Market Forecast -- week of Sep 1 - 5

As predicted, New York stocks finished down last week, as the Dow closed at 11,543 and the S&P at 1282. The 1% drop was a more modest decline than forecast and reflected Thursday's unexpected gains in advance of the Venus-Pluto square. The persistence of bad economic news is making it hard for this market to rally, and the planets aren't helping either. This market is now residing in a fairly nondescript anteroom of a very frightening house of bear market horrors.

This week looks mixed, as stocks may start weaker Tuesday and Wednesday after the Monday holiday for Labor Day. Tuesday in particular may feature some anxious tendencies as the Moon is in aspect to Rahu in Hasta. There's a good chance prices will head higher towards the end of this week after the Sun has moved past its conjunction with Saturn. Thursday may have the most bullish configuration (at least on paper) as the Moon joins an assortment of planets around 18 degrees of their respective signs. If the early week losses stay above 11,300, then there's a good chance the market will finish higher overall. Nonetheless, I'm not at all confident that there will be many more gains here. The risk of significant losses will increase towards the end of next week and particularly with the Full Moon on Monday the 15th. There is a very real chance of of breaking below the July lows at that time.

Mumbai stocks eked out a slight gain last week as the Sensex stands at 14,564 and the Nifty at 4360. Early week trading should be mostly negative as the transiting Moon and Venus oppose Saturn in the Nifty chart. While prices may fall, they are unlikely to go below 14,000. Late week trading looks more positive as the Moon moves into the 5th house of Libra in the Nifty chart. Overall, the week may close fairly near current levels, with a minimal upside bias.

Tokyo rose about 3% last week and opens at 13,072. While I had hinted at the chance for gains last week, this move up was surprising. The tough sledding early in the week may prevent much more upside this week, although if Tuesday is positive with the Moon in Virgo joining Mercury, Venus, and Mars, then we can look for more gains overall. On Tuesday, the transiting Moon will join Venus as both will be in fairly close aspect to the natal Jupiter in the TSE chart.

Chinese stocks continue to drag along the bottom here, below all the moving averages as the Shanghai Composite opens trading Monday at 2397. With the square aspect of transiting Mars to the natal Venus in the SSE chart Monday, stocks should decline significantly, perhaps below 2300. By week's end, however, prices should rise with the transits of Mercury and Venus into the 9th house of the SSE chart. 2400-2450 are reasonable targets here.

The Euro sank backwards a bit last week and stands at 1.4674. I had thought we would see more of a rally underway by now but it seems we will have to wait for this week's trading. Monday and Tuesday will likely be higher with the higher oil prices in any event and will correspond with the transiting Moon in Virgo joining Mercury and Venus near the ascendant in the Euro chart. 1.48 is likely, possibly higher. But as transiting Mars squares its natal position by Friday, the Euro may slip back to 1.47. Next week may take the Euro back above 1.50.

Oil closed above $115 last week, and hit $118 in intraday trading, basically confirming our bullish forecast. Prices are continuing this upward trend today in a special trading session to handle market demands in advance of the likely disruption of supply by hurricane Gustav in the Gulf of Mexico. This upward trend will probably continue until Wednesday and the Sun-Saturn conjunction. It will be interesting to see when prices start to fall back as this conjunction will be in near exact square aspect to the natal Jupiter in the futures chart. Whatever the price spike here, prices are likely to come back below $118 by week's end, possibly down to $116. There is a chance that crude will fall only starting Friday, since there will be a grand trine formed with transiting Sun/Saturn, Jupiter, and natal Venus in the Futures chart. Next week looks bullish.

Gold closed marginally higher last week in keeping (barely) with the forecast and opens trading at $836. Intraday trades were as high as $844, indicating a tentative exploration of that crucial $850 resistance level. I think Gold may reach $850 this week but is unlikely to hold on to it by week's end. $900 is looking very possible by the end of September at the latest, but possibly as soon as September 15th.

Market Forecast -- week of Aug 25 - 29

After a fairly volatile week that featured days of both triple digit losses and gains, New York finished slightly lower. The Dow closed at 11,628 and the S&P at 1292. Last week's forecast had called for a little more upside bias but the early week rally never materialized as the Mars-Pluto square had more energy than I had anticipated. Friday's rally was possibly the result of the approaching Mercury-Venus-Uranus configuration but all in all, the minimal price movement was within expectations.

I think this week looks bearish, especially towards the end as Mercury and Venus both square Pluto. This week is more likely to begin fairly strong, however, as Mercury and Venus move into Virgo to join Mars. There's a reasonable chance we'll see 12k here, but the late week trading suggests that any gains made here won't last by Friday so 11,300-11,500 seems like a better downside target. With the long Labor Day weekend ahead and no trading next Monday, there is a chance that some of the bearishness may be held off until Tuesday Sept 2nd. Nonetheless, Friday should be a down day.

While I had expected some meaningful rally to take place over the next few weeks, I'm much less convinced this will be the case. I think the big down days will overwhelm the up days so the best we can hope for are mini-rallies back to 11,000 - 11,500 from sell offs that are likely to occur in the next two weeks. Once we get into October, all bets are off. I'm very concerned that some kind of major decline in just around the corner, starting in the second half of October, although most of the negative energy is focused around the last week of October and first week of November. This coincides with the US presidential election, so that may be in the mix in some way. The Dow will almost certainly drop below 10,000 at that time, depending on how far it falls before the major selling event occurs. Investors who are long here and are looking to take profits would do well to sell into any rallies in the coming weeks. I would consider anything above 11,500 as acceptable, and 12,000 as heaven sent.

Mumbai closed lower last week on the renewed strength in commodities and fear of inflation. The Sensex finished Friday at 14,401 and the Nifty at 4327. I had thought the early week would produce more gains that would be able to withstand the predicted late week sell off but the market had other ideas. The Mercury-Venus conjunction moves over the 8th house cusp in the Sensex chart early in the week, so that may indicate volatility. Gains may be short-lived, however, as the late week action looks more negative. A Friday close above 14,000 would be fairly decent.

Tokyo's Nikkei had a very bad last week and closed Friday at 12,666, down almost 3%, it's lowest level since March. It's finally starting to catch up to some of the other global equity markets. While a negative outcome is likely here, I do note some patterns of strength in the natal chart of the TSE. The transiting Sun conjoins the ascendant in the Topix chart while Mercury and Venus apply to the natal Jupiter in early Virgo. It's possible that the declines will be relatively smaller than last week's. There is even an outside chance at some net gains here.

The Euro rallied last week on renewed strength in commodities and geopolitical fears over Georgia and opens the week at 1.4792. I believe the worst is over for now for the Euro and this week should see gains, perhaps back to 1.50. As Mercury and Venus move into Virgo, they will both be approaching the Euro's ascendant at 5 Virgo thus providing an upward momentum to prices. 1.55 still seems like a realistic short term target here as the Euro's days in the sun wind down before the autumnal slaughter.

After a volatile week that saw Oil rise above $121 on Russia-US geopolitical tensions, crude settled very close to where it began the week at $114. While I mistakenly thought there would be an early week decline, at least I did foresee the late week recovery in prices. The question now is can Oil hold above $112? I think the answer is yes, although I acknowledge the possibility we may see a retest of long term support levels in the coming weeks. This week looks quite strong, although I think the volatility will continue as we could see price moves of 3% either way. Assuming Monday isn't too negative and prices stay above $112, $116 is a reasonable intraweek target. There's more upside in crude in the coming weeks, so $132 is quite possible at some point.

Gold rallied off its catastrophic lows last week and closed at $829. Like Oil, I expected more early week difficulty that in retrospect had already been manifested by the previous week's sell off. As predicted, the late week trading was generally kinder to Gold as it moved sharply above $800. I'm guardedly optimistic about Gold this week, although next week looks better as transiting Sun moves closer to Saturn in Leo and the Jupiter aspect. If early week declines are below $800, Friday's trading should take it back to current levels and above. For traders waiting for a return to $850, next week seems like a better bet.

Oil jumps to $121 on Russia-US tension

Worries over the geopolitical implications of the Russian invasion of Georgia pushed up Oil prices today as crude closed above $121. And as the traditional safe haven when the world gets nervous about possible superpower conflict, Gold rose as well and closed at $841.

Although both commodities are now much higher than I had expected in my weekly forecast, at least this late week rise was correctly forecast as gains have accelerated from more tentative moves Monday and Tuesday. It seems that the bottom was formed at the end of last week and the trend now will be up at least until September 12. If this rally does come together soon, it will confirm my previous prediction for a late summer commodities rally.

It's very possible that tomorrow will see a continued rally in commodities against the falling US dollar. I think it's possible that Oil will again see $132 in the weeks ahead, possibly $140. Gold looks like it will follow suit, although it may not rise as quickly due to some significant chart afflictions I have noted in previous posts. I think $875-900 is a realistic target.

The Euro rose to 1.4885 and is poised to go over 1.50 tomorrow and into next week. This is setting the stage for a final rally in the Euro to 1.55 after which it will fall sharply back down to earth.

Stocks were flat in New York, although they fell earlier in Asia. It seems that a retesting of previous lows is now inevitable with a probability of new lows being set in the coming weeks. I had thought there was a chance to get above 12,000 on the Dow in the near term, but that now seems like wishful thinking. Tomorrow will be interesting.

Bear stalks UK market

Like most global markets, the UK has fallen significantly throughout 2008 as twin fears of economic slowdown and inflation have created a pessimistic mood. Since its high in October 2007 at 6730, the FTSE 100 has dropped more than 20% and currently stands at 5370. This decline can be seen in the horoscope of the FTSE 100, which was launched on 3 January 1984. What is especially intriguing about this chart from a Hindu perspective is that the bulk of it occurred during the bhukti of Venus, a natural benefic. This is another example of how the natural qualities of planets are an unreliable guide for stock market performance. The actual condition of the planet in the horoscope in question reveals if the planet's period will yield positive or negative results.

Actually, the story of the current bear market goes back to March 2000 with the beginning of the Moon dasha. This closely corresponded with the market top that occurred in December 1999. Like Venus, the Moon is considered a natural benefic in Jyotish which brings blessings and favourable outcomes. But there is considerable difficulty with the Moon in the FTSE 100 chart. First, it rules the 8th house, a negative dussthana house. Second, it is almost completely combust through the near perfect conjunction with the Sun. Third, Saturn aspects the Moon very closely. While Saturn rules good houses here and is exalted, there is always a residual malefic quality to its influence. In sum, the duration of the Moon period from 2000 to 2010 would never be able to yield great returns. This is in keeping with the classic double top formation we can see in the chart of the FTSE 100. Although there was a sustained rally from 2003 to 2007, it never exceeded the previous highs set in the late 1990s. And given the difficult condition of the natal Moon, it is extremely unlikely that prices will exceed this top (6300) for the balance of the Moon period which lasts until 2010.

The Venus subperiod began on 4 January 2008, just days after an interim top was reached around 6400. While Venus can normally be counted on for gains, Venus is compromised in this chart by virtue of: 1) its position in the 12th house; 2) its conjunction with Ketu and Uranus and 3) the difficult situation of its dispositor Mars, which is conjunct Pluto and Saturn. While Venus still retains some of its natural power to deliver favours, especially given its rulership of the 11th house of gains, these temporal afflictions limit the extent to which Venus periods can deliver the goods. It is noteworthy that the Venus subperiod will run until September 2009. That fact alone should give pause to longer term investors in the UK market since it largely precludes the possibility of a boost in prices above 6400 over the next year. This is a statement of the obvious given the probability of continuing economic weakness in the UK, and yet it is still useful to see how economic and market conditions are reflected by the horoscopic situation.

Transits have also played a role in the current bear market. The FTSE topped out last October as transiting Ketu exactly aspected the natal Mercury in the first house while transiting Jupiter conjoined the natal Ketu. Ketu is a planetary energy that is usually antithetical to expansion of economic activity and market optimism so it is not surprising that this double dose of Ketu should have coincided with a reversal in investor sentiment. By the time of the sharp January 2008 decline, transiting Ketu had now moved within range of natal Jupiter, the chart ruler. Again, this is usually a very bearish influence. The most recent leg down from May to July corresponded with transiting Saturn making a station in close square to subperiod lord Venus. Like Ketu, Saturn's bias is towards pessimism and caution and is often implicated in sell offs and bear market movements.

The prospects for the next few months are mixed. On the plus side, Jupiter will station in early September and it's close proximity to both Sun and Moon ought to be a source of investor confidence and higher prices. But transiting Ketu is aspecting its natal position which is often troublesome and in October Saturn will aspect natal Rahu, another possible period of turbulence. Since the Jupiter influence is likely to be more strongly felt over the next 4-6 weeks, UK markets are unlikely to fall much further than their current levels. I would also expect an upward bias through September which may see a rally as high as 5700. This chart gets precarious into October and beyond as the Jupiter influence wanes and the chart comes increasingly under the rule of Saturn and the nodes. I would expect a new low under 5000 by year's end.

Shanghai stocks down 62% from 2007 highs

The Shanghai Stock Exchange is one of the worst performing exchange this year as investors grow nervous that the pre-Olympic boom may not be sustainable and inflation threatens to choke off the economy. Once over 6000, the Shanghai Composite Index is now a little above 2300. What went wrong here?

Using the horoscope for the inception of the SSE Composite (July 15 1991, 9.30 am), this chart has been running Venus-Mercury dasha since August 2007, right near the market high. Judging from its poor 2008 performance, one would assume there is something defective in the natal Mercury of this chart. Mercury (23 Cancer) is in the 12th house in Cancer, which is often unhelpful and yet it is not near the equal cusp which is more commonly associated with hardship. It is also in a very tight conjunction with Jupiter (23 Cancer) in its sign of exaltation. Not exactly a textbook case for a bear market bhukti lord. I think one potential source of volatility with the Mercury is the near exact square it forms with Pluto (23 Libra). Squares with outer planets are almost never helpful so this may be one reason for the poor performance of the SSE during the Mercury bhukti so far. Of course, it continues until 2010 so one has to be cautious in making definitive evaluations of periods that have not yet finished.

Another source of difficulty have been a number of really tough transits to this chart. This chart has 11 Leo rising -- the exact degree of the Saturn-Ketu conjunction in October 2007 just at the same time as the market top. The timing correlation with the price is extremely close, within just days of the partile conjunction. Of course, both malefic planets were in the proximity of the ascendant and the powerful Moon-Venus conjunction that straddles it in the weeks leading up to the top. This complexity of planetary motion makes reading the market more nuanced since one cannot simply interpret the presence of a malefic on a natal point or planet as negative. It requires consideration of other factors for the effects to become manifest. The Shanghai index continued dropping as transiting Ketu made conjunctions with Venus (8 Leo) and Mars (6 Leo) over the next 3 months. In December Saturn stationed just a degree from the natal Moon at 13 Leo and then retrograded back over the Ascendant over the winter as the SSE fell another 10%. When Saturn stationed next in April it was less than a degree from natal Venus which corresponded with more declines under 4000. Interestingly, Saturn's direct motion near the natal Venus in late April coincided with a short lived rally in May.

Now transiting Saturn is free and clear of the first house planets but the recent declines below 3000 are largely the result of transiting Ketu stationing very near the Mercury-Jupiter conjunction in the 12th house. It will be hard to this market to make many gains in the next month while Ketu is still there. There's a chance that Mercury's transit of Virgo may create some up days, but I think the overall trend in the market is still down for the rest of the year. The SSE will probably bottom out under 2000, maybe 1500.

Equities sell off amidst inflation fears

Stocks stumbled for the second day in a row as traders got more bad news on inflation, housing and banking. The Dow finished at the day 11,348 and the S&P at 1266. While I had forecast a grim Tuesday, my call for an up day Monday was denied by the power of the Mars-Pluto square. The week seems destined to be negative overall now, particularly with Friday's volatility still to come. It's possible there will be a retest of the July lows here.

Gold and Oil rose today as they both attempted to form more solid bottoms. While Monday's decline did not materialize, it's possible we've seen the interim bottom here as the upward momentum should be intact the rest of the week. Friday will be key.

The Euro continued to tread water with more confidence in the neighbourhood of 1.48. The rest of the week should be mostly favourable.

Market Forecast -- week of Aug 18 - 22

Despite the continuing correction in commodites and the new-found strength in the US dollar, New York equities were unchanged last week. This is perhaps a sign that we've reached the upper limits of this immediate rally and another dose of good economic news is needed before the next step is taken above 12,000. The Dow closed Friday at 11,659 and the S&P stood at 1298. This confirms last week's forecast for a holding pattern of current levels. The intraweek trends unfolded more or less as predicted as we saw some significant pullbacks midweek below 11,400 with Mercury conjoining Saturn and the end of the week saw gains.

There are a couple of key aspects to watch this week. The potentially damaging Mars-Pluto square perfected on Sunday but this may have enough punch to push prices down, particularly early in the week, especially Tuesday, when the transiting Moon completes a fairly close t-square. Monday's open may be very positive as the Moon conjoins the natal Venus in the SPX Futures chart in opposition to both transiting Mercury and Venus. I would not be surprised to see a 150 point rise in the Dow in the morning. Tuesday runs the risk of erasing all of Monday's gains with the t-square. The other key aspect is actually a multi-planet affair involving the Mercury-Venus conjunction on Thursday. While the conjunction is a combining a positive energies, the problem is the close opposition to destablilizing Uranus. It's very possible that these three planets could make for sudden movement towards the end of the week. Certainly, trade volumes will rise and we will probably see some wide swings in prices and a major move. Overall, the week has an upward potential but much depends on Friday's trading. If Friday turns out to be positive, then the market may well get to 12k. If, however, Friday turns out to be negative, then the market will end up lower than current levels. A defensive posture is probably the most prudent course as I think the downside risk, though not at all certain, is potentially large.

The Sensex lost 2% in a shortened trading week and stands at 14,724. While the forecast correctly identified the intraweek pattern of gains earlier and losses later on, I had expected a better outcome in Mumbai. This pattern will likely repeat this week as Monday and Tuesday appear favourable as transiting Mercury and Venus come under the benefic influence of Jupiter in the Nifty natal chart. 15,000 - 15,300 is a reasonable mid-week target but by week's end, however, look for sentiment to turn negative. While it's possible that Mumbai may delay the decline until next Monday, I think Friday's action looks problematic so we may end the week not far from where we started.

The Euro fell through its long term support level of 1.48 last week and opens Monday at 1.4689. While I had forecast some intraweek probing below this support level, I underestimated the strength of bearish sentiment. The retreat of the Euro will continue this week as the transiting Sun moves into the 12th house of loss in the natal chart. By Thursday, I would not be surprised to see it below 1.42. Friday's action presents an opportunity for a respite, however, as the Venus-Mercury conjunction lines up nicely in aspect to the Euro's Jupiter. If Friday's gain doesn't pan out, it may be delayed until Monday. It is doubtful if any gains made Friday, no matter how large, will retrace the losses earlier in the week, however.

Oil lost about 1% last week and opens trading Monday a little under $114. My forecast was largely correct in calling for crude to stay above it's long term support at $110 and for midweek gains. We did see some trades at $117, however briefly. I had thought we'd finish a little stronger but the rally in the US dollar was not to be denied. I think there's a very good chance Oil will breach it's support at $110 this week and fall back to perhaps $107-109. Transiting Sun comes under troublesome influence of natal Ketu early in the week so that may be the most difficult time. Some bounce back rally is possible at the end of the week that may put crude around that $110-112 level.

Gold suffered the greatest last week and opens at $792. What looked cheap and attractive last week, now looks precariously perched above the abyss. Last week, it was clear that August was going to be tough sledding for bullion as long as stationing transiting Ketu was locked onto the subperiod lord Mercury in the GLD ETF chart. That said, I was not fully expecting Gold to tumble as quickly as it has. The new reality for Gold is that it's far below its support level of $850 and with the US dollar rising, it enjoys very little appeal. Astrologically, things look fairly gloomy for the next couple of weeks. Monday may see another shocking sell off as the Mars-Pluto square forms around the GLD ascendant. $750 or lower is not out of the question in the early going next week, but the Mercury-Venus conjunction should boost prices by Friday and perhaps next Monday. It's hard to imagine the week will finish positive, but the late week action may at least cut the losses of the early week. It's also possible that Tuesday may be the new interim low and a rally ensues after that. Subperiod lord Mercury moves into Virgo on Sunday the 24th so that ought to give a little more support to Gold prices generally. But longer term, I think Gold still has to make new lows before making a meaningful rally back to where it was in early 2008. As a worse case scenario, I think we may see Gold hit as low as $650 by December.

Commodities bounce

Gold avoided the ignominy of falling below $800 today and bounced back over $20 to close at $837. Maybe Armageddon is not around the corner for Gold after all. The extent of Monday and Tuesday's decline caught me off guard and I wondered if I had missed the key trends for the week. Fortunately, more bad financial news for US banks put pressure on the dollar and Gold and Oil responded in kind with healthy gains. I'm optimistic that this trend will not be significantly reversed in the next few days of trading. Oil climbed back to $116 today and is poised to hit $120. I think Gold is still the weakest of the US dollar plays. Getting back to $850 is still doable in the next few days but it's not certain.

Gold falls below support level

Gold has decisively broken below its $850 support level as it fell further today and closed at $819. While I did think the early week would be negative, I didn't think it would be this negative. There's no way it's going to make my forecast target of $870 now. As predicted, the U.S. dollar recovery continues apace with corresponding losses in Oil which fell to $113 today and the Euro which closed at 1.4922. Significantly, both Euro and Oil stayed above their long term support levels. Clearly, Gold is suffering from more bearish sentiment. I am concerned now that the Sun's transit of Mercury-ruled Ashlesha is correlating with pessimism about Gold due to Mercury's approaching conjunction with Saturn. I had thought that the presence of benefics Mercury and Venus in Leo would offset this negativity, but that is not the case. With this scenario in mind, it's likely that Gold will go below $800 and may be only recover modestly by Friday.

Whatever the logic of the transit analysis might be, there's no doubt that the GLD ETF chart is showing this price collapse because the natal subperiod lord Mercury is suffering under the aspect from natal Ketu. Ketu will station on this point for another month, so on the surface, this creates more of an uphill climb for Gold. Several weeks ago, I had thought that we'd see a bottom in August and I still think that's the most likely outcome. I'm still confident the rally will occur, but there may be new lows here below $800, or even $750, and that will make our $900 target look very ambitious indeed. It's not easy being a yellow metal this month.

Market Forecast -- week of Aug 11- 15

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.

Euro collapses to 1.50

With its biggest single day decline in eight years, the Euro lost 3 full cents today and closed at $1.50 as a growing number of investors recognized that the economic slowdown in Europe would keep interest rates stable in the medium term. This plunge further confirms my forecast for a brutal week for the Euro. Oil and Gold were also down sharply as crude ended at $115 and bullion to $864. All three have had an inverse relationship to equities and the U.S. dollar. The Euro and Gold are just 2% above their 280-day moving average and key support levels, while Oil has already broken below it. If the current trend towards the U.S. dollar continues, these key financial indicators may have a long way to fall.

Astrologically, I think we've already seen most of the decline for now, so even if the Euro, Oil and Gold are heading lower, it probably won't be more than 3-5% over the next two or three weeks. After that, I am expecting a rally to recovers perhaps half to two-thirds of previous highs. That would take us back up to 1.53-1.55 for the Euro, the 900-940 range for Gold and $120-125 for Oil.

But the next leg down will likely be larger than this one. If the Euro loses 8-10% here (1.60 to 1.44-1.48), then the November/December decline will be at least double that, say 15-20%. That would take the Euro down to 1.25 by the start of the new year. Oil and Gold will likely follow suit with losses of similar magnitude.

Euro falls below 1.54

The rally in the U.S. dollar continues this week as the Euro is now trading below 1.54 for the first time since March. Today's decline comes as ECB President Trichet has confirmed that he is more concerned with weakening growth than inflation and that interest rate bias would be towards lowering rates. This confirms my prediction for this week that the Euro would be in for a rough ride as the transiting Mars aspected both the natal Mercury and Jupiter in the Euro chart. I only wish I had taken the hint that a falling Euro would translate into falling Oil and Gold prices as well this week. It's not a particularly complex association given they have been moving in unison for months now.

I think the price correlation between Euro, Oil, and Gold will continue until there is a a significant correction that takes these prices closer to their long term moving average. This would be about 1.45 in the Euro, $100 in Oil, and $850 in Gold. They also display substantial inverse correlation to world equity prices.

Commodities continue selloff; stocks rally

The Fed held rates steady today and indicated that their main concern is growth thus signalling a friendly rate environment for investors. NY equities rose by almost 3% as a result. While I had thought we would see more downside probing this week in advance of an August rally, it seems that the rally is now underway.

To almost no one's surprise, Gold fell further today, closing at $886. I think we'll see further declines back to $850, if not below.

Oil also fell back to $118. I think it may fall back to $110 before undertaking another rally later in August.

Oil drops below $120; Gold in danger

NY stocks were off almost 1% as the expected negativity manifested in Monday's trading. I expect more downside action in the next couple of days that should take us to 11,000 and below.

Oil staged a heavy retreat, however, and touched below $120 finishing around $121. I had expected Oil to do better today, but I still think there's a good chance it will hold on to these levels for the rest of the week. That said, the downside risk to Oil is clearly greater than any upside movement, so I would be reluctant about taking any new long positions. September will see another bonafide rally once a more sturdy bottom is formed in August.

The Gold decline today to $907 has me re-evaluating my forecast for this week. I think my previous $930 target would now require a miracle. A more likely scenario would be for Gold to keep dropping this week, perhaps below $875. There is a real possibility it will test its 280-day moving average at $850 over the next couple of weeks. The Sun's movement towards a conjunction with Ketu may therefore be the signal of an end of the current phase of prices above $900.

Another rally will begin starting in the last week of August.

Market Forecast -- week of Aug 4 - 8

New York ended last week mostly unchanged and the Dow opens trading this week at 11,329 and the S&P at 1260. While my forecast for gains this week was not confirmed by Friday, prices rose above 11,600 at midweek thus providing a plausible exit point. With the Mercury-Ketu conjunction in Ashlesha, this week promises to be volatile with a negative bias especially on Monday and Tuesday. The Mars-Uranus opposition also perfects this week on Wednesday and this will likely add to the volatility. There's a real risk of closes below 11,000 here and that will likely be the interim bottom the market needs to move significantly higher in August.

Despite my belief that the bottom formation would start early with a lower close Friday, Bombay ended with modest gains last week and Sensex opens Monday at 14,656. With Mercury conjoining Ketu so close to the Ascendant in the Nifty Futures chart, I think further gains will be harder to come by this week. The sense of loss may be stronger earlier in the week as transiting Venus opposes the natal Saturn in the BSE 1875 chart. I expect some trades below 14k here, perhaps below 13,500. Once the Sun passes Ketu next week, this market will be on firmer ground to rally higher.

Tokyo was lower last week and opens Monday at 13,094. Last week's forecast did foresee some downward pressure on the Nikkei, and I was more or less correct in predicting little change. My larger oversight was missing Friday's selloff, which was likely due to the transiting Mercury coming under the influence of the natal Mars in the TSE chart. On Monday, the transiting Sun comes under this same probable negative influence of Mars so we can look for a down day. Much of the rest of the week is likely to be biased towards the downside, as transiting Venus conjoins the natal Saturn.

As predicted, the Euro lost more ground last week and opens Monday at 1.5565. There's likely more declines ahead this week as transiting Mars aspects the natal Mercury in the Euro chart. Early in the week looks worse, and we will see trades below 1.54. I would not be too surprised to see even 1.53 for that matter. There may be some late week recovery but not that much.

As predicted, Oil rose last week and opens at $125. I think there's more upside left in this rally, especially earlier in the week as transiting Sun is aspected by the natal Jupiter in the Futures chart. I wouldn't be surprised to see $130 at some point, although gains will probably erode late in the week. Next week looks like another retracement down to $120.

Although our forecast was correct in calling for declines down to $900 last week, Gold finished down overall and opens Monday at $917. I had expected it to bounce back further towards $930 by week's end, hoping that the ingress of Venus into Leo Friday would give it a lift. As it turned out it only made it as high as $925 intraday and Friday was a disappointment. Monday's Venus-Pluto trine near the ascendant of the GLD chart should provide a boost in prices. The midweek action looks less solid, however, as Sun's conjoining with Ketu threatens to send prices lower. Volatility may be extreme this week. The end of the week should be stronger though, as Ashlesha lord Mercury moves into Leo. Overall, Gold should be higher by the end of the week, hopefully to $930.