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Today's Trade & News

Small part of this week newsletter is here as a gift.....

“Let’s talk some thing new: Long term Commodity bull market and dollar weak talks is now too boring”

Dear Members,

A weak trend persisted in the commodity market for the past week and I expect it to remain in an uncertain zone. Meanwhile the Dollar Index was in the 71.70 to 73.18 trading range. Most talk is currently about the same issues of a weak Dollar, the commodity bull market, a weak USA economy, the sub-prime crisis as well as the story of emerging growth. There is however, consensus that the longer-term outlook for the commodity market is optimistic for metals and energy. Furthermore, everyone believes that rising global population and new growth in India, China, Brazil, and rising world population will push up grain prices. There is also general recognition that there will be pressure on central banks to increase interest rates if inflation keeps rising, and this may push the real estate market onto the down side and put a break to the story of global growth. All in all, everyone is aware about what is happening in the financial market as well as the likely future trends.


The markets are currently very volatile and prices are oscillating quite rapidly on both sides. Interestingly, long term positions don’t have much benefit compared to medium term trends, and this is an indication that drastic transformations have occurred with the passage of time. I have noticed that whenever prices are at the top side in any market or commodity and planets give indications of a weak trend for a few weeks, prices fall very sharply. It is therefore important that we take advantage of this. On the other hand we could derive huge profits whenever prices fall sharply and planets give a buying signal. I have therefore decided to give the long-term outlook, but at the same time, I shall also give the medium term trend since current market conditions could give better returns. We have to change according to current situations and pattern.


Back in 2002 and 2003, a 0.05 cents move in silver and a $3 to $5 move in gold were supposed to be big moves, and for that reason, long term investment was a better trade. However, that kind of movement only takes a minute to occur these days. It is therefore important to change strategies according to changing times and adapt to the current situation. For instance looking at the last 2 weeks; corn and soy bean came down around $200, oil came down around 17% from the top and the same thing happened in gold, silver and platinum. This means that we must focus on short term and medium term trading strategies at the current stage. We shall however retain the long term strategy for some core position.


Financial predictions for 28th of July to the 1st of August



This week gold and silver will trade in a mixed trend but I see gold coming down toward $900. Monday gold prices will trade bit positive but in USA market it will touch last week’s low and one can buy from there. Gold could touch $938.80 on the higher while silver will trade in the range of $16.81 to $17.79.


Trading Strategy: Buy gold and silver during the fall on Monday in USA market and Tuesday. Gold prices will recover with oil on Wednesday from low of month and Thursday…... On Friday…..



This week we shall have a downward trend in these side metals. Platinum has come down more than 32%, and if you plan well and execute your strategy correctly, one could make tons of money during this volatile time. Copper is in the final phase and a weak trend is poised to begin but I see Monday and Tuesday positive trend in copper.


Copper will fall sharply from next week.


Platinum will remain range bound and one can cover the short position. Zinc and Nickel will trade side ways and soon begin to move up, though not from this week.



As predicted, cotton and coffee moved up on Friday. This week both will move up for the first three days but decline from late Wednesday or Thursday. One should wait another nine days before taking a big position in coffee.



These soft commodities will all remain sideways this week. As predicted, Orange Juice came down sharply and it is now the turn for cocoa and sugar. I recommend getting out if one is holding any position in sugar or cocoa as I see them falling towards 2008 lows.


Trade carefully. Lumber will also trade weakly.



We are quite close to the stock market turn around and the rise will be very sharp especially in tech and financial sectors. A major turn around in the USA stock market could happen from 12th of August, but a sharp rising will begin from 9th of September.


While I am not very optimistic about emerging markets, the rising trend of the USA could prop them up significantly.


This week USA stocks will rise from this week Tuesday & Wednesday; buy financial and technology stocks as they will move more than 15% higher during the next six trading days.


I see the NASDAQ 100 touching 1900; while the S&P will trade in a very narrow trading range. Time has come to accumulate the S&P.


One should avoid the DAX and others in the European market since they are in a bear trend and lower prices are possible for the next one month. One should therefore take a short position in these markets.


Asian markets will move down sharply: Hong Kong, Nikkei, Australia, India, Singapore and other Asian markets will fall sharply and I warn investors to stay away from these markets. In addition, it is time for the decline of the banking sector in Asian countries, and from here I see a 15 to 25 percent decline in Asian markets.


Those who still want to remain in the market must sell the Asian market ETF’s and buy USA indexes.



This week grains will stabilize and therefore one can cover shorts on Monday and if they rise sharply then take sell position again. However, you should not buy grains as they are in a long term bear market. I recommend taking put calls in grains on Thursday as I see them rising on Wednesday and Thursday. Buy wheat against your selling position.



This week on Monday oil will trade sideways but will move down in USA market and Tuesday it will remain weak in all markets. Wednesday will be the right day to cover shorts and add some buying position in oil as I see a…... Meanwhile, cover your short position in heating oil/RB Gas and natural gas on Wednesday.


The trading range for oil will be $120.80 to $127.80, and the same proportion applies for other energy products.



The Dollar will rise from Monday to Wednesday but trade weakly or sideways on Thursday and Friday. This week the Euro will move towards $1.54 while the Australian Dollar will move towards $93.20.


The New Zealand Dollar and the South African Rand will move lower and one should therefore add short positions in these currencies. The British Pound will trade very weakly and the decline could continue for the entire week. I actually see the British Pound coming down to1.94 and therefore the best strategy is to sell it this week.


The Dollar index will trade in the range of $72.95 to $74.15.


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Thanks & God Bless,

Mahendra Sharma, 27 July 2008, Sunday