28 July 2018 Volume 11, Issue 31

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1 28 July 2018 Volume 11, Issue 31 Summary for week of 30 July 2018 Stocks mixed this week with bearish bias Dollar leans bullish, especially after Fed on Wednesday Crude oil may remain under pressure, esp. after Tuesday Gold could bounce but prone to declines on Wed and Fri US Stocks Stocks finished higher after an eventful week on diminishing trade worries and mostly satisfactory corporate earnings. Despite Friday s decline, the Dow gained 1.5% on the week to 25,541 while the S&P 500 was somewhat less positive closing at This bullish outcome was surprising as I thought the bearishness of the second half of the week would outweigh any early week bullish moves. This view proved to be mistaken as stocks generally climbed through Wednesday, while the late week was less negative than expected. We seem to be at an inflection point here. The SPX has almost returned to its January high so markets will be awaiting new reasons to either go on to higher highs or consolidate and retrace lower. Thus far, earnings season has been very mixed with more than a few disappointments such as Facebook and Twitter which saw huge declines. Apple is due to report after the close on Tuesday so that could also move markets in either direction. Friday s GDP number was a strong 4.1% but there were some doubt about its repeatability due to one-time boosts such as lower corporate taxes and a surge of foreign purchases in

2 advance of tariff deadlines. There are also a few early warning signs of slowing in the housing market that may be related to rising interest rates. For its part, the Fed is due to meet again this week on Wednesday. While this is not a live meeting (i.e. with a press conference) and hence has little chance for any change in rates, the statement will be parsed carefully as usual. The astrological outlook leans bearish, at least in the short term. So far, the volatility I had expected in the approach to Friday s Full Moon/lunar eclipse has been rather lacking. I still think we are likely to see some significant down days coming up this week as the Full Moon will be fairly close. Previous Full Moons have sometimes seen interim lows made in the week following the exact Sun-Moon opposition. So bears still have chances to do some damage here. More importantly, the multi-planet alignment will remain in place this week as retrograde Mars will remain in close alignment with Saturn, the Lunar Nodes and Uranus. The Mars-Uranus square aspect will become exact in the second half of the week and should coincide with some more selling. Looking further ahead, the month of August as a whole has some upside potential as Jupiter aligns with Neptune. For this reason, I think there is a reasonable chance that the SPX could make new all-time highs. Of course, this assumes than any preceding pullback this week isn t too large and we see another higher low. The technical picture became a lot more interesting last week. The midweek rally to 2848 essentially filled a key gap from January 30th and therefore created a more plausible case for a pullback. Bulls were hoping that the gap could fill and then stocks would continue up to retest the ATH of But the pullback right after the gap fill suggested that new ATH may have to wait. Bulls are still hopeful that 2872 will come sooner rather than later but the whole chart now resembles a double top pattern. Therefore, we are probably more likely to see further consolidation before another rally attempt. The bullish chart suggests that any pullback here should form a higher low above the last low of 2691 and indeed the 50 DMA at 2761 could well be a target that many participants are considering. Resistance this week may be near Thursday s low of Any early week rally to that level will likely bring in sellers who are seeking to push prices lower would also be resistance, of course, and if that is broken then the SPX will likely run all the way up to Support is near Friday s gap fill at A break below 2810 would therefore be bearish and would likely lead to more selling and could fall to the next gap fill at If things really

3 get out of hand, then there is another gap at 2760 (and the 50 DMA) which could act as support in the event of a significant sell-off. The NASDAQ had a worse week as prices rejected the rising channel resistance midweek and then sold off sharply on Friday. Given that it is right up against resistance here, the candles show not just a down day on Friday, but rather a short term trend reversal. More downside looks more likely than not in the coming days, perhaps down to the 50 DMA, perhaps lower. The small cap Russell 2000 looks even more vulnerable to declines here after failing to break above horizontal resistance several times last week. After closing below its 50 DMA Friday, it may test horizontal support at 1620 soon. If selling accelerates, it could even test the 200 DMA at The Dow fared better last week although the weekly chart is pushing up against resistance at 25,500. Of course, it could go higher from here. But if there is some selling this week, then we should keep an eye on horizontal support at 25,000. If this breaks, then it could fall much further. This week offers the bears another chance. Mars is still in close alignment with the South Lunar Node and Saturn this week although it is gradually separating from both. However, Mars will form a 90-degree angle with Uranus this week as well. This is often a negative influence on markets, especially in the absence of any offsetting bullish aspects. An additional negative factor this week is that Venus enters the sign of Virgo on Wednesday. This is also a bearish influence although its effects tend to be felt across several weeks. I think the chances are good for more downside here and we could fill one or even two of those gaps at 2780 and But I suspect there will be a bounce before we get any significant downside. Mercury aligns with Venus on Monday and Tuesday so those would be my best guess for possible up days. Tuesday looks more bullish than Monday. So if Monday is bearish, then that would load the dice for a rebound into Tuesday. I tend to think we could actually get a bounce Monday although I wonder if it will hold into the close. I don t know. If the SPX bounces, then 2835 is quite possible. I would not rule out a retest of 2848 either although I suspect bulls are no longer that strong. Wednesday looks quite bearish as the Moon aligns with Mars and Uranus. This will be on the FOMC day as well as the day after Apple reports earnings. It s a good planetary set up for a sell-off, in other words. Friday is the June jobs report and that also has a difficult planetary set up with the Moon again aligning with Mars-Uranus in the afternoon. So we could see the SPX finish below 2800, perhaps closer to the 50 DMA at Next week (Aug 6-10) looks more bullish as Mercury and the Sun align with Jupiter. This alignment is closest later in the week although it is possible it could produce gains early on. I would expect a positive week overall with possible larger gains occurring on Friday the 10th. The following week (Aug 13-17) may be more mixed but I can t see anything clearly bearish. Tuesday and Friday stand out as more bullish days than the others. Generally, I would expect August to be bullish with a real possibility of higher highs. The Venus in Virgo factor in August is a negative but I don t think it will be strong enough undermine the rebound. Mars stations direct on Aug 27 and could foreshadow a shift in

4 sentiment once again. It is a possible turning point. I m uncertain exactly when it will reverse lower but I suspect it won t take place until early to mid-september, e.g. by September 12 th when Mars again aligns with Uranus, Saturn and the Lunar Nodes. This should coincide with a two or three week pullback. I don t know if it will produce a lower low or higher low with respect to the early August low. Another rally is likely in October and early November. I would also definitely not rule out higher highs by November. Another pullback or correction is likely in late November and early December. This one looks bigger than the September decline. I would expect a strong rebound to begin in December and continue into January and February. Higher highs are again quite possible in Q A large decline is likely in Q2, however. It is possible the decline may do some significant technical damage to the bull market. We shall see. The second half of 2019 looks more bullish. Technical Trends Astrological Indicators Target Range Short term trend is UP bearish (disconfirming) SPX (1 week ending Aug 3) Medium term trend is UP bullish (confirming) SPX (1 month ending Sep 3) Long term trend is UP bearish (disconfirming) SPX (1 year ending Sep 2019)

5 Indian Stocks Stocks pushed to new all-time highs last week on strong earnings and receding trade worries. The Sensex finished higher by more than 2% at 37,336 while the Nifty closed Friday at 11,278. This bullish outcome was surprising as I thought we would see some selling before Friday s Full Moon but stocks powered higher. The early week was bullish as expected, however, although the lack of much of a pullback on Wednesday s Moon-Saturn alignment was a clue that the bulls were very strong this week. Friday s gain was quite disappointing coming on such an apparently bearish planetary set up. Alas, the selling only began much later in the day in the US. The bulls are in firm control here as it is hard to find fault with new all-time highs. The recent pullback in crude oil has taken the pressure off the RBI somewhat as inflation worries are no longer front and center. Also currency concerns have retreated as the dollar appears to be stabilizing. The Federal Reserve is likely to continue to raise rates this year and next but it may be at a fairly modest pace. This could maintain the healthy capital inflows for the foreseeable future, particularly as long as India continues to outshine its EM competitors. Moreover, China s strategic devaluation of the yuan has attempted to boost exports and negate the worst effects of any US tariffs. At this point, the only headwinds are a possible slowdown in China and geopolitical concerns such as North Korea or Iran. If President Trump gets into more trouble politically with the Mueller investigation, he may be forced to act more recklessly on the international stage in order to redirect attention. This is probably more likely to take place in November -- after the midterms and the likely defeat of the Republicans in the House of Representatives. If the Democrats win the House on 6th November, then impeachment proceedings are much more likely. The astrological outlook leans bearish in the short term. While my expectation for some selling around Friday s Full Moon and lunar eclipse did not occur, I still think there is some risk of downside in the coming week or so. Mars is still forming a difficult alignment with Ketu, Saturn and Uranus this week upcoming and so bulls should be extra careful. That said, August in general looks fairly positive. I had previously thought we could get higher highs then given the approaching Jupiter-Neptune alignment and that is still my overall expectation. To be sure, the new highs have come earlier than expected but there

6 is more positive energy that has yet to manifest. For this reason, dip buyers will likely continue to be rewarded for the next month or so. I think the market is likely to take a breather and pullback in September. This is unlikely to significantly alter the bullish up trend. After an October bounce, a potentially larger pullback is likely in November. The technical outlook remains bullish. The new highs suggest a bullish breakout is underway and a new leg higher is likely. It is still possible the breakout could fail if there is a quick retracement back under 11,171. Fake breakouts can happen if they reverse quickly and return to their previous trading range. Therefore, Nifty support at 11,171 needs to hold in the event of any pullbacks this week. Some minor violation of support is still acceptable, however. It would require a close below 10,900 to nullify last week s bullish breakout. I would think some back testing of 11,000-11,100 is likely in any event but that dips will be bought. If not, then it would raise significant questions about the rally. The daily chart is getting overbought here but bulls will likely continue to buy as long as momentum is strong. A bullish crossover in MACD is one indication that the trend is with the bulls. It s hard to know where resistance is now. Using the measured move technique as reckoned from the previous low to high, the next upside target may be 11,425. The weekly Sensex chart shows how the rally appears to be following a rising channel with support at 34,000 and resistance at 40,000. As long as 34,000 isn t broken, bulls should expect the rally to reach 40,000 at least before a significant pullback. I think 40,000 could be possible by Q4 all things considered. The chart is getting overbought, however, with RSI a lofty 73 but this condition can go on for sometime. Meanwhile, Tata Motors showed signs of life after a positive earnings report. It is too early to say if the bottom is in, however, as it has yet to test the 50 DMA which has been acting as resistance for many weeks. I would think bulls will be eager to take quick profits here as the chart is still very bearish. There needs to be a better bottoming pattern before the bounce becomes a legitimate rebound. ICICI Bank extended its rebound last week and is now forming a bullish double bottom pattern. If resistance at 310 can be broken, then the upside target would be 360. Interestingly, 360 is also the January high. The clustering of moving averages suggest a new trend higher is more likely than not, especially if we see a weekly close above the 200 DMA.

7 This week gives the bears another shot. Generally, I think the period from Wednesday to Friday looks more bearish than Monday or Tuesday. Mars aligns with Uranus and Saturn during the second half of the week and should coincide with some nervous selling. As an added negative influence, Venus enters Virgo on Wednesday. The early week has some bullish potential due to the Mercury-Venus alignment. I m not certain when we are more likely to see gains, however. Monday s open has a bearish feel to it due to the Moon-Mars alignment so we may begin the day with a gap down. Monday could finish in the red although some recovery in the afternoon is possible. Perhaps Tuesday is a more bullish day as the Moon aligns with Venus. If we have seen a pullback on Monday then Tuesday could retest Friday s high. Wednesday looks more bearish as the Moon is square Saturn, especially in the afternoon. Apple reports earnings after the US close on Tuesday, so that could be a catalyst. A 100-point decline on the Nifty is possible. Thursday lacks clarity although I would retain a bearish bias. If Wednesday has seen a large decline, then Thursday could be a consolidation range day. Friday looks bearish again although most of the negativity may be at the close. If the first part of the day is positive, then I would not rule out a green close. Overall, it seems more likely that we will see a test of support at 11,000-11,100 this week. Higher highs are less likely. It is difficult to say if 11,000 will be broken to the downside. Bulls have been very strong lately so that may not happen. And yet there is definitely the potential for some downside this week, whether it is only down to 11,100 or some other level like 10,900. Next week (Aug 6-10) looks more bullish. Monday could lean bearish, however, as the Moon aligns with Mars and Saturn. Tuesday looks more positive as the Sun aligns with Jupiter. Wednesday looks somewhat bearish (range day?) as the Moon opposes Saturn but Thursday looks bullish on the Sun-Mercury conjunction. Friday looks bearish on the Venus-Saturn square. The Nifty should retest resistance here at least. The following week (Aug 13-17) looks bullish as well as Mercury aligns with Jupiter early in the week. We could see higher highs in the second half of August although the last week of the month looks somewhat bearish as Mars stations direct. This may only be a small pullback. Early September looks bullish again but the up trend is likely to end in the second week of September after Saturn stations direct. This is likely to coincide with a two or three week correction with a low possible in late September. At this point, I do not expect this September decline to exceed 10%. Another rebound is likely in October and into early November. Another multiweek pullback is likely to begin in mid-november and continue into December. This looks larger than the September decline although I would not expect anything too dramatic, perhaps a test of rising

8 channel support (34,000) on the Sensex. The first half of 2019 looks somewhat bearish. While we are likely to see a strong rally begin in late December and extend through January and perhaps February, the gains may not last. That is because a major correction (>10%) is due beginning in March or April. This could last two or three months and do significant technical damage. After the low in May or June, stocks should be in a better position to resume the rally for the rest of Technical Trends Astrological Indicators Target Range Short term trend is UP bearish (disconfirming) 10,900-11,100 (1 week ending 3 Aug) Medium term trend is UP bullish (confirming) 11,100-11,400 (1 month ending 3 Sep) Long term trend is UP bullish (confirming) 11,000-12,000 (1 year ending Aug 2019) Currencies The Dollar edged higher last week against a backdrop of mostly strong corporate earnings and optimism over trade. The USDX finished the week at while the Euro settled Friday at This bullish outcome was more or less in keeping with expectations although the gain was more modest than anticipated. I thought the Dollar could make a hard test of resistance at 95 but only Friday s intraday high of came close. Interestingly, the Dollar actually closed slightly lower on Friday despite the fairly strong GDP number. Clearly, the market is

9 skeptical that 4% growth can be sustained in future quarters. The Fed may have something to say on that score when it meets this Wednesday. Growth rates seems to warrant two more hikes this year and several more still in 2019 but persistent trade worries with China could negate some of its hawkish tone. Technically, the Dollar seems to be stuck under resistance at 95 while keeping above support in the 94 area. The trading range has narrowed recently and implies a breakout in either direction may come soon. The converging 20 and 50 moving averages paint a similar picture of a possible breakout. It is difficult to decide if the chart shows a bearish rising wedge or merely a gently rising channel over the past two months. I think the wedge interpretation is a bit more persuasive although the intraday spike high at 95.5 offers some evidence for a more bullish channel pattern. A wedge breakdown would likely see a move to 93 fairly quickly. Of course, a retest of the 200 DMA would seem almost a given if there is a pullback of any size. But since the wedge is not a sharp one, the convergence of support and resistance lines could take several more weeks before we see a breakout either way. The weekly Euro chart reflects this sideways trend although a possible right shoulder to 1.20 is not out of the question yet. Despite brief daily moves outside of this range, every weekly close since June has fallen within that narrow two cent band. One would think that the next weekly close outside the range will dictate the direction of the next trend. This week leans bullish for the Dollar. The early week could see some weakness, however, as the Mercury-Venus alignment appears to favor the Euro. A retest of support at 94 or below seems more likely than not. I would also not rule out a move down to It seems that Wednesday s Fed meeting could be bullish as the late week alignments look stronger. This bullish Dollar forecast has a moderate confidence only as there is a lack of confirmatory indications. Nonetheless, I would expect a test of 95 by the end of the week with a breakout possible. Next week (Aug 6-10) also looks bullish as the Sun conjoins Mercury. There is a higher likelihood of a breakout above 95 here. Generally, I think August should be bullish for the Dollar so a move above 95 seems fairly likely. Some retracement should occur in September although it may not break below the 200 DMA. October looks mixed to bearish also, however, so there could be a greater likelihood of a technical breakdown. November and December should see a sharp rebound with the Dollar generally bullish for the first half of Higher highs are possible. The second half of 2019 looks more bearish and could mark the beginning of a longer bear market in the Dollar that extends into 2020 and beyond. Technical Trends (Dollar) Astrological Indicators Target Range

10 Short term trend is UP bullish (confirming) (1 week ending Aug 3) Medium term trend is UP bullish (confirming) (1 month ending Sep 3) Long term trend is DOWN bullish (disconfirming) (1 year ending Aug 2019) Crude oil Crude edged higher last week on lower US inventories and military actions in the Gulf that forced the Saudis to halt shipments. WTI gained about 1% to just under $69 while Brent finished the week above $74. This bullish outcome was unexpected as I thought the late week Full Moon and eclipse would be more bearish than it was. While I did correctly anticipate some upside in the first half of the week, prices kept rising into Thursday and Friday saw only a standard sized sell-off. The technical outlook is still bullish in the medium term but the short term is uncertain. The recent rebound off the previous week s low has yet to rise above the 20 DMA, a key level that divides an up trend from a down trend. The two-week bounce may simply be a bear flag which could resolve into another down leg. This is, in fact, what happened in May and June as the early June low had to be retested before buyers could safely return en masse. We could well be in a similar situation here with a retest of the 18 July low. Bear flag support is near Friday s intraday low at $68 for WTI. A move below there could signal a retest of $66. If we do get a quick pullback to $64-66, then price would presumably rise from there. And yet that would also set up a possible head and shoulders topping pattern if there was a rally back up to the May high of $73. For now, it looks more likely that crude will rally back to new highs in the coming weeks. One possible detour to higher highs would be a possible retest of the 200 DMA at $63. This is fairly close to horizontal support anyway, and it might be necessary to shake out weak bulls. The weekly Brent chart is still holding onto support from the 20 WMA after the potentially bearish double top. A weekly close below $72 would scare off many bulls as it would point towards a measured move down to $64. If $72 holds as support, then another push higher to $80 seems likely.

11 This week looks mixed with a risk of downside. The early week has some significant bullish potential, however, as the Mercury-Venus alignment ought to coincide with gains on Monday and/or Tuesday. It is quite possible we could see prices push back over $70 by Tuesday. While I think August leans bullish overall, I m not sure if the rebound can begin this week. One reason is Wednesday s bearish alignment of the Moon, Saturn and Mars. This looks like a high probability down day. But like Friday s Full Moon, it is difficult to gauge how much selling we might see compared with any preceding rise on Monday or Tuesday. Bulls should therefore be aware of a possible retest of the July 18 low, especially during the midweek period. Thursday and Friday may have a better chance for gains and I think it is likely that at least one of those days will be positive. Next week (Aug 6-10) looks more bullish as the Sun conjoins Mercury. Wednesday the 8 th may be bearish but there should be enough positive energy for a bullish week overall. The following week (Aug 13-17) also looks bullish as Jupiter aligns with Neptune. While we could see some retracement in the final week of August around the Mars direct station on the 27 th, it is possible the up trend will continue into mid-september. Therefore, higher highs could be within reach. A retracement is likely in the second half of September and early October. Most of October should see another rebound although higher highs seem somewhat less certain by November. Mid-November should see a larger pullback that lasts into December. This could well put in a lower low relative to the late September low. Another rally should begin in December or January and crude should stay in a mostly bullish trend for Q1 and much of Q2. However, a sharp correction is likely to take place sometime in Q2, probably closer to June. The summer of 2019 looks quite bearish. Crude should recover by Q4. Technical Trends Astrological Indicators Target Range (WTI) Short term trend is DOWN bearish (confirming) $64-68 (1 week ending 3 Aug) Medium term trend is UP bullish (confirming) $68-76 (1 month ending 3 Sep) Long term trend is UP bullish (confirming) $70-85 (1 year ending Aug 2019)

12 Gold Gold slipped further last week on Dollar strength and diminishing inflation pressures as prices fell by less than 1% on the week to This bearish outcome was in keeping with expectations although I thought we might have seen a larger decline in the late week with the lunar eclipse. As it happened, however, gold traded in a fairly narrow range all week as dip buyers kept price above 1210 while sellers entered the market just underneath the 20 DMA. Bulls are attempting to form a bottom here after the correction. It is unclear if gold can rally from here, however. To be sure, there is some horizontal support at 1200 that dates back to But I suspect those previous lows may not offer much support given where gold has been since then. Those early pullbacks to 1200, 1210 and 1220 were on the way up in a strong rally. Gold is now on the way down and has broken below its more recent low of The violation of recent lows is likely more significant technically than interim lows from over a year ago. Moreover, the back breaker for bulls was the move below 1240 and the rising trend line off the 2015 low. In order to create a more compelling technical story, bulls will need to get a weekly close above It is close at hand, but until it actually happens I suspect most rallies will be sold before they reach If does not hold, then it is possible it could down to This would be the pattern target of the large two-year double top from 1240 to The longer gold goes without reclaiming 1240, the more likely it will have another leg lower. Similarly, we should note that brief one-day spikes above 1240 may not be indicative of a bullish move as price can reverse quickly. This is one reason why the weekly close may be a more trustworthy technical indicator of market direction. This week looks choppy with significant moves in likely both directions. I am somewhat bullish for gold generally for the month of August but I am uncertain if a meaningful bounce can begin this week. I tend to think we will continue this possible bottoming process for another week. Therefore, tests of support at 1210 and resistance at 1240 are likely. The early week leans bullish in this respect as the Mercury-Venus aspect on Monday and Tuesday should produce at least one up day. Tuesday looks a bit more bullish than Monday given the Moon-Venus alignment. Wednesday is Fed FOMC day and it also

13 happens to look more bearish in terms of the planets. The entry of Venus into the sign of Virgo looks a bit bearish since Venus (and gold) typically does not do well there. There is a risk of a sizable decline (>1%) here although I would not say it is probable. Thursday lacks clarity while Friday leans bearish on the Moon-Mars square. Overall, I am reluctant to predict an outcome here. There is definitely downside risk that suggests caution. However, I m not convinced there will be any big decline either. Next week (Aug 6-10) looks more bullish as the Sun and Mercury align with Jupiter. The late week is likely to see some pullbacks as Saturn squares Venus, however. The following week (Aug 13-17) also has some upside potential as the Jupiter-Neptune becomes exact. All the while, Venus will still be transiting Virgo. This is a potentially offsetting influence could makes it harder to forecast where gold will be trading in August. It seems very likely to move over 1240 but it may not be so quick to retake higher levels of resistance such as 1270 and the 50 DMA or 1300 for that matter. The Saturn-Lunar Node alignment also remains in the background as a negative influence throughout August and September so that is another reason why I am reluctant to get too bullish about gold. The late August Mars direct station is another potential time of weakness where pullbacks are more likely. Even if August is positive, I suspect rallies will be sold quickly. And there is a chance that August may not be very bullish at all. Unfortunately, the planetary indications here are contradictory and hence do not provide a clear picture. Early September should be more positive as Venus enters Libra on the 1 st of that month. Some further upside looks likely into the middle of the month as Jupiter aligns with Pluto. But late September leans very bearish as Saturn aspects the Sun while Mars again conjoins the Lunar Node. This looks strong enough to produce a significant reversal lower and interruption of any potential rally. After a possible interim low early in the month, October looks more bullish and the up trend should extend into early November. Late November and December should see some major selling. Overall, the rest of 2018 suggests a fairly mixed picture for gold with downside risks outweighing the upside potential. I think gold is more likely to finish the year below 1300 than above it. Even staying above 1200 could be challenging if the Q4 sell-offs materialize as expected may be more positive although I suspect the first half of the year will still be quite choppy. The second half looks more promising. Technical Trends Astrological Indicators Target Range Short term trend is DOWN bearish (confirming) (1 week ending Aug 3) Medium term trend is DOWN bullish (disconfirming) (1 month ending Sep 3) Long term trend is DOWN bearish (confirming) (1 year ending Aug 2019)

14 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