With buyers and sellers trying to find out what is likely to happen next, we have seen a cautious trading pattern in the market, with quick exiting from trading once a profit has been made. At the moment, I cannot advise my members to jump into hot commodities like metals, as planetary movements are not really in favour of that.
However, I would like to say that we are likely to see a similar pattern in metals trading for the next fifty years. One will therefore need to move with the wave and take advantage of the rises and falls of prices as they occur. I shall of course guide you through the changing trends as well as the overall situation.
The energy story is nearing its end but before that, there will be a final push by Mars towards a new high, though it will not be able to hold after October.
In regard to grains, they are in a long-term bull market and the world is going to feel the pinch of inflation, especially with food prices. The next concern with inflation will therefore be in relation to grains or food and not oil or gold.
As for the dollar, it is in a unique trend that is likely to position it contrary to the expectations and beliefs of many experts.
Even though stock markets are trying to stabilize, it is a false sign of stability and markets like India should fall another forty percent from current levels and the fall will be quite a nasty one. In addition, I have concerns about the European market as well.
Let us now see what this week presents:
THIS WEEK’S PREDICTIONS - 26 TO 30 JUNE 2006
Last week gold traded within the indicated trading range and its failure to move down on Tuesday was confirmation that for a few days, gold will not fall. For this week, it should remain stable on Monday while Tuesday will be a most unpredictable day. If it rises on Tuesday, then it should remain in positive territory for the entire week. That notwithstanding, the trend for the next three weeks is weak, therefore trade accordingly.
Gold’s trading range will be from $598.80 to $568. However, remember that the upside for this week is only possible if gold trades positive on Tuesday. If gold trades weak on Tuesday, it could take gold towards another low.
With the exception of silver, the other three side metals will trade weak. The most important point to be noted here is that the three side metals have entered into a medium-term bear cycle. Selling copper and platinum will give enough returns to keep your books in profit by the end of this year.
Silver should trade in the range of $10.72 to $9.81 and again, this is only applicable if metals trade positive on Tuesday.
Furthermore, from Friday 30th June platinum and copper will start a long term weak trend regardless of the movements in gold and silver. Side metals broke relationship in the second last week of May and may not trade with the direction of gold and silver.
Wait from my alert on Tuesday or wednesday Morning.
Last week, all major markets rebounded from lows. The point to be noted is that this was just a “rebound”, and they will enter into a bear cycle from 3 of June. I am also anticipating some negative news for stock markets and though I can’t exactly tell what it will be, it is sure to be “negative news”.
In the next three years, alternative energy stocks will post mind-boggling returns and I therefore recommend buying in this sector. My personal feeling is that small companies like PWTC, ENER, SLRE, USEY and WWAT should perform well in the longer term. Indeed, I have been investing in the alternative energy sector since the last two years.
Uranium stocks will also perform well, in addition to ethanol stocks.
For this week, all major markets will trade side way or up. Furthermore, I expect negative news for South American, Australian and Asian markets.
As for the European and USA markets, they will have a negative time from next week.
Three weeks back I recommended booking profit in grains but then again recommended buying after one week. They are trading under pressure -especially corn. I recommend buying grains for the short, medium and long-term basis.
Current prices of Soy Bean, oil and meal look very attractive. There will also be a sharp turn-around in wheat prices, while corn should remain side way before rising sharply.
They could turn around from low on Monday and one should not miss the opportunity to buy before the day closes.
This week, oil should trade positive. However, in case it fails to do so by Wednesday, then one should get out from buying position in the energy sector including stocks.
IMPORTANT NOTE: WAIT FOR MY ALERT ON WEDNESDAY. IF IT FAILS TO RISE IN THE NEXT SEVENTY HOURS, THEN I PREDICT A BEAR MARKET IN ENERGY. HOWEVER, A BULL WILL HOLD TILL OCTOBER IF IT RISES.
Bonds are not trading as I expected but I will still hold my prediction. Buy treasury bonds from Thursday.
All major currencies remained in a weak cycle and the South African Rand doesn’t show any sign of recovery. Seven weeks back I strongly warned about the Rand when prices were around 6.00. It is now at 7.45 and I still don’t see it stopping here except for a technical rebound.
My warning is on for the Australian, New Zealand and Canadian Dollars. They could fall more than twenty percent in the next five months.
The Swiss Franc, Euro and Pound should remain weak. I recommend buying the Yen against the Euro and side currencies. The dollar index should make a three months high as a hidden upside wave is coming in the US Dollar from next week.
Though both soft commodities are trading weak. I still hold my prediction to buy coffee at the current price. Cotton may however remain in a weak trend till 5 July. In the worst case, coffee could go down to $92 but it doesn’t look likely. Cotton could also decline another seven percent. Despite all this it is certain that both commodities will have a great second half of 2006.
Thursday will be right day to sell orange juice, while sugar will not go down much till September. All in all the future for both commodities doesn’t appear very promising.
I wish you good luck and a fruitful week in your trading.
Thanks & God Bless
Sharma Mahendra 25 June