As predicted, New York stocks fell last week as the Dow ended trading at 11,288 while the S&P stood at 1262. Sentiment is increasingly gloomy as the week's action confirmed that we are currently in a bear market -- down 20% from the 2007 highs. While the Dow managed to stay above 11,000 last week, next week promises to be even more newsworthy as the long-awaited Mars-Saturn conjunction occurs. Most observers agree that we're heading for another down week, the only question is how much. While there are whispers about the possibility of a crash here, I don't foresee things getting that bad. That said, the market is more vulnerable to sudden declines now that it has been in quite a while so I wouldn't want to rule out the possibility of the Dow going below 10,000 this week. A more likely scenario is for the markets to dip between 4-7% which would be 10,500-10,700 on the Dow and 1180-1210 on the S&P. If the rally on Monday takes off, then some of these downside targets may be tougher to meet. Nonetheless, I think we will see at least one day close decisively below 11,000/1230, and most likely Friday's close as well.
Monday has the chance for some gains as Mercury, Sun and Venus are in sidereal Gemini -- the only day they will do so -- while Moon is aspected by Jupiter. A rise of more than 1% is possible. Things may go south fairly quickly after that as the Sun opposes Jupiter on Wednesday the 9th which will set up both the Mars-Saturn conjunction and the bearish Mercury-Pluto opposition on the 10th. The possibility of a sudden market capitulation by Thursday may create some bonafide buying opportunities by Friday. After this week, we will likely be within 2-3% of an interim bottom that may be re-tested throughout July before a meaningful rally gets going in August. I would say there's a 50-50 chance that the interim lows will come this week.
In keeping with our previous forecast, Bombay is coming off another negative week in which it closed below 13,000 for the first time in many months. The Sensex opens Monday at 13,454. This week looks like more of the same with the perfection of Mars-Saturn, especially given the stresses in the IFN ETF chart. Tr Mars and Saturn will line up exactly opposite the IFN natal Venus and Mercury. I think we will see lower lows this week with a weekly close below 13,000, perhaps below 12,500. An intraday below 12k is also not out of the question.
Tokyo stands at 13,237 and has similarly been beaten down recently by dim economic prospects. The Thursday Mars-Saturn conjunction occurs right atop the ascendant of the Topix chart so it's hard to see how the Nikkei will do anything but go down. While there is a real chance of a snapback rally on Friday, we are looking at a re-testing of the March lows around 12k this week. Thus far, Tokyo has withstood the worst of the bearish mood and has remained well above its previous lows. This week looks like it plays a bit of catch up.
As expected, the Euro did have a tougher go of it this week, as the ECB signalled it had finished this round of rate cutting. While I had thought it would finish close to 1.58, Friday's sell off pushed it down and it opens at 1.5706. I think the Euro is poised to continue its longer term rally this week, although Monday looks quite negative. Transiting Mercury will pass over the MC and thereby form an opposition with Pluto on the Euro's IC. While not an obviously bullish pattern, it nonetheless looks significant and indicates that currency moves will be big this week. Overall, I expect the Euro will at least get back above 1.58. At the same time, however, some downside protection might be a good idea in case Pluto gets the upper hand.
As predicted, Gold was volatile last week and barely managed a gain overall, closing at $934. The early part of the week looks worst, as transiting Sun conjoins Saturn in the Futures chart. Friday may see a nice rally as Mercury is in aspect with Uranus in the Futures chart but generally, I'm not bullish on Gold here. I think we'll close lower for the week, possibly under $920 at some point intraweek Gold still has at least two more weeks to go before it makes a decisive break out move above $950 and launches another big run past $1000. I expect there will still be buying opportunities below $920 in the meantime. $900 entry points may no longer be possible.
While Oil failed to reach $150 last week, it did rally further to $145, as forecast. As Mercury moves out of the range of Rahu, however, there is less reason to stay with Oil. Mercury's entry into Gemini more or less spells the end of this current run-up so this week will likely see a significant decline in crude. Transiting Mars-Saturn will oppose the natal Venus in the Oil ETF chart which might push it down sharply, perhaps back to $130. The next week or two look mixed before another rally ensues after July 18th.
