Sunday, October 19, 2008
Market Forecast -- week of October 20 - 24
US markets rebounded somewhat last week but remain highly volatile amidst continuing fears of a deep recession and global banking uncertainty. The Dow finished Friday's session 5% higher on the week and opens Monday at 8852 while the SPX sits at 940. While I had not expected the extent of last week's bounce, it's clear that the markets are indeed trying to form a bottom at this point and that some retest of the Oct 10 lows at 8000/840 is imminent.
This week looks mixed again although I think Monday and Tuesday looks more negative. It's even conceivable we could see a retest of those lows then, although I'm not sure there's enough malefic energy available to move the markets down another 10% in such a short time. Monday starts with the Moon aspecting Jupiter, a normally helpful influence. But with Jupiter is close aspect to Saturn and Rahu, I think Jupiter's impact here will only amplify the fear of investors and push the market down. Some up days are likely midweek, as the Moon transits Cancer Tuesday and Wednesday where it may alleviate anxiety. Some key indicators turn more clearly negative by week's end, however, as Mercury moves into bad aspect to Mars once again. If the retest does not occur this week, then a more probable date for it would be next Monday Oct 27, when many of the malefic aspects line up more exactly. Mercury will be quite close to Mars' influence, while Mars aspects malefic Rahu. I think we will see a close decisively below 8000 by then, perhaps as low as 7500.
It's possible that we will see some kind of meaningful bottom as soon as next week, so investors who are short may consider closing out some of those positions then. I still think we will see more down days than up days until at least the first week of November, so lower prices are still very possible after Oct 27. The date of the US election stands out as another possible lower low below 7500, as Saturn exactly opposes Uranus while Mars simultaneously squares Neptune. This configuration may represent an exogenous political event that could affect the markets very negatively.
Indian markets lost more ground last week as the Sensex closed below 10,000 for the first time in two years. The Sensex opens trading Monday at 9975 while the Nifty stands at 3074. While I had predicted a down week, I erroneously reversed the intraweek trend so that the positive days were actually in the early part of the week. This week looks quite uninspired although overall I think losses may not be as severe. Transiting Mars is approaching an aspect to the already afflicted natal Mars and the natal Rahu in the BSE chart so it's really only a matter of time when this explosively negative aspect manifests. My guess is that the worst of it will be Friday and then again next Monday Oct 27. The downside potential from this aspect is very large and I think we will see another big drop over the next two weeks, certainly well below 3000 on the Nifty. There's a lot of technical support at 2000 but that seems too large a drop to consider seriously. In the meantime, the start of the week looks negative as the Nifty may dip below 3000 with some rebound rallies possible into Wednesday or Thursday.
With stock markets bouncing back last week, the Euro managed to close the week mostly unchanged at 1.34, as late week pessimism erased the early week gains. With stocks preparing to fall again this week and next, I would look for the Euro to easily break below 1.30. We could see a big drop of 2 cents or more early in the week as the transiting Sun opposes the natal Saturn in the Euro chart. Friday and next Monday also look very bearish and likely reflects a further gain in the US dollar as a safe haven amidst volatile stock markets.
As predicted, crude oil traded below $70 last week although it rallied slightly on Friday to close at $72. I think we are likely to see more trading below $70 this week although there will still be some strength in the prices. Sentiment will turn very bearish by the end of the week, however, as transiting Mars opposes the natal Venus and the Sun conjoins natal Saturn in the Futures chart. In all likelihood, crude will be below $65 by next week, perhaps as low as $60.
Gold prices collapsed further last week as bullion closed at $788. While I had expected to see prices below $800 by November, this early extreme bearishness was a little unexpected. Any rallies will be very short lived this week as the major move down in gold will continue for the foreseeable future. Tuesday and Wednesday look best for gold this week as transiting Mercury conjoins the natal Jupiter in the GLD chart..