The much-anticipated August rally is finally upon us as stock markets rallied strongly last week by over 3%. The Dow begins trading this week at 11,734 and the S&P at 1296. While I had expected this rally, I was a few days late in my timing as I thought there would be more significant declines last week. As it happened, Monday was the only down day in advance of the Mars-Uranus opposition. In retrospect, this aspect provided the energy rather than the direction for the market. The conjunction of Sun and Ketu in Mercury-ruled Ashlesha probably provided the necessary optimism to drive prices higher. Last week, Mercury had moved well past Ketu and was applying to benefic Venus. My revised forecast after Tuesday's big gain recognized that we are no longer in any immediate downside danger of retesting the July lows.
The key aspects this week will be the applying Mercury and Venus to Saturn in Leo. While Saturn's effects are often negative, this needn't be a very bearish contact given the trine aspect from Jupiter in Sagittarius. And yet, I think we will likely have some significant downside risk midweek as Mercury conjoins Saturn. This will still be far enough out of range from Jupiter for it to be helpful. Friday may be positive opportunity for gains as Venus is more closely aspected by Jupiter. Here I'm counting on the possible pessimism of the Sun-Neptune opposition to have been manifested on Thursday. Monday also looks fairly promising as both Mercury and Venus will still be Magha. So I think we'll see more of a mixed bag this week overall. The markets will probably finish close to current levels with an upside bias.
The Sensex rose modestly last week and starts Monday at 15,167. While gains are likely this week, the market may see some of them disappear by Friday with the approach of the Sun-Neptune opposition and the Mars-Pluto square. The Sensex natal chart (Jan 1 1986) has both Venus and then Mercury conjoining the natal Moon which should provide a protective effect so we may see prices above 15,500.
The Nikkei also enjoyed a slight gain last week and opens at 13,168. Transiting Venus and Mercury make very favourable grand trine aspects to Moon and Mars in the TSE natal chart so this should be enough to move prices higher. Tokyo has been underperforming of late, so it may be more likely to post a larger gain relative to other global indices. Further guaranteeing an upweek is the fact that both Venus and Mercury will be transiting the ascendant of the Topix chart. I think 13,500 is very likely as an intraweek high, possibly higher.
Perhaps the biggest story last week was the rapid recovery of the long abused U.S. dollar. The Euro fell 3 cents on Friday, its biggest single day drop in eight years. Overall, it dropped over 5 cents and opens Monday at 1.5006. Last week's plunge was in keeping with my bearish forecast for the Euro as transiting Mars completed the t-square with natal Mercury and Jupiter. While this was clearly a negative planetary configuration, I wasn't sure how much of a decline was possible. As it turned out, I greatly underestimated it. The Euro is now close to its 280-day moving average of about 1.48 and once below it, it may fall a long, long way. I don't think that time is upon us and it may have another several weeks above it's long term support levels. November will likely decimate the Euro and we could well see a 20% drop over a few weeks towards the end of 2008. We can look forward to a global economic shock at that time which will force the U.S. dollar back into the spotlight as the preferred default currency. A Euro on par with the greenback in 2009 is very possible. More immediately, I think the Euro is due to bounce back a bit this week after probing below 1.49 or 1.48 on Monday or Tuesday. The midweek period should be it come back above 1.50 to perhaps 1.51. Friday looks shaky though and we may see another sharp sell off. Overall, the Euro is likely to have some upside potential this week and close above 1.50.
Like the Euro, Oil dropped further in the wake of the recovery of the U.S. dollar and restored confidence in economic prospects. It opens trading at $115 on Monday. While I had originally been bullish on Oil, last Monday's action convinced me that a breakdown had occurred and the forecast was quickly revised downward. I think crude could touch as low as $110 Monday, but will make some gains through the week. There's a good chance we will see levels above $115 at some point and depending on Friday's volatility, there is an upside bias for the week.
Gold also reacted to the re-setting of the financial chess board last week as it plunged to $864 by Friday's close. I thought Gold would have more staying power above $900, but after Monday's grim trading, I knew that it was likely headed to revisit its long term support at $850. The transits of Venus and Mercury to Saturn in Leo this week should help Gold tread water here and perhaps move a little higher. Any movements below $850 this week should be temporary. Over the next 60 days, I think Gold is more likely to move higher than lower.
