Weekly Newsletter from 2-6 November
We are expecting higher employment number on Friday and unemployment rate should go below 5.00 by December
Dear Members,
Last week the Fed sounded a bit hawkish in their statement which is giving clarity to the market, and indicating that a rate rise is on the way. This supported the USA market and as expected, 30 year bond and metals lost big value. Dollar went up but as predicted but it lost value from the higher sides again. The other commodities remained directions and the emerging market acted a bit nervously.
I have been connected with the financial market since I was 18 years old and many of you must have been involve with the market for more than three to five decades. You all must have noticed that there is one thing that repeatedly happens and that is that any market always bounces back from the bottom or from a sharp fall. A few markets took five to seven years to bottom out, while other took a few decades, but overall most of the equity markets, commodities, or currencies have always bounced back from lows or corrected from all time highs. We can call this the Wave of nature’s cycle or behavior pattern of market because just like a wave, the market also has its highs and lows. Each individual has an unique story to tell about their journey or experience with the market. You will find many investors who never made any money in the market, and other times you will find some that always made money no matter what they did.
Last week we talked about the luck factor and you can add ego, greed or ignorance to the luck factor because these things also play a role in investment. Ego come’s if your Mars is negative, greed comes when Mercury/North-node are negative, and Ignorance comes when Jupiter/Sun/Moon are negative in the astro chart.
I have said many times in the past that I missed making a fortune when I had 33000 call options in silver, I could have easily made over a 150 million dollar in silver call options trade but my calls expired two months early. If I would have bought calls for 2007 rather than 2005 March, I would have invested three hundred thousand dollars in this call by paying $0.01 (one cent for one contract in 2002 when silver was at $4.52). If I analyze this trade then a simple answer comes and that is. I was thinking too short term when I knew that the bullish cycle in gold and silver will continue till 2011/2012, when I already predicted that Silver to hit $50 and gold $1600 to 1800 then I could have planned well.
This was my mistake and we all learn from our mistakes so stay focused on the longer term and we are sure you will make money. Don’t put aggressive bet on the short term, and don’t involve all your capital at the same time without leaving cash behind. I am sure that you have risk management skills and if you don’t have them then it is better you learn how to manage risk if you would like to stay or work in this market for the longer term.
In the first week of August if anyone had bet on S&P with all his capital and for a short term trade then he might have lost everything but if someone is holding December 2016 call options bought in March then he/she must be fine now. Please plan your trades well as this market will move towards 3200, but between now and 3200 we may see many nasty weeks in this journey.
After communicating with many members in the last two decades I have found that many of our members have lost money by trading with short term leverage bets that also trading with small money and going all in. Going all in can you can either lose everything or can make a fortune; but if you want to make your career in the financial market and stay in this game for longer term then please never go all in with leverage bet. I believe putting 20% of your capital in the market in a longer term trade and 10% in a short term trade is a good idea. Keep 70% on the sidelines so that if any opportunity comes, you can take advantage of it.
I am no one to tell you all about this strategy, you know far better than me about how to invest your money and how much risk you need to take and where to stop. This is simply a reminder so we don’t become ignorant about the small things.
Let’s see how all the major financial instruments will perform during his week from 2-6 November:
GOLD/SILVER/BASE METAS
Last week gold, silver and base metals corrected sharply from late Wednesday as predicted and the weakness continued on Thursday and Friday (gold fell from $1184 and silver $16.05 from recommended selling levels). Precious metals sudden weakness came as a surprise because hardly anyone expected any weakness. Investors however took the FEDs comments as hawkish which resulted in a sharp corrections in precious metals.
Gold broke $1150 astro level which is surely not a good sign for metal traders and going below $1140 will create fear. If gold closes below $1120 for three days then it will open the door for gold moving towards multi year lows and silver will follow gold in the current trend. Our three digit price target for gold is still there.
As mentioned last week, mining stocks are trading far better than precious metals but they can retest the lows of August.
Base metals trend looks negative for this week and can turn very negative after this week. This is final week in which metals can trade in a mixed trading pattern. The current astro cycle indicates that if gold and silver start trading negatively from Wednesday and if they close negatively on Thursday, then Friday it will be the most dangerous day and dangerous sign for metals trend. Gold and silver supported by a positive astro cycle since 1 August and 70% positive cycle ended last week on Wednesday (28 October), and a 98% negative time cycle will start from next week so remain watchful of precious metals. We are not recommending any buying in metals during this week though this week is showing some positive signs. On Monday and Tuesday metals will trade mixed, and may form a bottom but from Wednesday USA session some recovery will come which could last till Friday.
The higher side for gold will remain around $1148 to $1154, and a gold will have difficult time breaking these levels. The lower side support level is at $1132 and major astro support level is at $1120 and next $1080. Silver will follow gold and base metals will trade a bit positively from mid Tuesday but we are not recommending any buying. One can surely book profit from short positions and stay away before we watch the end of this week.
Last week DUST performed very well as it moved almost move over 25% from Wednesdays low. It has to trade above $20.00 for three days to confirm that it is going back to $35.00 or higher. On can book 50% position and hold 50% positions.
Important note: Gold and silver are at the most important level and their destiny will be decided by Wednesday to Fridays move so wait for next weeks letter because it will be the most important one for metal investors.
Our view is still very negative for metals but we have to get 100% approval from the astro cycle.
On Friday the employment report will out, and robust numbers may push gold and silver towards lows so expect a sharp corrections in metals even though the day is positive for them.
Here is Monday’s range: (December 2015 contract):
GOLD: $1148.50 to $1133.25
SILVER: $15.69 TO $15.33
COPPER: $233.00 TO $228.10
PALLADIUM: $684.00 TO $668.00
PLATINUM: $999.00 TO $978.00
INDEXES
It was an amazing rally. Many analysts are talking about it but no one wanted to give a bullish call when S&P was at 1880. Suddenly all the negativity disappeared and now investors are waiting for a correction so that they can buy the market, but the question remains, will a correction come? This is one of the toughest questions to answer but we always try to provide our opinion after the reading astro charts.
In the last three weeks only developed markets (Japan, European and USA) rallied. Most of the emerging markets remained on the sidelines during the last nine trading sessions. From here USA and developed markets will trade without any major correction and the emerging market will start taking the lead from here so we can say that the money and momentum is sifting back to markets like China, India and Brazil. We strongly recommend buying positions in BRZU, LBJ, YINN and INDL.
USA, European and Japanese equity market will trade mixed so trading in and out in daily basis will provide better returns to short term traders. In USA market the focus will remain on earnings as many big names will announce earnings in the next two weeks. Most giant tech companies have announced earnings except for Facebook. Those who bought positions in our favorite stocks gained handsomely so it won’t harm you to take a pause from active trading. Our daily Flashnews report will guide you for in and out trading, and the stock report will guide you on stock specific earning cards.
As mentioned in the last two weeks letter that S&P may struggle to close above 2088 level and last week it struggled but the down side will also remain limited for developed country markets. S&P may hold 2060 level and in the worst case scenario as mentioned 2035, but the chances of it going toward 2035 is very less. Once S&P closes above 2088 for three days we may see 2138 in the next two weeks.
The most important astro level is 2143, S&P has to close above this level for at least five days to confirm that it is headed towards 2278 level by the end of December.
Last week we recommended that financial and banking stocks will take the lead and that many biotech stocks will also hold value so remain careful. Tech stocks rallied hard and they will take some rest here but the down side is very limited so hold positions in tech stocks. Buy international ETF’s for indexes.
On Monday the market will trade mix, and the same kind of trend will continue on Tuesday with some profit booking around the higher sides. On Wednesday once again profit booking will come and on Thursday one should accumulate positions in the market around the lower side levels. Traders should build up long positions in emerging markets on Thursday on any weakness.
On Friday employment report will be out, and once again the market will sharply bounce back. We are expecting record numbers and the unemployment rate may drop to 5.00% or lower which may make many investors nervous about the FED policy. We don’t see any fear of rate rise, so get ready to buy on Friday on any weakness.
Don’t short any market, and stay away from those who are still saying that there is going to be a fall or correction in the market because our view is completely different for the market.
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Thanks & Gold Bless
Mahendra Sharma