Dear Friends here is this week newsletter for review.
We have once again seen massive volatility dominating the world financial markets and talk of recession is spreading like wildfire. Many are concerned about lower interest rates and the rising commodity prices. Predictions are rife that if commodity prices fail to come under control and inflation keeps rising, then the Fed will have little room to maneuver and may have to increase the interest rate again from the middle of the year. As a matter of fact, there are those who feel that the Fed took too long to cut the interest rate and that it is now too late to handle the housing crisis. To make matters worse, the falling dollar and credit crunch in the financial industry has put a damper on things and increased the unease.
I know that common investors are confronted by countless questions and that there are too many confusing issues. I would therefore like to keep everything simple at this stage, and the prognosis is that the
I do not want to write more at this point as my book is taking final shape and should go into printing in the next ten days. I have tried my best to give insights about the world and the world financial markets for the next two years. Before I give the outlook for the following week, I would like to say once more that I donít anticipate a major recession in the
Here now is what is indicated for the world financial market during this week.
Financial Predictions for 4 to 8 February 2008.
GOLD & SILVER
Last week we recommended the selling of metals and metal stocks on Monday, and both gold and silver declined more than three percent on Friday. At this stage volatility will continue and I still believe that gold and silver will be unable to break last weekís prices during the month of February.
This week I see a sharp correction in gold and silver prices from Tuesday. For short term traders therefore, Monday will be the best day to sell the gold and silver. The weak trend is set to persist for the entire week but there will be some recovery from lower prices on late Thursday or Friday.
This week gold will break $900 while silver will go below $16. On the lower side, gold could fall up to $880 and silver to $15.88. Speculative traders could buy back their position in gold and silver on Thursday and Friday positive trend. International metals stocks are very near to hit big correction.
PLATINUM, PALLADIUM, COPPER, ZINC & NICKEL
For the first time in a year I am recommending the buying of zinc and nickel as from Friday for they are poised to move higher from next week. I see a rise of around 18% from current levels.
Platinum and palladium made new highs last week following news of problems in
Copper will trade sideways or weaker for the whole of this week.
COFFEE & COTTON
Hold your position in coffee and cotton, while those who would like to buy a new position can do so on Wednesday. I see a sharp rise in coffee prices starting from Friday onwards, and this rising trend will continue for the next few weeks. Meanwhile, I expect a similar trend for cotton.
This week is the best time to buy lumber and cocoa for the short term trades and get out by Thursday morning. Meanwhile, sugar and orange juice will remain weak for this week.
All major markets are trading with huge volatility and it seems like money no longer holds any value. It is very possible for traders to make millions overnight as long as they are on the right side, but they can also lose everything if they are caught out in the wrong side. The market scares me whenever gamblers go in with higher stakes, as one wrong move can make one to lose everything. Emerging markets are especially prone to this high volatility and it looks like higher stakes are constantly getting in and out. Those trading in these countries should therefore exercise extreme caution; for instance in
This week I see some recovery on Wall Street, but the markets will trade weaker on half day Wednesday and Thursday. On the other hand the market will trade positively on Monday as well as on Friday (it will gain from lower). I highly recommend that people stay away from emerging markets and each rise should be taken as a selling opportunity.
European markets will trade in a similar to the
Commodity stocks will have a sharp correction, therefore one should sell metal and energy stocks and instead buy alternative energy and technology stocks. I donít recommend buying any housing or banking stocks till Wednesday. Thursday should therefore be the best day to buy these stocks.
Bond prices will rise again during this week and I will not be surprised if they hit a new high. I therefore highly recommend a buying position in bonds on Monday.
Last week wheat prices moved to $995 but later came down to $909 on Thursday. For those with money power, the stock market, commodity market and currency market have become a favorite gambling place. Hedge funds and banks are putting huge stakes into speculation and I am worried because this is the peopleís money. There was a time when trading was based on authentic news, but nowadays it is fun for powerful people to switch the market on both sides so that they can win as the common people lose their money.
Grain prices are very close to a major crash and trading in options will therefore be the right strategy at this stage. This week I see weakness in all grains and one should sell corn, wheat, bean products and canola as they will decline on Wednesday and Friday will be right to sell.
Last week oil prices declined sharply on Friday, and this week I expect a weak trend as well. Oil will fall from Monday to Wednesday, but it will rise from Thursday. Those who want to take a short term buying position can therefore do so on Thursday. On the lower side, oil will touch $85.10, while it could move up to $92.80 on the higher side. One can take a buying trade on the lower side and a selling trade on the higher side. RB gas and Heating Oil will move down, but one can buy it on Thursday opening. Natural gas will trade in a stable trend, therefore donít sell natural gas when you see oil decline.
The dollar remained weak during the previous week as a result of several economic reasons. To me however, it traded quite well having absorbed the impact of the interest rate and taken a hit from a negative non-farm payroll. Despite all the negative news for the dollar, it fought back quite valiantly and I am now convinced that planetary movement is working for the dollar. I therefore recommend that one can put his hard earned money into the dollar because from here it will not decline.
Here are the charts of Dollar index and CRB (CCI) Commodity index. We can see clearly that the via-verse relationship between US Dollar and Commodities. Many said dollar going down force commodity prices to move up but I can say even in other way that commodities moving up forced to dollar move down. They both are at very interesting point as one looks over bought and one looks over sold (I am not technical chart person) but imagine if dollar start moving up from here will surely make impact on commodity prices. Astrologically I confirm reverse trend now.
DOLLAR INDEX (highly weighed agst EURO) CRB INDEX (Grains, metals Energy & soft)
Buy the dollar from Monday and keep adding your position. The Japanese Yen will also move down against the dollar as well as the Swiss Franc and Euro. Indeed, all the currencies will have a sharp correction against the dollar, which will have a one man show for the whole of this week.
I see the dollar rising more than three percent during this week, which is a lot of money in the currency market. Friday will be the right day to partially book profit.
This is my favorite area of investment and I highly recommend buying PEIX, VSE, SATC, LDK, YGE and SOLF. People in funds can also add FSLR, WFR, SPWR and STP. Furthermore, one can buy uranium stock like USU and URRE.
Thanks & God Bless
Mahendra Sharma, 3 Feb 2008, www.mahendraprophecy.com