Dear Friends,
Current time is very volatile and uncertain, so I decided to put this week letter here.
Thanks & Gid Bless
Here is this week newsletter:
Volatility is dominating but we have “options”
Dear Members,
Looks like 2008 is back in terms of volatility because all commodities and markets were on fire but this time is a different scenario. I don’t know how many people like to trade under current volatility. Many will say Mahendra, we will just buy and keep it and let market go up or let volatility remain at center point because it is good for us as prices are going up and we are making money! My understanding of volatility is different when buying and selling positions, both with high risks. Those who don’t mind high risk for them is fine but I will give advice that it’s better that you play with PUT and CALL or in other forms of options trading.
Lately I met a few of my members, and they told me that Mahendra: we made killing in oil and currencies during 2008 and 2009 because we were holding lot of puts (good for them). Yes, after being in markets for so long as a forecaster and a trader, I can say that in volatile times option trades are most interesting because its lock your risk and time is also in your hands.
One of the old members and currently partners in our Fund was telling me that simply following my prediction and trading with call and puts can make huge money rather than trading futures. Yes, I agree with him because in futures markets money is always on risk even if a small move goes against us.
For example, planets are indicating a huge up move in metals after 25 October 2010, so it’s better to buy calls because I see metals moving toward historic highs in the next few years. If buyers of metals hold future contracts and if metals fall overnight, it will be a nightmare: not only that you might suffer substantial losses but also at the lows you won’t able to buy more because factors such as fear, lack of confidence, and running out of margins.
Today, I feel so unfortunate because one move in metals in 2004 changed my whole life and predicting styles. I was with Micheal Krupp and holding huge positions in gold and silver. On 2 Sep 2004, gold prices crashed over night and the account was almost wiped-out. This incidence changed me, and I became more cautious in predicting bull markets because at the same time a lot of my followers lost money on that fall, so I decided not to predict rises always. Whenever negative time frames came I warned investors but most warning calls have been not working well since 2005.
I have been keep asking myself that all major longer term moves I called so accurately but always I was struggling at selling calls. Look at this year buying calls on coffee and grains. We could have made fortunes by just traded these two calls.
I think therefore the best answer will be puts and call. I am sure all agree with this and honestly I want your opinion as well. You all see a unique ability in me and that is why you subscribe my services but if that is not helping you to build your portfolio or investment then my series for you is useless.
After thinking much I came to conclusion that in current time and coming volatile time option trade will be great tools to play the markets. I really your feedback on this because after analyzing myself from July 2005 to today I realized that if we just traded with puts and call, we might have been one of the most successful investors in financial market.
I have analyzed my predictions which they were wrong on short term but very accurate on longer term basis:
1. When oil was $93 we came out with prediction, not to buy oil but sell oil, for the next three months oil kept moving up, went to $145. I still was sure that oil would move to $50 or $30. If someone had built puts six months or one year out, he/she could have made enough money to retire. One first cycle prediction was that oil should reach $100 in five to seven years time when it was $16, and therefore buying longer term call would be quite profitable.
2. At the end of 2007 and 2008 we were very negative on stocks and housing markets, but in March 2009, we came out prediction of Dow reaching 32,000 to 38,000 when Dow was at 6,800. Today we could have easily sitting at a commanding position without worrying about shorter term trends.
3. In 2001 to 2003 we constantly talked about gold reaching historic highs. Simply buying longer term calls would have made us huge amount of money.
The point I am making today is how simply we can make money without fighting, struggling or worrying about trend or market condition or economic data’s or Fed decisions. It is eye poping for me that money can be made so easily in simple ways with struggling and your portfolio could be built up every year to new highs regardless of where markets goes!
Today, I have decided to change paths because I want to find you a solution to make money in simple ways so let’s see what will be our planning from here. I want to make sure that my theory should be useful for you. I will be very happy if hundred out of hundred members make money by the end of each year.
Before I start, I would to say that options trading won’t give you money overnight but surely it will secure your future and money if our trend predictions pan out. Day to day excitement won’t be there but surely you will be at peace and many other things you will be doing for yourself instant of watching screen all the time.
GOLD/SILVER
From today it important that we reconnect back to old path so let see what I mentioned in 2003, here what we said and you must read it both small below articles.
http://www.mahendraprophecy.com/predictions.php?id=40
http://www.mahendraprophecy.com/predictions.php?id=41
Yes, longer term cycle is very bullish for gold; even medium term cycle is showing strength in our Astro combinations. Shorter term negative cycle (Feb to Oct) has been overcome by gold very successfully (except one fall came from $1,225 to $1,045 and second $1,265 to $1,159).
Now the final two negative weeks are pending for metals before they start very strong rally. So my advice will be buy March 2011, option calls around 27 Oct 2010 in gold and silver.
Let this next two week volatility gets over.
Now those who are holding long position in metals in futures market or options can take 1/10 position of puts of gold dropping to $1,300 but you should be out from this position by the end of October.
Note:
We still hold our prediction of next two and half week’s weakness in metals.
Monday and Tuesday is Scorpio Moon which is dangerous for market and traders so any sharp rise should be taken as a selling opportunity and any sharp fall should be taken buying opportunity and this applies to all markets.
By Mid January 2011, gold can easily hit $1,600 and silver $28.00. This prediction will be much clearer once next 17 trading day’s passes.
Those who still prefer to see our week trend for them here it is:
Monday and Tuesday sharp move on both sides.
Wednesday sideways movement but Thursday and Friday there will be corrections.
Important indicators for short term traders: Last nine Tuesdays gold have gave most strongest single, so Tuesday should be watch carefully. Gold and silver shouldn’t give any weak sign on Tuesday in the USA market.
BASE METALS
Compared to precious metals, base metals are not performing that well but this situation can change from the end of October. Copper can move to $500 by the end of year and platinum can go back to $2,100. Palladium can reach $700. Zinc, nickel and aluminum will follow copper.
Yes, these prices can be easily achievable once current negative time gets over. I respect negative time, even though in June newsletter we mentioned that great time is coming for silver and gold but something was concerning me for the shorter period (until 25 Oct), which shall be over soon.
Anything is possible so metal investors or traders should let this negative cycle pass, because if negative cycle comes then it will bring nightmare and prices of precious and base metals can fall overnight beyond over imagination.
This week weakness in base metals can come from Wednesday. Monday and Tuesday they will follow precious metals.
Longer term investors should put focus on precious metals because base metals may not able to achieve what precious metals will do. Or precious metals can be great hedging traders against metals buying.
CURRENCIES
Dollar is suffering a setback. I don’t see European economy shine for shorter, medium and longer term. Currently concerns of European economy have gone away but overall situation remains the same.
Those who don’t like holding dollar shouldn’t be touching any currencies. Yes our Japanese Yen prediction remains 100% accurate even in shorter term since last ten years. Yen has outperformed against all world currencies. Also 2009 and 2010, Swiss Franc rising prediction came very accurately as we recommended European investors to sell pound and Euro against Swiss Franc or buy Swiss Franc against both these currencies.
Now Yen and Swiss Franc are very near to the top but it doesn’t mean that you short sell them at this stage. Yes once our concerning time is over which is 25 Oct then you can take a selling trade or puts in both of these currencies. Both of these currencies can hit new high during this period. Monday and Tuesday can fall sharply but they will recover from Wednesday to Friday.
Australian and Canadian dollar will move with huge volatility, shorter term they are trading under high risk zone but from November onward they will move toward historic high because of commodity up moves.
British Pound remained underperforming. Shorter term outlook is positive for pound but uncertainty which we see during next two weeks can pull Dollar out from weaker trend means dollar can gain against all most all currencies.
If I came right on what I see in the next two weeks then Pound, Euro and other currencies can fall 500 to 700 pips, meaning dollar can easily move back to 79.
STOCK MARKET
Final two weeks are pending because markets are entering a unique bull cycle. We strongly recommend keep buying alternative energy stocks because among all areas of investments, we see alternative energy stocks performing best. Even gold, silver, grains, coffee and other our favorite of longer term will be left far behind by alternative energy stocks in longer term.
What else you want now? Just keep adding these stocks and within five years you will be on the top of the world.
If in the next two weeks markets don’t fall, our crash prediction for shorter period will be nullified. From end of October markets will enter into new horizon and Dow can easily reach 14,000 to 15,000 by end of year.
Acquire longer term calls as Dow is toward 32,000 to 38,000 by end 2014/15. Solar, battery, wind and uranium stocks will be ruling world financial markets from 2011.
GRAINS
Last week Friday they went limit up on data. Grains pulled the whole commodity area into a new orbit on Friday (because of grains soft went up crazily, oil came up and metals bounced back half heartily). CRB index went up almost four percent. Friday up move in all commodities is due to grains so this point should be noted very strongly.
In the third week of September we mentioned that corn could touch $454, when it was $525. Yes, it came down that level and moved up again very sharply.
Everyone is aware that Friday limit will push grains again on Monday, but Monday is Scorpio Moon so it always gives both-side directions means they will give up gains on late Monday or after opening on Monday so let them go first them to limit up. Don’t sell Corn as it is our favorite of 2010/11 but Soy and wheat can be traded for shorter terms as they won’t able to hold gains.
Same applies for Soy meal and Soy Oil. Rice will remain sideways but over trend in rice will remain up for longer term.
Note: Next two weeks are still not safe for the whole commodities and stock market cycle. We have a whole life ahead to trade so don’t feel like you are missing something.
COFFEE/COTTON
In the next three years coffee will move to $500 or even higher so yes, after corn coffee is our favorite. Shorter term cycle in cotton and coffee looks very uncertain. DON’T BUY SINGAL CONTRACT IN COTTON AND COFFEE. DON’T BUY ANY CALLS AT THIS STAGE.
If you like to take small risk then buy puts for the December but make sure you get out by the end of October.
SUGAR/LUMBER/COCOA
Sugar prices are rocking. Friday grains move have supported even all these soft commodities but avoid for all these commodities for the next two weeks.
We will be in a better position to guide you after two weeks.
OIL
Monday and Tuesday oil can support all commodities but move in oil will be also both sides. From Wednesday onward oil will fall sharply so avoid buying oil for medium and longer term. Oil is the only commodity which is not really in our favorite list for the next three years BUT yes there will be shorter term trades will be coming and we will try to identify them.
Wednesday to Friday oil will move down. Natural gas will remain in a weaker trend so avoid gas but from next week some positive up move will come in gas so great time to acquire gas on Friday this week. Monday and Tuesday any rise in gas should be taken selling opportunity.
Final note - We are changing our advising method without making changes in our theory. I hope that it will work very well for you in longer term. Give me two weeks, let these next two week pass and we will be very clear, we won’t have any fear.
Last week’s planet strength graph showed weak trend commodity from this week and will end or will go to its weakest point by 27 October so we should respect these indications, Fall can be very nasty in stocks or other commodities but it will be for shorter period. If in the next two weeks nothing happens then stocks and metals will be on fire for next three months and above mentioned higher side target in gold, silver and stock market will fulfill.
Great buy this week:
Alternative energy stocks Battery - ABAT, ULBI, ESLR, DSTI, SPIR, LTHU, wind - BWEN, WWEI, Uranium - URZ, URRE, PALAF
Thanks & God Bless
Mahendra Sharma, 10, Oct 2010