Four Pillars Finance

Chinese astrology cycles for market timing

Archive for August, 2010

Markets Update

Posted by Danny on August 9, 2010

Interesting times in most of the markets we cover, so we will try to give some update on all of them.

Nasdaq

Current level: 2288

The Nasdaq is unchanged since we last gave a more detailed outlook for it.
But quite a bit has been going on in the meantime.
The market turned down, as expected, and found support near 2050, one of the resistance levels we had indicated. Next prices have rebounded swiftly, and now we are right back where we were in the end of June.

Going forward our Chinese cycles point to a downward bias for September and October, probably followed by a year end rally.
I see two possible scenarios.
1) A mild decline that stays above the early July lows. This would probably see us end the year slightly in the plus.
2) A more sharp drop in which the July lows are broken. Then we are likely to get to 1700-1800 area before stabilizing and rebound into next year.

Currently I would give about 75% probability for the mild scenario 1.

Here is our updated prognosis chart (click for larger image):

Gold Stocks (XAU)

Gold stocks have remained weak. I would continue to stay out.

Euro – US$

Current level : 1.32

Euro has rebounded nicely, as we indicated in our last post.
We have already reached our 1.32 upside target.
While it may go to 1.35 short term, I would take the profits here.
It would not surprise me if the expected weakness for stocks in the coming months comes with renewed weakness in the Euro as well.
The further direction of this market is highly uncertain for the moment.

Oil Prices (USO)

Has started to go up as indicated by our cycles.
Hold on for longer term.

US 20 year Treasury Bonds (TLT)

Current level: 100

Has reached a summer high as our cycles indicated. Could jump to 105 if there is any panic in the stock market. But wouldn’t bank on it.

One day people will feel stupid holding these bonds that give them a 4% return for the next 10-20 years. And where will the buyers come from when they want to sell?

Get out of bonds.

Good Luck,  Danny

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