Halloween treats on Wall St as stocks rise again

US stocks rose 1.5%, as the market posted its largest weekly gain in over 30 years. The Dow finished the session at 9325 while the S&P closed at 968. Global markets continued their rally earlier in the day, as Indian stocks soared 7%. The BSE Sensex closed at 9788 while the NSE Nifty stood at 2885 at the close of trading. I was clearly mistaken in my expectation for weakness here as the the market has put together several consecutive up days for the first time in several weeks.

Nonetheless, I remain convinced that next week will see another sharp move down as the tense Venus-Saturn-Uranus configuration sends a shock to the markets. The aspect becomes exact on November 4, and as I've said previously, it's very possible that the market may have to react to some unforeseen developments in the US election. While I would not rule out another up day Monday in the US, I do think we are headed down over the next two weeks, probably to a retest of 7773 on the Dow and 7697 on the Sensex.

US rally fails at the close

New York closed down 1% after the Fed cut its prime lending rate 50 basis points to 1%. The Dow had been up over 9300 but sold off sharply in the last 15 minutes and ended the day at 8990 while the S&P closed at 930. Indian stocks were up modestly on the day with the Sensex at 9044 and the Nifty at 2697.

I had thought the market might hang on to more of its gains today, but it was not to be as bearishness returned at the close. This sets up a more negative sentiment Thursday and Friday and going into next week. There is a veritable Sword of Damocles hanging over this market as Mars moves under the exact aspect of Saturn in the next few days just as Saturn and Uranus are set to oppose one another early next week with the money planet Venus getting caught exactly in the middle. Look for volatility to increase here and we will likely see 8100-8500 intraday by Friday on the Dow. A retest of 7773 is more likely Monday or Tuesday. The Sensex will likely trade below 8000 on Friday, with closes below 7500 next week.

US stocks stage huge rally

In a stunning and dramatic rally, stocks soared amidst growing signs that the worst of the credit freeze was over. The Dow was up over 800 points and closed at 9065 while the S&P finished at 940. The rally was a continuation of a rally that began overnight in Asia and specifically, Hong Kong, where buyers rushed in to buy up bargains.

I did not foresee this rally, although I was fairly tentative about the market sentiment in advance of tomorrow's Fed meeting and that that some gains midweek were likely. In my weekly forecast I also noted the possibility of a Tuesday afternoon rally ahead of the Sun-Moon conjunction, although I had no inclination that we would witness such as huge upswing. While I am still cautious about this market, I do think that the strength of this rally should not be underestimated. A retest of the 2003 lows in November seems improbable now, and even a retest of 7773 is going to be a purely speculative play. Tomorrow will likely see another plus day ahead of the meeting and some selling afterwards but likely positive overall. 9500 is possible. But Thursday and Friday still look quite negative to me, so I think the market will once again trade down towards the 8500-9000 range. For those thinking of closing out short positions, that might be the a good opportunity. Monday also seems negative from here, so I would be reluctant to take on any large long positions this week. The market will likely continue to be volatile for another week or two. But on balance I think November will be positive, especially in the second half of the month.

Rally fails as stocks slide 3% at the close

After spending most of the day in positive territory, stocks in New York fell sharply at the close and ended down across the board. The Dow lost 200 points and ended the day at 8175 while the S&P closed at 848. While today's session did not retest the Oct 10 lows, it was somewhat noteworthy in that it was the lowest close yet. The negative mood followed mostly bearish global trading as Indian markets fell over 2%. The Nifty continued to probe the downside getting as low as 2252 intraday before closing at 2524. The Sensex similarly dipped below 8000 before rallying to finish at 8509.

In the end, my call for a retest today was overstated, although the day did end up negative. I am maintaining my basic position here that a significant retest is imminent and may come as soon as tomorrow, although I am not holding my breath on it. We may well see a close below 8000 and an intraday retest of 7773. I think the retest of the 2002-03 lows may have to wait until Friday or perhaps next week. And indeed, there is a chance they may not come at this time at all. Look for Indian markets to retest their intraday lows by Friday and into next week.

Market Forecast -- week of Oct 27 - 31

Global stock markets continued their downward spiral last week as investors weighed the implications of a prolonged worldwide recession. US stocks lost 6% as the Dow closed Friday at 8378 while the SPX stood at 876. This was largely in keeping with last week's mostly bearish forecast as the market prepared itself for a retest of the Oct 10 lows this week with Friday's harried decline.

This week I think it is certain we will see a retest of the recent lows and in all likelihood the 2003 lows also. This may occur as soon as Monday the 27th as the Moon conjoins Mercury in a negative alignment with both malefics, Mars and Saturn. Indeed, Monday looks like the most negative day this week so it is likely we will see a close below 8000 on the Dow and 840 on the SPX. I would not be surprised to see 7500 on an intraday basis. Tuesday will probably begin negatively but there is a good chance for a rally in the afternoon in advance of the Sun-Moon conjunction later in the day. The market may rally on Wednesday but the end of the week looks quite unstable and probably negative as Mars comes under the exact aspect of Saturn.

In terms of when the interim low will be reached, I'm still not certain if it will occur this week or next week. While this week's planets look worse than next week's, it is possible that this reflects a greater percentage decline rather than the bottom of the market. Monday will probably see the larger loss and it may well prove to be the interim low, but that may also occur Friday the 31st or even sometime next week, albeit will less dramatic single day drops. More cautious investors would do well to consider covering some short positions Monday just in case Friday does not quite return to Monday's levels. And with some kind of modest rally likely in November, it may be worthwhile to take some speculative long positions during the down days this week and next.

Indian markets were savaged last week after the RBI left rates unchanged Friday. The Nifty lost 12% in a single day and closed at 2584 while the Sensex ended Friday's bloodbath at an unbelievable 8701. My forecast had been fairly bearish about last week and correctly noted that Friday (and this Monday) would be the worst day(s). I also wondered aloud if 2000 on the Nifty was a possibility now. What seemed unrealistically gloomy last week, now seems much more plausible. This is a level with some technical support dating back to 2005 and given the probable volatility over the next two weeks seems more reachable. That said, I think that the greater portion of the declines have already taken place with the Mars conjunction to the BSE Rahu. Even with the likelihood of a decent November rally, investors should be cautious as December looks quite negative again. If the Nifty manages to stay above 2000 here, say, with lows in the 2200-2400 range, it may ultimately test that support level in December. With a shortened trading week for the Diwali holiday, look for another big down day Monday with a gain Wednesday, followed by another down day Friday.

With the ongoing financial turmoil creating high levels of fear, the US dollar has taken flight. As predicted, the Euro fell below 1.30 last week and opens Monday at 1.2624. With the Moon-Mercury conjunction occuring right on top of the natal Euro Mars on Monday, look for another huge sell off, perhaps as low as 1.20 by Tuesday morning. Friday may see the Euro fall below 1.20, perhaps decisively. Even with a rally later in November, the US dollar will likely rally again against the Euro and most other currencies in December with the greenback hitting a high around December 12. The trend will likely reverse after that. In all likelihood, the above pattern will apply to the Indian Rupee also with further declines in the next two weeks of 5-10%.

Crude oil also plunged last week amidst fears of economic slowdown and the US dollar appreciation and closed at $64. This conformed well with last week's forecast for crude below $70. $60 seems inevitable this week as the Futures chart is still heavily afflicted. Transiting Sun conjoins Saturn early in the week while transiting Mercury opposes Mars at the end of the week making for very bearish bookends. Look for an interim low in crude next week somewhere in the $50-55 range.

Gold also experienced sharp declines last week on the US dollar rally and closed Friday at $730. This was in keeping with our expectations that gold is headed to the $650 support level by December, perhaps sooner. Look for gold to plunge Monday as transiting Mercury is in tense aspect with the Futures natal Saturn. I would not be surprised to see it fall below $700 then, or perhaps later in the week. With transiting Ketu conjoining the natal Moon in this chart, look for gold to fall further in the next two weeks. The retest of these early November lows (perhaps around $650) will occur in mid-December.

US stocks drop 3% on global recession worries

It was another losing day on Wall St. as stocks probed ever closer to the Oct 10 lows as investors contemplated the grim possibility that the US recession may go global. After falling below 8200 at one point, the Dow closed at 8378 while the S&P ended trading at 876. The New York decline followed an even more negative session in other world markets. In India, the RBI unexpectedly left rates unchanged and the markets sold off precipitously as the Nifty lost 12% and closed at 2584 while the Sensex finished at 8701.

India's disastrous decline was somewhat foreshadowed in the Mars conjunction to natal Rahu in the NSE chart I had mentioned earlier. While I was calling for a generally day negative across the board, I wasn't quite prepared for the extent of panic in Indian markets. I still think we're at least another week from the bottom, but India may have seen the worst of this decline with this 12% loss today. Still with a lot of support near the 2000 level on the Nifty, one wonders if it can go all the way there in the next two weeks. Monday is shaping up to be very negative globally and in the US in particular. I'll post more details in my weekly forecast.

US stocks rally 2% at the close

After yet another mostly bearish day of trading, US stocks rallied near the close as the Dow closed at 8691 while the S&P finished at 908. The optimism borne in New York followed a negative day in Asia as the Nifty closed below 3000 to 2943 and the Sensex likewise broke below another major psychological level of 10,000 and ended the day at 9771.

With the long-awaited up day now behind us, we can look towards tomorrow for an indication of next week's trends. With Mercury applying towards Rahu's aspect while Mars simultaneously applies to aspect Rahu, it is hard to make a convincing case that this rally will continue. While I think Monday's planetary influences are clearly worse, Friday's also seem somewhat negative.