw a good bounce off the 20 DMA at 2870 in keeping with bull market expectations. Bulls do have good reason to expect higher highs, especially given the breakout above The early September pullback back tested the breakout level and then we got more upside. If the market is behaving as it should, then the technicals make a good argument for 3000 on the SPX fairly soon. The bearish case may rely more on how overextended the rally is now. The late August high was outside the upper Bollinger band and now prices have consolidated a bit. Significantly, Friday s gain was a lower high and thus sets up a possible sell situation. This isn t that compelling in itself, but it deserves to be monitored. Also, there is a bearish rising wedge forming on this chart based on the June low. If support is broken near the 20 DMA, then we could see more selling. The weekly Dow chart continues to ride up its upper Bollinger band and is now 300 points away from retesting its January high. The possible double top also looms large here although it shouldn t be overemphasized either. Stochastics are overbought but that could still accommodate a pullback that doesn t take it below its key 80 line. The bigger problem with the Dow chart is that the rising wedge is more pronounced. Wedge support is near last week s low at 25,750. A break of this level would likely spark fairly rapid additional downside, possibly down to 25,000. But wedges can keep on rising before they breakdown so bears should wait for a break of support. Planets aside, that is another reason why I would not be shocked if stocks actually rose a bit further this week. The Nasdaq 100 and Russell are similarly just below their recent highs and are at risk of forming a lower

3 high which could create a reversal. Another test of their 50 DMA from a lower high would have a much higher risk of a larger breakdown, possibly down to the 200 DMA. This week gives the bears a decent chance. I would say the planets are more bearish here than last week since Jupiter is now past its alignment with Pluto. This could mean that relatively minor bearish aspects could have a bigger impact than they had last week during the five-day rally. The bears have a good chance on Monday on the Moon-Saturn conjunction. This aligns with the Mars-Lunar Node conjunction and sets up a potential down day. While I have underestimated the strength of the bulls recently, there is the possibility for a sizable decline here, possibly 1%. Tuesday looks more bullish as the Moon aligns with Jupiter-Pluto. If Monday has been down, then an oversold bounce is possible Tuesday. Wednesday could be a particularly interesting day since the Moon aligns with the Sun and Mercury in the morning. This looks bullish more than anything else. But the afternoon may be less positive as the Moon approaches Mars. An intraday reversal lower is something to watch out for. Nonetheless, I would not rule out higher highs (2920?) on Wednesday, especially if Monday isn t that bearish. Thursday leans a bit bullish from the Sun-Mercury conjunction although I would not say it is a highly probable outcome. Friday is hard to call. Even if we get a pullback to 2880 on Monday, I would not rule out 2920 at some point this week. But I suspect we will finish closer to the 20 DMA. Next week (Sep 24-28) looks more bearish still. The Sun and Mercury will align with Mars and Saturn and could generate one or two very negative days. Monday and Tuesday are most negative in this respect, and Monday in particular seems more likely to bring a decline. Thursday morning will feature a very negative Moon-Mars alignment which could coincide with a big gap down open. A conservative target would be the 50 DMA at 2844, although I will be disappointed if we don t at least test channel support at The following week (Oct 1-5) is mixed. Monday, Oct 1 looks bearish on the Moon-Saturn opposition but we should see some kind of rebound in the middle of the week. I would be reluctant to predict a lower low here. Thursday and Friday lean bearish, however, as Venus turns retrograde while square with Mars. Overall, the week is hard to call. October as a whole looks somewhat bullish. Depending on how low we go beforehand, I would not count on higher highs in October. There are still a few short term bearish alignments in October that could do some damage. Of course, Jupiter will be strong again at times and my general expectation is that prices will rise. Another pullback is likely to begin by mid-november and could well continue into

4 December. At this point, I don t have a strong opinion whether it will form a higher low or lower low relative to the late September low. A strong rally looks likely to begin in late December or early January. This could last into February and may be enough to produce a higher high sometime in Q1. A major correction is likely to begin in Q2, probably in May or June. This could seriously undermine the bull market and produce a 20% correction during the summer. A bear market is therefore more likely to begin in 2019 and extend into Technical Trends Astrological Indicators Target Range Short term trend is UP bearish (disconfirming) SPX (1 week ending Sep 21) Medium term trend is UP bearish (disconfirming) SPX (1 month ending Oct 21) Long term trend is UP bearish (disconfirming) SPX (1 year ending Sep 2019)

5 Indian Stocks Stocks slipped last week as further rupee weakness renewed concerns about the current accounts deficit. The Sensex lost 1% to 38,090 while the Nifty finished at 11,515. This bearish outcome was in keeping with expectations although I mistakenly thought we might have got some early week gains. Stocks sold off rather sharply on Monday and Tuesday, although Friday was bullish as forecast on the Moon-Jupiter conjunction. India finally revealed its vulnerability to the ongoing emerging markets turbulence last week as rupee weakness began to complicate the fiscal picture going forward. The late week recovery pulled up most emerging markets as the dollar retreated but there is now the possibility that the other shoe may drop at some point. The state of the US economy may be the key factor in this equation as interest rates there are again on the rise. A push above their May high of 3.11% for the 10-year note could cause a lot of turbulence on global financial markets as it would be a signal that the Fed will be forced to pursue a more aggressive path. This would in turn push the dollar higher and send the rupee spiraling downward once again. But it hasn t happened yet so it is possible the situation could normalize in the weeks ahead. Nonetheless, we would do well to closely monitor developments in the debt market. The astrological outlook still leans bearish. As expected, September has brought an increase in volatility. I am expecting more downside over the next two to three weeks and the likelihood of lower lows. The current Saturn-Ketu-Mars alignment seems to be only half done. We have already seen some negative effects but it seems probable that there will be further declines when Mars conjoins Ketu in the last week of September. That still leaves room for some rally attempts, possibly this week, but I suspect they will be short-lived and relatively small.

6 The technical outlook is still bullish after last week s pullback. The Nifty eventually found support at the 50 DMA at 11,300. This also matched the lower Bollinger band so it provided a decent entry for bulls seeking to profit from a bounce. Resistance is the 20 DMA at 11,545 while a daily close above 11,600 will likely create more bullish enthusiasm for a run to new ATHs. Stochastics have moved above the 20 line once again so we will see how far this bounce can go. If the Nifty can t push above 11,600 in the next couple of sessions, then there is a probability of a retest of last week s low. If 11,300 doesn t hold, then the next level of support would be the key breakout level of 11,100. Very often, a big sell-off overshoots on the downside so it would not be surprising to get a quick retest of the 200 DMA at 10,730. Given the planetary set ups in the coming weeks, that kind of decline is looking quite likely. The weekly Sensex chart is still bullish although after the gravestone candle three weeks ago, it is possible we could see more downside. Of course, the long lower wicked candle of the past two weeks are fairly bullish as bulls managed to erase most of the intraweek losses by the Friday close. But there is some risk now that stochastics will fall below the 80 line and MACD will roll over as well. This would create more bearish technical conditions for the medium term. If those conditions occurred, there the risk of a longer correction would increase, with the possibility of a deeper pullback to the 50 WMA and the lower Bollinger band near 34-35,000. Meanwhile, Infosys was flat on the week as it is now finally showing signs of taking a breather after its long rally. It looks range bound here but a move below 720 would likely lead to a test of the 50 DMA at 690. ICICI Bank fell modestly last week as a bull flag takes shape in the chart. This usually produces a reversal higher before too much downside occurs. There is some horizontal support at which will likely bring in new buyers in the event of more declines in the near term. This week looks mixed at best. The early week leans bearish. Monday looks worse in this respect as the Moon conjoins Saturn in the afternoon. This would tend to suggest that the morning may be more positive, although I would note that the Sun and Moon form a tense angle in the morning also. Bulls should therefore be cautious here as there is an

7 elevated risk for a fairly large decline. Tuesday looks a little less bearish but I would note that the Mars- Uranus square is quite close for the first half of the week and could coincide with generalized weakness on each day. Wednesday offers the possibility of gains, especially in the morning as the Moon aligns with Jupiter. If there has been some early week downside as I expect, then Wednesday sets up as a bounce day. Thursday looks quite bearish again as the Moon conjoins Mars and Ketu. As it happens, markets are closed that day so perhaps Dalal St. can escape the worst of it this week. I suspect other global markets will sell-off that day. Friday s Sun-Mercury conjunction leans bullish. It is possible that we could see resistance tested at 11,600 this week but I would be surprised if the Nifty finished at or above that level. The negative alignments this week (esp. Mon and Tue) argue against a strong bounce this week. I would think we are more likely to retest support 11,300. Next week (Sep 24-28) looks more bearish as the Sun and Mercury align with Saturn early in the week. Tuesday looks more bearish in this respect although Monday doesn t offer bulls a great opportunity either. But perhaps Monday morning s Moon-Jupiter aspect can deliver some early upside. Wednesday s Mars-Ketu conjunction looks bearish again and Thursday also looks bearish. It seems more likely that we will get lower lows here. Friday could bring a rebound. The following week (Oct 1-5) looks mixed with some weakness likely on Monday and Thursday but upside more likely on Tuesday and Wednesday. October overall looks more positive than September as Jupiter enters Scorpio. This is unlikely to produce a strong rally but it might prevent further downside. I think higher highs above 11,750 are unlikely but let s see how much damage the bears can do in September. Early November look bearish again so there is the possibility that there could be a second pullback in quick succession. December looks more bullish and the rebound may well extend into January. Q1 looks mixed with weakness likely in February but a rebound likely in March. Q2 looks more bearish, however, as Saturn conjoins Ketu and Pluto. This is a very bearish alignment which has the potential to derail the bull market in Bulls should be very careful. Technical Trends Astrological Indicators Target Range Short term trend is DOWN bearish (confirming) 11,200-11,500 (1 week ending 21 Sep) Medium term trend is UP bearish (disconfirming) 11,100-11,500 (1 month ending 21 Oct)

8 Long term trend is UP bullish (confirming) 11,000-12,000 (1 year ending Sep 2019) Currencies The Dollar fell last week on slow retail sales the possibility of rate normalization in the Eurozone. The USDX finished the week just below 95 while the Euro settled Friday above This bearish outcome was a little surprising as I thought we might have seen some early week upside above resistance at While the midweek selling was in keeping with expectations, the Dollar remained stuck in a narrow range between 94.5 and A daily close out of this range could set up a new trend. The 20 DMA is acting as resistance and is sloping downward. Despite Friday s bounce, there is some risk that the bearish crossover of the 20 and 50 DMA could compel more bulls to sell. The bearish case looks a bit more persuasive here as we can see a flattened head and shoulders top pattern forming with an upward sloping neckline. If we got a clean break of support at 94, this pattern would have a downside target of 91. The weekly Euro chart still shows the longer term head and shoulders pattern in the mix, although support at 1.16 is holding for now. The last three weekly candles have all had long upper wicks which is not suggestive of much strength. In that sense, the technical picture is quite mixed. This week leans bearish. I think there is a real chance for more downside over the next week or two so bulls should be cautious. The early week looks more bearish perhaps on Monday s Moon-Saturn conjunction. The late week Sun-Mercury conjunction looks more positive, however. There is a possible breakdown of support at 94.5 here. Next week (Sep 24-28) could see some upside on the Sun-Saturn aspect. Early October could see some significant moves as Venus turns retrograde. I would lean towards a bullish bias for October on this pattern, although it may not translate into a significant up trend. November leans more bearish and sets up the possibility of a range bound dollar for most of Q4. I would still lean bearish generally, although I admit the picture is

9 less clear than I would like. Q may be mixed but the dollar should begin to rally more strongly in Q2. Higher highs above 97 are very possible. The rest of 2019 looks less clearly bullish and we will likely start to see some weakness. The decline will intensify in 2020 and beyond. Technical Trends (Dollar) Astrological Indicators Target Range Short term trend is DOWN bearish (confirming) (1 week ending Sep 21) Medium term trend is UP bullish (confirming) (1 month ending Oct 21) Long term trend is DOWN bullish (disconfirming) (1 year ending Sep 2019) Crude oil Crude oil pushed higher last week on supply worries in Iran and Venezuela. WTI peaked at $71 on Wednesday before settling about 1% higher on the week at $69 while Brent finished at $78. This bullish outcome was in keeping with expectations as I thought the early part of the week could bring some upside. The late week was more bearish as expected on the Mercury-Neptune aspect although the week finished green. The 20 DMA is acting as support in this latest bounce although the rally ran out of steam at the upper Bollinger band near the horizontal resistance level of $ As long as the 20 DMA holds as support, the chart looks bullish. However, a breakdown at $67-68 would highlight the possible head and shoulders pattern in the making. With a neckline at $64, this pattern has a downside target of $53. While the 200 DMA will likely offer support in the event of another test, a failure to rise above last week s high would increase the chances that the 200 DMA will ultimately fail to hold. Conversely, a daily close above $71 for WTI would be more

10 bullish and would likely translate into another test of the high at $75. The weekly Brent chart still looks bullish although the rejection of $80 is fairly clear. The 20 WMA at $75.69 needs to hold in order for bulls to launch another rally attempt to $80. A move below $75 would likely lead to a test of horizontal support at $70. This week looks more bearish. The Mars- Lunar Node conjunction moves closer to exact this week and that could translate into some significant one day declines. Monday is suspect in this respect as the Moon conjoins Saturn. I would think a test of the 20 DMA at $68 is likely and WTI could well trade below that level. Tuesday lacks clarity so that could go either way. Wednesday and Thursday are also higher risk days as the Moon conjoins Mars. I would think at least one of those days is down and we could even see two down days in a row. Friday looks more bullish, however. Next week (Sep 24-28) is more mixed. There is still some downside risk, especially on Monday, Tuesday and Thursday. The early week patterns definitely lean negative so that means we could see lower lows then. But the Venus retrograde station in the first week of October looks more positive. I would therefore expect a fairly strong rebound in October. November may be more bearish again, especially in the second half. While the decline may be significant, I am uncertain if it will be a higher low or lower low. For now, I do not expect a bearish down trend to take hold but let s first see what happens in September. The first half of 2019 looks fairly mixed. Some upside is likely after any Q4 sell-off we may see. But the rally in Q1 and Q2 does not look that strong. The second half of 2019 looks more bearish with a significant correction likely in Q3. Technical Trends Astrological Indicators Target Range (WTI) Short term trend is UP bearish (disconfirming) $64-68 (1 week ending 21 Sep) Medium term trend is UP bullish (confirming) $64-72 (1 month ending 21 Oct) Long term trend is UP bullish (confirming) $70-85 (1 year ending Sep 2019)

11 Gold Gold was mostly unchanged last week at 1201 as it traded in a narrow range. I thought we might have seen more upside although we did see midweek gains which were then eroded later in the week. The neutral outcome was not surprising, all things considered. Gold may be putting in a bottom here as the trading range is above its recent low. A breakout above 1220 and the 50 DMA would be bullish and could signal the start of an uptrend. It would seem possible that a move above 1220 would at least translate into a rally that tested resistance at the 200 DMA at Support is near 1190 and as long as that holds, this sideways consolidation looks more bullish. A move below 1190 could mean a retest of the low at This could also prove to be bullish in the long run as it would create a double bottom. Both scenarios are possible, although the length of the current sideways move is giving bulls hope that there may not be any hard retest of 1167 before a breakout higher. But we cannot completely rule out a third and more bearish scenario whereby gold falls to lower lows in the next week or two. That seems less likely at this point, however, although if 1190 breaks, then those odds will rise dramatically. This week looks bearish. The Mars-Lunar Node-Saturn alignment is closer this week and therefore there is added downside risk. Monday looks bearish in this respect on the Moon-Saturn conjunction. Tuesday is harder to call although if Monday has been bearish, it may suggest a bounce. Wednesday and Thursday have a bearish bias as the Moon conjoins Mars although I would not expect two straight down days. Friday may bring a rebound. The planets here suggest a retest of 1190 is likely and it could even break down. I m not prepared to say that is probable but it is definitely a possibility worth considering. Next week (Sep 24-28) looks bearish to start as Saturn aspects the Sun. We could well see further downside here so the risk of a breakdown below 1190 is quite real. Wednesday looks bullish but Thursday looks quite bearish. I think gold is due for a significant rebound but it seems less likely that it will occur in late September. Bulls may therefore have to wait until early October. Venus turns retrograde on Friday, Oct 5 so that could well mark the start of a rebound. The entry of Jupiter into Scorpio in mid-october also looks bullish and could indicate the rebound is strong. However, the

12 rebound will likely end sometime in November and we will get another significant pullback in late November and into December. It is hard to say if this will produce a higher low or lower low. Q should see another rebound but it does not look too forceful. It may not be strong enough to fundamentally alter the long term bearish technical outlook on gold. A significant correction is likely in Q2 so that may undermine whatever technical progress that may have occurred beforehand. Gold should be on more bullish footing in the second half of Technical Trends Astrological Indicators Target Range Short term trend is UP bearish (disconfirming) (1 week ending Sep 21) Medium term trend is DOWN bullish (disconfirming) (1 month ending Oct 21) Long term trend is DOWN bearish (confirming) (1 year ending Sep 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