Rate cut spurs weak morning rally

Markets have reacted half-heartedly to the coordinated rate cuts of 50 basis points this morning. The Dow was up over 100 points in early morning trading.

I think we may be in the red again by this afternoon as Moon is in hard aspect with Saturn. This peaks in the last two hours of trading in New York. Look for a late day sell off.

Markets continue to bleed red; Dow closes below 9500

After a small rally on the open, markets in New York resumed their downward spiral despite strong hints of an imminent cut from Fed chair Ben Bernanke. Stocks fell over 5% and broke through some important psychological support levels as the Dow closed at 9447 and the S&P at a shocking 996. We're clearly in uncharted waters here. While I had wondered if we would see a rise today, the bearish mood shows no signs of lifting. Even if there is a relief rally tomorrow, Thursday still looms as a possible big down day that could take us down to 9000.

Indian markets similarly started off in the green on the strength of the RBI rate cut, but succumbed to selling pressure and ended unchanged. It seems that Nifty 3400 may be breached quite soon before any kind of rally. Look for 3000 by November.

After the smoke clears this weekend, I think the market will stabilize from about Oct 15 to 23. This might be enough reason to try to cover some short positions this week. Another move down is likely after that. It seems that we may get to 8000 by November. Wow.

Oil is moving with stocks and closed mostly unchanged at $89. Another move below $85 is in the cards.

As suggested in our forecast, the Euro had a nice bounce today and finished at 1.3612. Any rallies here are potentially lucrative shorting opportunities.

Gold had a good day and closed up 2% at $886. Rallies may be cut short in the days ahead especially with the approaching Sun-Rahu aspect.

World markets slide on recession fears

World markets continued last week's sell off today as European markets fell over 7%, Asian markets over 5%, and NewYork finished down almost 4%. At its worst, New York was down 9% as the S&P dipped to 1001 intraday. This decisive break of 10,00 on the Dow is a stark confirmation of our forecast for today's action. Tomorrow may see a relief rally but this is definitely no time to go long. Look for another big sell off Thursday or Friday that puts markets closer to 9000. As a basic position, I would stay short until mid November at least.

Gold finally got a boost from this turmoil and closed at $866. I think there may be intermittent rallies to $900 but long positions should be handled with care as gold will decline precipitously very soon. Gold over $900 might be a good short term shorting opportunity.

As predicted, oil continued its downward trend and closed down $7 to $86. My forecast for $80-85 is now looking overly conservative. There is a lot of downside potential to crude over the next few weeks and so I would stay short.

The Euro also continued to move down as it closed at 1.3511. I had thought the bear market in the Euro would take a bit of a breather this week. Let's see how the rest of the week plays out. I would stay basically short on the Euro over the next 60-90 days at least.

Market Forecast -- week of Oct 6 - 10

The markets took it on the chin for yet another week on growing fears that the bailout bill will not prevent the economy from sliding into a deep recession. For the week, the Dow fell 7% to finish at 10,325 while the broader S&P500 declined 9% to 1099. While I correctly predicted noteworthy declines for Monday and Friday, I was far too sanguine about the week overall and underestimated the extent of the negativity. I will note that I was correct in calling for some kind of midweek rally, although it sputtered at 11,000, which was well below upper level expectation. Nonetheless, our default bearish stance has positioned us well as we head into what will likely be another difficult week after the markets sold off Friday on news of the passage of the bailout package.

We're now entering what I believe is the most bearish period so far as the Sun conjoins Mercury under the influence of Rahu on Tuesday while Saturn and Rahu are in tense aspect. A number of bearish hits to pertinent natal charts reinforce the notion that we may be facing an even larger decline this week. Taking it as a proxy for the whole market, the Nasdaq chart, for example, has transiting Mars conjoining the Descendant early in the week. This is a very bearish indicator and completes a t-square with the natal Moon-Mercury opposition. At the same time, the Sun-Mercury conjunction occurs atop the natal Uranus in that chart. Meanwhile, transiting Venus exactly opposes the natal Saturn on Tuesday. So there's no shortage of potential difficult energies there, although it is significant that they appear to focus on earlier in the week, mostly on Monday and possibly Tuesday as an indicator of larger declines. I expect the Dow will break decisively below 10,000 by intraday Tuesday at the latest, although the Tuesday close and Wednesday's trading might see a decent recovery back above 10,000 or higher.

I still think there is a potential for a more serious decline later in the week, especially on Thursday as the Moon conjoins Rahu and increases the intensity of the larger planetary configuration. While I've written previously about the possibility or even likelihood of a crash-type scenario in this time period, I don't want to fall into the common trap of 'astrological sensationalism' here. (or maybe I already have!) It's conceivable that the larger decline may be delayed until early November, as October sees high volatility and more downward probing below 10,000. That is a very real possibility that would not surprise me. But we may also be on the verge of the largest one-week decline here, perhaps over 10% and 9000 on the Dow, and investors should be aware of this potential. In a nutshell, I'm predicting a very (i.e. >5%) negative week , the only question is how negative it will be. I still think the markets are eventually headed down to 8000 or below by November, or December at the latest.

Mumbai lost 5% last week as Monday's afflicted New Moon in Virgo set up a negative pattern that proved to be too much for markets. The Nifty begins the week at 3818 while the Sensex opens at 12,526. There's little reason to be optimistic this week as Ketu bears down on the NSE natal Mars, and we could see a decline that pushes the Nifty back to 3600 or below. Friday looks terrible.

With Chinese markets were closed for the week, Tokyo could not escape the bearish mood as the Nikkei plunged 8% and stands at 10,938. It's very hard to imagine how the Nikkei will go anywhere but down this week with the double barrelled affliction to the natal Mercury from Saturn and Rahu. There's a good chance of breaking below 10,000 at some point. On Thursday and Friday, transiting Mars will aspect both Jupiter and Venus in the natal chart, which may be an indicator that the larger decline for the week. This is a hugely afflicted horoscope.

As predicted, last week the Euro collapsed below its support level of 1.38 as it lost 6 cents and closed Friday at 1,3784. While my outlook on the Euro remains hugely bearish, declines this week will be more modest and we may even see some gains. The weekend moves by European governments to shore up the banking system will likely help support the Euro somewhat this week as Venus conjoins the MC of the Euro ETF chart although any upside will likely be confined to early or mid-week.

Oil prices plunged last week on recession fears and finished below $94. While I had forecast prices below $100, I had thought they would not occur until this week. I expect this major decline of crude to continue and even accelerate this week, perhaps as low as $80-85, as significator Saturn is in tense aspect to Rahu with Sun and Moon playing supporting roles. In the Futures chart, transiting 12th lord Mars takes aim at the Moon-Saturn conjunction with lower prices as the most likely outcome. Even if there is some kind of relief rally towards the end of October, I wonder if we've seen the last of $100 crude for a while.

As predicted, gold continued its decline last week, although I underestimated the bearishness at it fell back over $50 to $833. As I wrote in my market updates this week, I no longer think there is enough upside in gold to push it back to $1000. There will be some smaller rallies that will likely hit $900 over the next few weeks but gold will start to move more negatively as we head into November. This week looks bad, especially towards the end of the week and we may see gold fall below $800 once again. If we manage some up days earlier, it may somewhat offset the declines that are likely for Thursday and Friday. Next week looks much better for gold.

Stocks sell off after bailout bill passes

The mood turned sour in Friday afternoon's trading after the House passed the bailout bill. The Dow dropped over 300 points in the afternoon and closed at 10,325, revisiting Monday's previous lows. The S&P finished at an anemic 1099.

In my weekly forecast, I had been uneasy about Friday's action given the position of retrograde Mercury in aspect to Rahu. This expectation was largely borne out given the sharp reversal that occurred. The New York market had been up 3% in advance of the House vote, and ended up over 1% in the red.

Oil declined with stocks while the Euro and gold were little changed.

So another week, another 4% shaved off equities. Now it seems clear that the bailout can no longer save the market. The stage has been set for next week's possible carnage, which seems to centre around Thursday or Friday. Breaking through 10,000 seems to be a certainty, and it will likely be a lot lower than that. We could be down another 10% before there's a relief rally.

The Gloom Descends

Markets in New York stumbled again and lost 4% today on growing recession fears as a bad employment report nullified any possible bounce from the successful Senate vote on the bailout plan. The Dow closed at 10,482 and the S&P finished at 1114. It is becoming increasingly clear that the bailout plan will not be enough to right the sinking ship. Although it is possible there might be a small bounce if the House of Representatives passes it Friday, this likely won't amount to much. It's possible that Monday and Tuesday of next week may be positive but our orientation should be short here as risk increases as time goes on. I'm expecting a decisive move below 10,000 on the Dow next week. 9000 is a worst case scenario for October.

Perhaps more important is the flight to the US dollar that is crushing all comers including the Euro, crude and gold. As predicted, the Euro is in free fall here and ended the day barely hanging onto support levels at 1.3809. And as fears of a major slowdown grow, crude oil fell back $5 to $93. Gold was hammered and lost 4% today and closed at $840. Gold is quickly losing its safe haven status now, and the US dollar has reaped the rewards of the current crisis. I believe this trend is likely to continue for the next few months. It seems that my forecast for $1000 gold will not be realized. We might see $900 at the end of next week, but rallies should be treated as exit points and opportunities for going short. This also holds for crude and the Euro.

By the end of the year, we may see gold at $650, the Euro at 1.20 and crude at $70. This is still in keeping with my previous medium range forecast. The only significant revision is that the short term upside potential has largely already been realized.

Markets flat in advance of Senate vote

New York ended largely flat today as traders avoided commitments in advance of the Senate vote on the financial bailout bill. Oil backed off to $98 while gold held firm near $890 in the day's trading. As I write this, the Senate has just voted in strongly favour of the bill and oil has gained a dollar while gold has dropped $13 to $874.

While the bill was widely expected to pass the Senate, the margin was encouraging for nervous investors (74-25) and should push markets higher tomorrow and likely into Friday. I'm still not convinced the rally will extend to the close on Friday, but certainly we should see some decent gains here. Gold may become a great buying opportunity at $850.

As predicted earlier in the week, the Euro has fallen below 1.40 and may go lower. It closed today at 1.3967.