8 September 2018 Volume 11, Issue 37. Summary for week of 10 September 2018

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1 8 September 2018 Volume 11, Issue 37 Summary for week of 10 September 2018 Stocks prone to more downside this week Dollar mixed but with rising risk of pullback Crude oil leans bullish this week Gold with bullish bias, especially in first half US Stocks Stocks pulled back a bit last week as tech worries weighed on sentiment. The Dow only fell 50 points to 25,916 while the S&P 500 lost 1% to This bearish outcome was in line with expectations as I thought the Mars- Mercury aspect would likely produce some selling. I had noted 2870 as a possible downside target before we got any rebound. That turned out to be more or less the case although I was very uncertain about Friday s jobs report given the range of influences. Is Trump s new trade regime finally starting to bite? If you re Apple or any other USbased tech company, you may well be brainstorming a Plan B as the US-China trade stand-off shows no sign of resolving soon. Many tech shares sold off last week and even the stalwart Apple warned on Friday that the trade war could impact its bottom line both in terms of sales and costs to consumers. It sold off sharply at the close following the statement. And yet for all the anxiety this year over tariffs with China, the EU and Canada/Mexico, the Dow is only down 2% from its all-time highs. Not exactly a compelling case for gloom and doom. Nonetheless, trade remains an area of concern, especially if its

2 implications move beyond these first order threats and into something more tangible. Tariffs can be inflationary by nature but the Fed remains prudently dovish in its outlook for Rates will rise but only when necessary. Friday s jobs report showed significant wage growth and bond yields spiked higher as the 10-year shot up to 2.94%. For the rally to continue, bond yields probably need to remain within their recent range of 2.80% and 3.00%. A move outside of that range could signal a much larger move higher or lower. Any such move would likely be bad news for stocks. Lower yields would suggest a slowing and/or flight to safety while higher yields would mean accelerated growth, inflation risk and higher rates. The astrological outlook argues for more downside in the near term. September has started off on the negative note and it is likely to continue for at least another week or two. Saturn stationed direct on Thursday and is now in a fixed alignment with Uranus, Mars and the Lunar Nodes. This alignment will be in effect until late September and is likely to see more down days than up days. The planetary patterns indicate a lower low is very likely in the days ahead and a test of the 50 DMA at 2827 is a conservative target by September 25 th. This is the date of the Mars-Saturn alignment which is likely to mark a possible bottom of another decline. While forecasting levels is very speculative, I would think that if we have tested 2827 sometime this week (Sep 10-14) then we could see something like 2750 or lower by either September 19 th or 25 th. The technical outlook is looking a bit more unsettled. After the new all-time highs on the SPX, the pullback has retraced to the 20 DMA at This is still within the realm of normal for a bull market retracement, especially after the summer melt-up. The SPX closed the gap at 2880 but it has yet to rebound. Things will get a lot more complicated if there is a close below the 20 DMA this week, however. A move below could see a quick flush to 2827 and the 50 DMA, if not 2800 where there is some horizontal support. If we get a bounce this week, resistance will likely be at Bulls will expect the bounce off the 20 or the 50 DMA to produce higher highs, of course, as the bull market logic could remain intact for a while longer. And yet if we get a lower high such as 2900 and then a sharp reversal, the selling may accelerate as bulls throw in the towel. The NASDAQ 100 may have found some temporary support at its 50 DMA at 7375, but Friday s candle was not bullish. There could be an added vulnerability this week if there is a daily close below the 50 DMA which also acts a rising wedge support. As we know, the rising wedge

3 is a bearish pattern which tends to break down. The Russell 2000 found support at its horizontal support at 1710 which is just above its 50 DMA. There is a compelling case for bulls going long at this level although any weakness will likely trigger many stop losses if is broken. The weekly Dow chart is largely unchanged as it has yet to produce a hard retest of resistance at 26,500 but it has also not generated a clear reversal candle. In other words, the bullish case looks more compelling for now for the medium term. Bond yields could again be front and center in the weeks ahead so any break above the early August high of 3.01% or the August low of 2.81% could create turbulence for equities. This week looks mixed with continued downside risk. The early week could see a bounce, with the Sun-Jupiter alignment on Monday and Tuesday hinting at a possible gain. I would think Tuesday has a better chance for a gain than Monday given the Moon alignment with Jupiter on Tuesday. Monday looks more negative as the Moon aligns with Saturn. The bigger problem is that Venus is square to Mars on Monday so there is definitely some risk of more selling. If Monday is down, then Tuesday has a good chance for an oversold rebound. Wednesday looks potent one way or the other as the Moon conjoins with Venus and aligns with Mars and Uranus. Normally, Moon-Venus conjunctions are bullish but here I would be wary of betting on the bulls given the Mars influence. Apple is due to release its new iphone on Wednesday the 12 th so that could be a magnifying factor as well. I would not rule out a gain on Wednesday but the downside potential looks worrisome. Thursday also leans bearish as Mercury opposes Neptune. Maybe Friday looks more bullish as Mercury aligns with Jupiter. Overall, I think the bears have a more compelling planetary set up this week. I think 2827 is doable here although a lot will depend on what size of a bounce we get along the way (Tuesday? Friday?). Next week (Sep 17-21) starts off on a bearish note as the Moon conjoins Saturn in the morning. It is possible we could see a bounce before the close although it is unclear if it will create a positive daily close. Wednesday s Moon-Mars-Lunar Node conjunction also implies some significant volatility with the likelihood of a major down day. Overall, this looks like another down week. The following week (Sep 24-28) may be bearish to start on the Mercury-Sun-Saturn alignment on Monday and Tuesday. This is a possible interim low for the market so if support is being tested here it may be a good time for bulls to go long. I would expect some kind of rebound to begin in October as Jupiter changes signs and enters Scorpio. My preferred scenario is for a lower high in early November. Another pullback or correction looks likely to begin in late November and could

4 extend well into December. Lower lows are possible although I would not count on them at this point. Late December and January should see a strong rally which could give the bulls their confidence back and the possibility of higher highs in Q A major correction is likely to begin in May or June and extend through the summer. The rest of the year could see a recovery. Technical Trends Astrological Indicators Target Range Short term trend is DOWN bearish (confirming) SPX (1 week ending Sep 14) Medium term trend is UP bearish (disconfirming) SPX (1 month ending Oct 14) Long term trend is UP bearish (disconfirming) SPX (1 year ending Sep 2019)

5 Indian Stocks Stocks slipped on the falling rupee and rising crude oil prices. After the late week rebound, the Sensex lost less than 1% to 38,389 while the Nifty finished at 11,589. This bearish outcome was more or less in keeping with expectations as I thought the Mars-Mercury aspect could cause some problems. However, since I thought most of the selling would be Tuesday-Wednesday, Monday s decline came as a surprise. While the pullback was long overdue, last week may have been a wake-up call for investors. This year s powerful rally highlighted the competitive advantages of India in the minds of most global investors. Trump s trade wars have not had much of an impact here as India has managed to stay below the radar. Its relatively modest trade profile has also helped it avoid the worst of the emerging markets fallout that has plagued most of that sector. And yet the rupee has taken a beating along with many other currencies as the Dollar has appreciated. While stocks may be able to continue their advance in the midst of this currency instability, it may not be sustainable longer term. And with inflationary pressures rising from the soaring domestic cost of oil imports, investors may have to consider a new macro calculus going forward. The astrological outlook is unsettled. Last week s pullback is likely only the start of a deeper pullback that could last for much of September. I do not expect it to unseat the current rally but it could dent the bullish case somewhat. The Saturn-Ketu-Mars-Uranus alignment is slow moving and therefore could undermine confidence for several weeks. It also means that some brief rallies are likely although they are less likely now to produce higher highs. A retest of the high of 28 th August is probably off the table until further notice. Bulls may have to wait until the last week of September or first week of October for a decent long opportunity.

6 The technical outlook is still bullish despite the pullback. Last week s low did test support at 11,495 but bulls regained control by the end of the week. The long lower wick on the candles from Wednesday, Thursday and Friday all testified to the strength of the rally. The bulls even reclaimed the 20 DMA at 11,549 by Friday and thus created a good bullish set up for this week upcoming. No doubt there will be no shortage of buyers on Monday although whether they can prevail remains to be seen. Resistance is near 11,640 so any intraday moves above that level could force a short squeeze which takes the Nifty back up to its previous high. If resistance is rejected, then a retest of support is likely. Last week s low at 11,400 is now likely the line in the sand for bulls to defend if they want to hold this to a brief one-week pullback. If 11,400 is broken to the downside, however, then it could open up a retest of the key breakout level of 11,171. This would also entail a test of the 50 DMA at 11,245. Stochastics could still fall further as it sits on the 40 level. This could reflect the shallow pullback and may simply be a brief hiccup as the rally moves to higher highs in short order. And yet it may also signify that there is another leg lower in the coming days. The weekly Sensex chart printed a hammer candlestick last week. At the end of an advance, the hammer can be indicative of a possible upcoming reversal. Stochastics hasn t fallen below the 80 level yet, but the candles are reason for bulls to be cautious. Meanwhile, Infosys had another positive week. However, Tuesday s candle was a bit bearish given the long upper wick and Wednesday and Thursday were both red inside days. This is a possible bearish reversal set up if Friday s low of 723 is broken. If that were to happen, then a pullback to the 20 DMA at 709 would be likely. Eventually, the 20 DMA will not act as support and the chart could become vulnerable to larger declines. Tata Motors finally looks as though it has broken out of its long decline with the formation of a bullish rounded bottom. There is still a lot of resistance at that may take more than one attempt to clear. A close over 290 will be bullish and could signal a significant rebound. This holiday-shortened week looks mixed. The early week should see some upside on the Sun-Jupiter alignment. This is closest on Monday and Tuesday. One of those days is likely to finish green although I am uncertain which one is more bullish. Tuesday may be a bit more positive, especially in the afternoon although it is by no means clear. Wednesday has a greater downside risk due to the Venus-

7 Saturn alignment. However, it is not a strongly bearish alignment that makes it a high probability decline but rather a merely medium probability. After Thursday s holiday closing, Friday looks more bullish as the Moon conjoins Jupiter. If the week has been negative up to Thursday, then Friday has a good chance for a strong bounce. I m not at all certain the week will be negative given the likelihood of two up days. I would maintain a bearish bias in any event, although a bounce to a lower high would likely give bears a more enticing short opportunity. A higher high would obviously defeat that bearish logic. Next week (Sep 17-21) looks more bearish as Mars aligns with Saturn and Uranus. Larger declines are more likely here. Monday looks bearish as the Sun enters Virgo and the Moon enters Sagittarius thus producing a tense 90 degree alignment. If the preceding Friday has been bullish, then this would suggest a higher likelihood of a sell-off on Monday. Tuesday also leans a bit bearish although less so. Wednesday looks more bullish as the Moon aligns with Jupiter and Pluto. Thursday and Friday look more bearish again as the Moon conjoins Mars and Ketu. There is a risk of larger than normal declines here. The following week (Sep 24-28) looks very bearish to start as the Sun and Mercury are aspected by Saturn. Again, there is a risk of a larger sell-off here on this alignment. The late week could see a partial recovery. But I would think we will see lower lows in the last week of September. October may begin with some weakness (lower lows?) but a rebound should begin by the second week as Jupiter enters Scorpio. The rebound should last into early November at least. It could even produce a higher high although a lot will depend on how deep the preceding pullback is. Mid- November to about mid-december should see another pullback and it could be larger than the September pullback. This may be technically more significant in terms of whether it can produce a lower low. We shall see. A rally should begin in late December and continue into early Higher highs are possible in Q1. A significant correction is likely to begin in May and last until July or August. It is possible we could see a test of the long-term 200 WMA of 30,000 on the Sensex. Overall, 2019 looks mixed at best, especially in comparison with bullish Technical Trends Astrological Indicators Target Range Short term trend is DOWN bearish (confirming) 11,400-11,700

8 (1 week ending 14 Sep) Medium term trend is UP bearish (disconfirming) 11,100-11,500 (1 month ending 14 Oct) Long term trend is UP bullish (confirming) 11,000-12,000 (1 year ending Sep 2019) Currencies The Dollar pushed higher last week as the strong jobs report strengthened the case for higher rates. The USDX finished the week at while the Euro settled at The Yen held steady near 110 but the Rupee Index extended its losing streak to 72. I had been fairly neutral last week although I expected another test of resistance. The greenback tested its immediate resistance level of 95.5 early in the week before pulling back into midweek. The technicals are equivocal here. Friday s candle was quite bullish and suggests some upside follow through, quite possibly above If there is another rejection of resistance, it could provoke more selling, however. Although the planetary cycles are suggesting a pullback in September, the technicals have yet to send out a clear message either way. The Dollar could easily rise further in the coming days and retest its recent high near 97. As long as it can stay above the 50 DMA at 95, buyers are more likely to enter the market. Another dip below 95 would be a warning signal. The weekly Euro chart looks more bearish given the two most recent weekly candles with long upper wicks. This reflects a rejection of resistance above 1.16 and a sign that a longer period of consolidation may be needed before heading higher. This week looks mixed again. Some early week gains are more likely on the Sun-Jupiter alignment. This suggests there is a plausible case for breaking above resistance at But a run back up to 97 looks much less likely, especially since the second half of the week may be more bearish. Bulls should be cautious this week as gains are less reliable here and the week overall may finish close to current levels. Next week (Sep 17-21) looks more bearish, especially if this week has finished positive. The late week may be more

9 negative. The chances are good that the Dollar will fall below the 50 DMA in late September which could then make retest of the 200 DMA possible. October should see a bounce as Jupiter enters Scorpio although I would not expect higher highs above 97. The Dollar could end up trading in a wider range between 93 and 96 through October. November should see another test of support. If the USDX has not made new highs above 97, then a decline down to the 200 DMA at is possible here. The pullback will likely extend into December. Another rally will likely begin by late December and continue into Q with higher highs likely. Some retracement should take place starting in late spring and early summer. The Dollar should recover strongly by August and stay firm through the rest of looks more bearish. Technical Trends (Dollar) Astrological Indicators Target Range Short term trend is DOWN bearish (confirming) (1 week ending Sep 14) Medium term trend is UP bearish (disconfirming) (1 month ending Oct 14) Long term trend is DOWN bullish (disconfirming) (1 year ending Sep 2019) Crude oil Crude oil fell 3% last week as the emerging markets sell-off continued. After a brief spike above $71 on Tuesday, WTI finished the week at $67.75 while Brent declined less than 1% to $ I had taken a more neutral stance as I thought Wednesday might have generated some upside to counteract the bearish Mars influence. However, the week was mostly bearish and continued lower into Friday. The technical outlook looks uncertain after the rejection of resistance at $70 for WTI. Crude did finish off its lows late in the week so that could indicate that support is now at $67. This would be a higher low and would give the bulls the advantage going forward. If $67

10 fails to hold, then there will be another retest of the 200 DMA and the $64 level. While not clearly bearish, it would nonetheless increase the risk of a technical breakdown and a move down to $ The weekly Brent chart managed to break above resistance from the bull flag/falling channel although it rejected horizontal resistance at $80. Bulls will now try to put in a higher low above $70 in order to prepare for another push towards $80. A move below $70 could spell trouble for the rally. For now, it is finding support at the 20 DMA at $75. This week could see another rally attempt as the Sun aligns with Jupiter early in the week. This is a fairly high probability alignment which could help to take price back up to resistance at $70 for WTI. I would not say the chances are good for a move above that but it s hard to say for sure. Some retracement is likely later in the week as Mercury opposes Neptune. Nonetheless, I would lean bullish overall for the week. The following week (Sep 17-21) looks less positive and could see a pullback as early as Monday the 17 th as the Moon conjoins Saturn. The week as a whole looks bearish and there could be a hard test of support at $67 or even $64 for WTI. The last week of September also hints at some downside as the Sun and Mercury align with Saturn. There is a risk that key support at $64 and the 200 DMA could break in late September or early October. Bulls should be on guard for suddenly deteriorating technicals. Some kind of bounce is likely in October as Jupiter enters Scorpio but it does not look too strong. Another retest of support is possible in October. More downside is possible in late November and early December. Generally, the rest of the year does not look overly bullish. It seems more likely that we will see support tested and perhaps broken. A rally is likely to begin in late December which should carry over into Q1. The first half of 2019 looks mostly bullish but a sharp correction is likely in the summer. Technical Trends Astrological Indicators Target Range (WTI) Short term trend is DOWN bullish (disconfirming) $68-72 (1 week ending 14 Sep) Medium term trend is UP bearish (disconfirming) $64-70 (1 month ending 14 Oct) Long term trend is UP bullish (confirming) $70-85

11 (1 year ending Aug 2019) Gold Gold pulled back for a second week as the Dollar stayed strong. Gold again traded in a narrow range before settling at This bearish outcome was in line with expectations as I thought Tuesday s Saturn influence would likely bring down prices. Technically, gold s pullback may be forming a bull flag which could eventually resolve into another leg higher. For now, there is a reasonable bullish case as last week s low was above the previous week s low. A bottom may be forming here which can then build into a more sustainable rally. Bulls still need a daily and, most likely, a weekly close above key resistance at 1220 in order to give the rally more credibility. But it may require a longer period of consolidation before gold can launch a major rally, especially in light of how long the down trend has been. A double bottom may be what some cautious bulls are waiting for. Any pullback to could be a more appealing entry for bulls looking for a longer term play. If there is a bounce above 1220, it could spark a short squeeze which could take gold back to 1240 or higher fairly quickly. Longer term, the technical outlook for gold is more difficult to say. The recent low is low enough that it could lay the groundwork for a rebound back above 1300 in the coming weeks and yet it could just as easily fall to a lower low. Market participants may be taking a very short term view for now looking for clues of strength and weakness which will gradually make the picture clearer. This week looks more positive, at least in the first half of the week. The Sun aligns with Jupiter on Monday and Tuesday so that offers bulls a decent chance for some upside. I would think the chances for gains are higher on Tuesday since Monday s Moon-Saturn alignment could be considered bearish. If Monday is lower, then that could improve the bulls chances on Tuesday. Wednesday s Moon-Venus conjunction also leans bullish. I would be more cautious about Thursday and Friday, however, as Venus aligns with Saturn. While I would have a bullish bias this week overall, I would not rule out a neutral outcome either due to the possibility that the late week is bearish.

12 Next week (Sep 17-21) looks more bearish as the Moon conjoins Saturn on Monday the 17 th. Wednesday and Thursday also look vulnerable to some selling given the poor placement of the Moon. Depending on how much preceding upside there is, this could retest support at 1180 or even The last week of September also leans bearish as the Sun is aspected by Saturn on the 24 th. I think a more bullish planetary set up for gold may come in the second week of October when Jupiter enters Scorpio. This is likely to coincide with some upside which lasts into early November. Another move lower is likely to begin by late November and continue into December. There is some risk of a lower low in December although it is difficult to say. A rebound should begin by January and there may be a sustainable move higher in Q Q2 may see a major reversal lower and a sharp correction in the early summer. Gold could be on more solid footing for a rebound by Q Technical Trends Astrological Indicators Target Range Short term trend is UP bullish (confirming) (1 week ending Sep 14) Medium term trend is DOWN bearish (confirming) (1 month ending Oct 14) Long term trend is DOWN bearish (confirming) (1 year ending Aug 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