Weekly Newsletter from 14-18 December
Most important week for Investors
Dear Members,
On Friday all the major markets lost value, but USA and European market had a free fall. The Scorpio Moon and the New Moon together on Friday played the most powerful negative role for the short term. S&P broke its most important support level of 2033, and closed around 2006 which is opening the door for it retest our most important level 1983. Surely a lot of long traders must have stuck with their buying positions and I feel that I was not able to pass a clear message that stay away from the market during last week’s Scorpio Moon so please accept my sincere apology but we still believe that market will bounce back strongly early this week.
I completed basic astro study at the age of 12 but then my interest towards the subject of astrology forced me to do a complete study of the behavior pattern of each planet and their results on the masses and masses thinking. I completed this study in 1985, and since then I try to avoid guiding our personal clients or our members and we always recommend them not to trade during a Scorpio Moon. I don’t travel, trade or meet people during the Scorpio moon because I know that whatever I try to do during that time, I will fail.
In my life time so far I have travel three times when there was a Scorpio Moon, and all three of these times I had a horrible experience. Still, the Scorpio Moon plays a game with me but I respect that humbly. In the future I will just leave all trading decisions during a Scorpio Moon up to you, I will just put out the ranges. Those of you who have been following our work must be aware how hard and difficult a role the Scorpio Moon plays. Last week I was in double mind about the role of the Scorpio moon and rather than exercise caution, I decided to go with Sun and Saturn which was the biggest blunder from my side. I wish I could have warned you with a clear note. I will always regret last week’s error because I was over confident even though I knew the ability of Scorpio Moon.
I turned 48 on 4, Sep this year. I took interest in the astro subject at the age of 9 and by the time I was 12 I became an astro chart reader for people, but I always had the thought that there was more to this subject, and it was more like studying the universe because there is no ending to it. Look at last week as an example of this, even though we put the message out there to stay away from the markets during the Scorpio moon, we never told all our members to stay away or sell everything. In hindsight that could have made huge difference.
We all believe in moving forward and I would like to do the same here. Yes, I failed to predict a few day’s trend but the medium and longer term trend in market is very bullish so we are hopeful that investors will do amazingly well in 2016 and 2017.
This is the most important week for market because:
The FED is ready to hike rates which is already in place but the language or statement of the FED will play a key role in giving direction to the market.
Most of the futures and call options contracts of indexes and stocks of December 2015 are expiring this week on Friday which will bring huge volatility. There will be a big fight among the bull and the bear to get maximum returns in their favor so the price movement will be large.
Currency December contracts will also expire during this week, so there will be huge volatility in the currency market as well.
A new fear in the junk bond market has arrived. To get extra returns many investors have invested in the illiquid high yield junk bonds. Many of the larger financial institutions have created ETF’s and different investment products of high yield and now suddenly there are now buyers are running away from it due to the fear of being unable to cash in. On Friday the Third Avenue focused on credit fund and have barred investors from withdrawing money. This may create some panic during this week as many investors and funds that have invested in these kind of high yield funds may start withdrawing their money, it looks scary.
Low Oil prices have been benefiting consumers and importers but oil producers and oil producing countries are suffering. Many energy companies have borrowed money on higher interest, but falling oil prices may impact the profitability of many energy companies and if oil prices fall further then this will create problem because lender will start getting panic. The same thing is happening with metals and mining companies and any further fall in metal prices will create a squeeze as many big funds will recall their debts. We have been recommending staying away from Glencore even though they have cut their debts from $30 billion to $18 billion by selling many of their few businesses. We don’t see many institutions issuing more credit to Glencore so they may have no choice left other than selling more of their commodity businesses otherwise failing of Glencore can create meltdown in commodity market.
Many energy and mining companies are cutting dividends (Kinder Morgan and Anglo American are recent examples during last week), which may push many investors away from these asset classes. Surely the future looks gloomy if I was one of the people who invested in high risk asset classes to earn extra yields so it will be interesting to watch high yield bond market coming time.
Uncertainty in the currency exchange rates, especially in the emerging market which provides extra yield looks like the falling exchange rates of many of these currencies are creating a panic situation among big investors as well as many central banks, which looks a bit scary.
December is the month in which everyone likes to close their books. Borrowers have to clear interest and many lenders will push them to even repay the principle which may create extra volatility in the emerging market currencies and many assets classes. Look at South African Rand, it is collapsing due to the same problem. Mexican Peso, Real, Rupee, Rubble and many other these currencies from South east Asia and South America have been trading sharply lower.
The FED decisions is on the way on Wednesday, and everyone would like to see statements from the FED. Any Hawkish comments can kill metal prices and Thirty Year Bond’s move. The stock market can also go wild. Let’s see what astro indicators are indicating for next week.
Achievement: The Death of Fossil Fuel, leaders achieved a historic climate deal. I have also been a big supporter of alternative energy and always urge that would leaders should take care of the climate change situation before it is too late for our future generations. The Sun will always shine and alternative energy sources as the future looks brighter and cleaner.
Here is this week’s newsletter from 14-18 December
GOLD/SILVER/BASE METALS
Last week metals traded mixed but concerns are rising. The future started looking bad for the medium and longer term as expected. Metal’s short term moves may be dominated by the Fed statement on Wednesday but the medium and longer term trend for precious metals looks very bad. It is getting clearer that those who will be buyers of these precious metals three to five years down the line will struggle. By 2055 gold will be produced in factory like Q-carbon diamond.
Anyways, let talks about the short term trend for the market. This week looks….
INDEXES
Though now everyone is so concerned about what is happening in the High Yield Bond market. The fall in the equity market during last week, and very volatile currency movements brought fear into the investors’ minds, and at this stage it is clear that everyone is very panicked after last week’s fluctuation.
According to our theory, last week market falling during negative Scorpio Moon days does not concern us that much. Yes, if the market fell on a positive day we would have been concerned. So, astrologically speaking, nothing new happened during last week. This week Monday looks like a positive day from mid European trading session, so we strongly recommend buying positions in the market. Buy indexes and stocks, because during the US trading session the market will turn very strong positive even if they open weaker in Asia and Europe during the electronic session.
Tuesday is also going to be a positive day so we strongly recommend holding buying positions in the market and adding more positions around the lower side value even though technical charts and the overall sentiments are negative, but the astro indicators will still support the market which means that you will be rewarded for your buying.
Wednesday is the most important day in investors lives because it is the most important FED meeting in which the FED will give some clear guidance about their move without playing a double game. Playing a double game has already damaged the equity markets trend enough from July 2015, otherwise today we would have been sitting with S&P at 2375-2450. Anyways, the Fed was not courageous enough to make a move in the month of July when the astro cycle was positive. On Wednesday after the rate hike, traders will watch the FED’s statement closely and if the FED…..
THIRTY YEAR BOND
Last week the Junk Bond issue came in the frontline in the media and surely many must be stuck badly. The structure or design of this Junk Bond must be falling apart, and the risk management strategy must be going out of hand in these products. We are sure that when all these big institutions create these kinds of products to give extra yield or extra interest to investors. They are investing in these kinds of products because there is a high amount of risk involved and that is why they are called Junk Bonds. Lately ETF’s have been gaining popularity among investors, and many institutions created some ETF’s which are connected with high yield Bonds, but they are so I-liquid that if investors were to get out now, it will drag prices down. This surely looks scary when the risk ratio goes above the border line, meaning that the risk of losing your capital rises, and that creates fear.
Falling prices in commodities and emerging market currencies has created some panic in the debt market if they are issued in different countries or with commodity companies. Anyways, I want to focus on Thirty Year Bond and last week, a sharp upside move in Thirty Year Bond has made many traders very confused, because on one hand the rate hike is on the way, and Thirty Yen Bond moving higher without the fear of the FED sounds a bit strange, but this could be the final move.
We mentioned that Thirty Year Bond prices wouldn’t be able to move above 156….
SOFT COMMODITIES
Last week soft commodities traded mixed. They have been trading in the predicted ranges, and this week the same kind of trend is also indicated. Surely 2016 holds a completely different scenario for soft commodities, so plan your strategy well.
Unpredictable weather and El Nino may damage coffee and cotton crops so trade carefully. We have been saying that coffee will trade in the range of $118 to $128, and it has been trading in that range….
GRAINS
Last week grains prices traded mixed. Some profit booking came in Soy as expected; and the overall trend in grains for this week looks very tight. We recommend buying grains on any weakness. They are our favorite among the commodities.
This week on Monday and Tuesday grains prices will trade….
ENERGY
Last week oil prices fell non-stop, and our worst case scenario was $35.50 on the lower side which was almost achieved. Most of you are aware that our medium and longer term view is very negative for energy, and we called “Death of oil market” when energy was still in the most bullish cycle in 2014. It was the most amazing prediction I ever made in my lifetime. At the same time we predicted that oil may even go to $15-$20, when it was trading around $100 last year. Now Goldman Sachs are saying that they do not discard the possibility that oil could go to $20. I wish they would have made this prediction last year in May when we were predicting it. Now it is easy to predict that there is a possibility that oil will be going to $20 because it is just $15 away from it. Anyways, we do not see oil going to $15 or $20.
Last week we predicted that oil is bottoming out and we also mentioned that in the worst case scenario it may go to $35.55 level, which was almost achieved. We recommend traders to buy….
CURRENCIES
It is the month of December, and most Fund Managers, Banks, Corporates, lenders and borrowers would like to close their books and collect interest checks, or pay interest. If they are in a deficit, then they may be forced to sell assets and create liquidity for payments. Surely, this month will remain very busy, and especially the middle of December is very crucial because after the third week of December, everyone is on holiday, so you must have noticed that every time, during mid- December, huge volatility comes in the currency, equity, and bond market.
This week futures contracts and call options contracts of December will expire so traders are bound to close these positions whether they are in loss or profit, or they can roll over to next month or march contract if they wish. Currency trades are very risky but the reward is also very high, but those who remained with US Dollar during 2015 were rewarded greatly. After oil, buying Dollar calls in 2015 remained the second best advice we had for our members.
This week there is a FED meeting and many currency traders are very nervous about the FED decision as well as the future statement from the FED in their press conference. By now everyone understands the FED, so they understand the FED’s language will either be Data dependent, or the Fed may say that they are monitoring the economic activity in the emerging market. Anyways, the bottom line is that the FED wants to hike rates, and they want to do so gradually. They want to keep hiking for many years from now, so one thing is for sure and that is that the low rate environment is going away. We do not see any deflation threat, and neither do we see a recession threat. So let people talk about deflation and recession; because our view remains very positive for the market so we do not see any recession coming in 2016 or onwards.
In 2015 the predicted lower side ranges have been achieved in most currencies. Our prediction of dollar Index hitting the three-digit mark has also been achieved. If I look back, then the rise of dollar and the fall of commodities seems like a miraculous prediction.
We are sure that most big investors must be watching the fall in emerging market currencies, and surely there are some concerns because a sharp fall in all these currencies can create an imbalance, which can force money to keep flowing into the USD or in USA, which could be a little bit dangerous because if gravity works on one side, then it can work as a black hole, and at this stage this is what is happening in USD. In 2014 we in fact predicted that this would happen.
Last week South African Rand crashed towards an all-time low. Big investors have put too many bets to earn 12+ percent interest rate in these counties, which seems like it has not provided any benefit to international investors. The currency value of Rand has fallen significantly more compared to what interest it provided, and the same is happening with Mexican Peso, Brazilian Real, Russian Rubble, and many other South East Asian and South American countries. Surely at this stage securing capital has become a bigger challenge than earning money on capital, and that is the reason that money keeps flowing into US Dollar.
On top of everything that we mentioned above, the FED is ready to hike rates which is creating more fear in the financial institutions who invested in other currencies, or other countries bonds for higher yields, because any Hawkish comments can create panic and many emerging market and frontline currencies can fall 5% within a few hours. We are sure the FED won’t do anything aggressive like that.
As recommended, booing profit in dollar above the 100 level has done well, and we still believe that dollar will…..
Subscribe weekly newsletter to read weekly newsletter: http://www.mahendraprophecy.com/weekly-newsletter-subscription.php
IMPORTANT NOTE: We will send a small alert on Wednesday after the FED meeting, so wait for that.
Thanks & God Bless, Mahendra Sharma
13 December 2015, 3.00 PM Santa Barbara