Commodities prices are looking especially weak and my recommendation is that there is no need for hurry to buy metals (Gold, silver, palladium, copper and platinum). As a matter of fact, I do not recommend all side metals including zinc, alluminium, titanium and rhodium, therefore stay away and watch them and wait for my signal for buying. Spot Gold is trading at around $627.20; silver is at $12.17 while copper is up one point $349 - they all should close sharply weak.
As regards oil, I recommended selling everything including heating and unleaded and indeed they are all moving down, and moving down quite fast and they should as wave of nature is against energy so watch your investments in this area. The important point is that Tuesday was a crucial day for commodities and they all performed very badly thus confirming a short-term bear cycle in hot run commodities. Oil is trading down one dollar and should remain weak.
The most interesting is the dollar index, whose eye I can see and feel. I can clearly see its future action as well and though some may be misguided and some lose patience, it will be worth the wait. Buying is recommended and one should therefore buy it- it is trading around $84.59.
Coffee and grains are in a great mood (though it is weak days as I mentioned in yesterdays update - Thursday out of ten times eight time they remains weak), which they should be since they are approaching a smooth path in which there will not be many obstacles from tomorrow. Therefore walk with them without letting go, otherwise you will be left behind. I am recommending buying grains today before closing as they are near their lows.
Today the stock market should trade side way and there is a short-term selling opportunity during mid-day. Compared to other world markets, I am however still not very negative about the USA market.
Alternative energy stocks strongly moved up yesterday, which is a sign to buy. If you can remember, last week I said that ‘when you see oil coming down, it doesn't mean that alternative energy will fall’, but time to start rising. My favorite stock yesterday moved up quite strongly and they should move higher from here: (ZOLT, WFR, SPWR, MDTL, ESLR, DESC, CY, GLW). Small ones like ENEI, SLRE, PWTC, WWAT, MCEL, FCEL BLDP, QTWW, MKTY, HYGS should also move up and it is therefore a great opportunity for buying.
Thanks & God Bless
Mahendra 9.00 AM, 17 August, New York
In this week's newsletter I mentioned that one should sell on higher opening on Wednesday, and this is an opportunity to do it. Gold is trading at $630.50; silver at $12.27, while copper is trading at $3.5, and they all shouldn't move much higher from current levels. The metal market should actually start giving up gains occasioned by the CPI release. Yesterday's sideways movement surprised me and we should stay away from any new buying position. Indeed one should even reduce position if you are holding.
The dollar index is trading down by 0.44 points and is at $84.61; and once again this should be taken as a great final opportunity for buying. In this week’s newsletter I mentioned that the dollar should strongly move up from Wednesday, and it should therefore do so before the market closes today.
Coffee and cotton strongly moved up yesterday, and today they should make gains once again.
Grains stabilized and from here they should strongly move up. However, those who bought should not forget to book profit since history shows that eight times out of ten, grains trade weak on Thursday but we pray that may tomorrow will be the one out of two.
It will be a great time to sell the European stock market as well as the Asian market on Thursday’s opening. The Dow will trade sideways after opening higher. USA market will perform better compare to all market.
Oil is not trading higher (currently at $73.10) and the right strategy is that ON RISING, one should get out from oil.
Thanks & God Bless
Mahendra, 16 August, 9.00 am New York
Yesterday metals and metal stocks went down and it looks like metals don't want to go up, which is a negative sign. Though another two hours are pending for the metal market to close, it looks like they are adopting a weak trend on a positive day.
Sharma Mahendra , Tuesday - New York Opening
We are experiencing a situation in which commodities are acting quite strangely, and there are several reasons for this:
Millions of traders in many new countries are entering into commodities trading everyday, as it looks very attractive. People can trade with high leverage even with a small amount of money and many funds and hedges are seriously getting involved as well. For the first time ever, a commodity fund has been launched by a leading upcoming bank in India.
Furthermore, many new exchanges have been opened around the globe to trade commodities. In the Dubai commodity exchange, Mcx of India and China too, volumes have been increasing day by day. Indeed, days are long gone when a handful of players controlled grains, oil, metals, cotton or coffee. At the moment, people simply jump in whenever prices come to an attractive buying level, a clear sign that these markets will always rebound strongly.
The population of the world is increasing everyday; therefore the demand for food and oil will obviously be on the rise as well.
Instability through religious wars is also turning into demand and manipulating the platform of world needs. For instance, powerful groups in the Middle East believe that the world economy would collapse in a matter of months if they stopped the flow of oil from the region.
Farmers and village population are moving towards major towns and cities. As a matter of fact, this has become one of the greatest challenges for India and China, as the younger generation doesn’t want to stay in the villages and small towns any more.
Investors are also getting tired with CEO’s and the performance of companies, since their interests are not being properly taken care of even after entrusting their hard-earned money with company owners and the people who run them. This is however not the case in the commodity market hence the rush towards this direction.
Other unpredictable reasons also contribute to the rising attraction of the commodity market, for instance geo-political tensions; changing government policies; natural disasters (last year’s orange crop was destroyed by Katrina) etc. One of the most important factors that play a silent and hidden role is Time or the WAVE. I believe, and have actually seen that whenever a new wave starts, people will gradually be attracted towards it till it ultimately becomes the talk of the world. For instance, this happened in Technology from 1996-1999, metals and oil 2002 to 2006, and many others.
Within the long-term cycle, there are always a lot of short-term ups and downs, which I always try to uncover once the longer-term cycle has been born. For the first five months of this year, I failed in metals because I saw a weak trend too early, since some planets were warning of an impending collapse. However, this finally happened when all nine were arrayed against the metals in the second week of May, bringing disaster: gold fell from $730 to $540 while silver fell from $15 to $10. We all know that it may take years for something to rise, but one stroke of negative news is enough to quash all the gains. Bearing this in mind, I am putting more focus on any weak trends that may emerge in oil and all other areas.
We should very closely watch indexes like CRB, Goldman Sach commodities index, dollar index and Gold bug index with HUI and XAU. These indexes will give us indications of whether we are right in the long-term or not.
PREDICTIONS FOR 14 to 18 AUGUST 2006
Monday to Friday – Copper will trade with huge volatility during the entire week. Buy copper on Tuesday and get out on Wednesday, and buy again on Friday‘s closing.
The trading range of copper will be from $352 to $332.
This week treasury bonds will move side way therefore avoid trading in them. As a matter of fact, they should gradually move downward for a short period before they make strong gains. Buy bonds from 14 September for the longer period. For the short-term they will trade according to the performance of the dollar index. Trade only for the short-term and book profit if you are making money.
You can judge the weekly trend of bonds from the dollar index in my currency section.
The bull market in orange juice is very near to its end and one should therefore very closely watch price action. On the higher side, orange juice could touch $181.20 and one can therefore take a selling position around this price.
Sugar is giving you a great buying opportunity but buy it after a week.
CRB INDEX AND OTHER INDEXES
It traded with almost no volume and it looks like the CRB index bull market should soon end and start moving down. Indeed, all indexes should move down including Goldman commodity index. XAU and HUI could perform very negatively hence no need to hold commodities stocks like metals and energy stocks. One should completely put aside any love and feelings when trading with real money.
We all know that the current trend of markets is very instable. When making profit, one should therefore book. I have started a daily commentary on each area since I feel that long-term predictions are not really very helpful for traders. However, we have to always bear in mind the future trend so that we can effectively take advantage when there are sharp rises and falls. In the meantime, I am trying my best to create a system that will give you maximum returns in the short, medium and long term.
SHORT-TERM TRADES FOR THIS WEEK:
1. Buy the dollar index on weakness on Monday....
2. Buy metals on Monday evening but..
3. Buy crude on Monday evening on weakness and sell it back....
4. Buy Soybean/meal on Monday....
5. Accumulate coffee on lower side and....
6. Sell side currencies on Monday and sell all major front line currencies...
MEDIUM TERM POSITION (SIX MONTHS)
TRADING RANGE SO TRADE WITH WAVE:
I AM NOT INCLUDING OIL AND METALS IN MY MEDIUM AND LONGER TERM VIEW AS THEY ARE IN AN UNCERTAIN ASTROLOGICAL TIME FRAME. FOR THE SHORT-TERM, OIL SEEMS TO BE ADOPTING A WEAK TREND AND I WILL RECOMMEND BUYING FOR THE LONG-TERM ONCE THAT IS OVER. HOWEVER, SHALL HAVE TO WAIT FOR SOMETIME AS IT COULD EITHER BE FROM SEPTEMBER OR NOVEMBER, OR MARCH 2007.
MY NEWSLETTER AND DAILY UPDATES WILL GUIDE YOU ON THE SHORT-TERM TRENDS IN PRICE MOVEMENTS OF BOTH COMMODITIES.
I WISH YOU GOOD LUCK.
THANKS & GOD BLESS
SHARMA MAHENDRA 13 August