Tuesday, January 15, 2019

Powell blinks: markets rally after Fed Chair's dovish comments

(15 January 2019) Financial markets are looking a bit more stable now after the Federal Reserve seemed to dial back its commitment to higher interest rates and quantitative tightening.  Stocks have rallied strongly following the dovish comments from Fed Chair Jay Powell which reduced the likelihood of more rate hikes in 2019.   This bullish investor reaction was another reminder how dependent the stock market is on these historically low interest rates and how captive the Fed is to the stock market.  

Because the stock market is so deeply intertwined with the US and global economy, any major decline will force the Fed's hand.  The "wealth effect" requires the Fed to support stock prices in order to improve sentiment and thereby encourage consumer spending.   After all, if consumers see the value of their 401k declining precipitously, they are less likely to spend their money.  This essentially broadens the mandate of the Federal Reserve to include inflation, employment and the stock market.  The role of the stock market in creating the wealth effect was first promoted by Fed Chair Alan Greenspan in the 1990s under Clinton, and has deepened under Bernanke, Yellen and now Powell.  The Fed believes that 'what's good for Wall Street, is good for America.'

So can the Fed's low rates and QE-type money printing keep this 10-year bull market in stocks going indefinitely?  Anything is possible, of course, but it seems unlikely to continue for much longer.  Last week I highlighted some planetary factors which suggested that the market was due for another major swoon later this year.  A central feature of the next market decline is the rare triple conjunction of Saturn, Pluto and Ketu (i.e the South Lunar Node).  This malefic conjunction will begin to form starting in April or May and will be within range likely until October.  Saturn is often prominent in any major bear market declines and its alignment here with power-centric Pluto and unpredictable Ketu make negative outcomes more likely. 

Trouble at the Fed

Significantly, this pattern will also be prominent in the horoscope of the Federal Reserve (23 Dec 1913 6.02 p.m.).  We can see that very slow-moving Pluto is sitting on the 7th house cusp exactly opposite the Ascendant.  This transit will last through most of 2019.  This reflects the intensity and historical importance of the current economic circumstance for the Fed.  The Fed is charged with managing the withdrawal of its unprecedented monetary stimulus from the period after the 2008 meltdown without causing a crash.  Some critics have argued persuasively that the Fed's stimulus has simply created a new bubble of debt that is vulnerable to collapse once rates normalize and it sells off its balance sheet of QE assets.  Now it seems it can't raise rates back to its normal range or else stocks will tank and interest rates will spike since the market can no longer absorb debt without a demanding a significantly higher premium.  Therefore, the Fed may finally be well and truly trapped. 

But Powell's dovish statement on January 4th was just what the market wanted to hear and stocks have been rallying ever since.  The Sun and Pluto are there opposite the Ascendant ("coercive power in action") with Saturn waiting in the wings.  But the relative success of Powell's comments can be seen through the Jupiter-Mercury conjunction which is typically associated with "good news".  Also the conjunction of transiting Mars with the 10th house cusp (MC) is a reflection of Powell's decisive executive action to essentially walk back his rate hike from Dec 19th and reassure investors that money would remain cheap as long as necessary.  The 'Powell put' is alive and well. 

But the real problems with the Fed horoscope come in the spring.  Saturn is due to station at 26 Sagittarius in late April in an exact opposition to the Ascendant (25 Gemini) and to natal Mars (26 Gemini).  This is a very tense alignment which virtually assures major economic difficulty starting in the spring.  This is not to say that the stock market has to decline in April.  It may be delayed somewhat or even manifest a bit earlier.  But it does underline the importance of that time window for the Fed.  Powell and Co. will likely be scrambling to stay on top of the economy and the markets.  The presence of Saturn here means they will have to make some very tough and painful decisions.  (e.g. emergency rate cut to combat geopolitical uncertainty, unexpected rate hike to fight sudden inflationary spike, etc.)

While Saturn is basically just sitting there opposite the Ascendant-Mars, Ketu will pass over Saturn in May.  Thus, Rahu (the North Lunar Node) will conjoin the Ascendant and Mars and thus reflect a chaotic and potentially explosive financial situation. 

To top it off, Mars is due to transit over the Ascendant in mid-June.  It is really one of the most malefic planetary combinations I've ever seen in a chart.  Who knows, maybe Trump will fire Powell by this time.  Or the Fed will be forced into a corner and have start buying stocks and bonds directly to prop up the market, just as Japan has had to do for many years.  It definitely looks pretty nasty.

Weekly market forecast

This week looks more vulnerable to declines.  The Full Moon on Sunday Jan 20 is also a lunar eclipse which could introduce some volatility this week.  Also, Saturn (19 Sagittarius) is fast approaching its crucial 20th degree of Sagittarius.  This degree is often implicated in declines since it is in exact alignment with the Ascendant of the NYSE chart.  It is also in alignment with the Sun (20 Aquarius) in the S&P 500 horoscope.   Since Saturn is a bearish planet, its exact aspects tend to coincide with pullbacks and declines.  Saturn also forms a tense minor aspect with Uranus here which may further indicate declines.  Neptune is already at 20 degrees of Leo, so the Saturn-Neptune duo is not generally not helpful for stock market rallies. 

Jupiter is conjunct Venus and fairly close to 20 degrees of Scorpio so that may offer some relief.  I suspect it could come next week after the lunar eclipse.  We shall see. 

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Monday, January 7, 2019

Beware the bear: how 2019 may be a repeat of 1937

(7 January 2019) The New Year got off to a positive start for most global stocks as investors tried to put the unnerving 2018 decline behind them.  Friday saw a surge of more than 3% on US markets on the perfect storm of a strong US jobs report, an interest rate cut in China and above all a dovish statement from Fed Chair Jay Powell not to hike too quickly, if at all.   Markets are still fragile and there remains considerable uncertainty about what may lie ahead for this year.

My basic expectation is that stocks may well recover somewhat over the next two or three months but that the planetary alignments look very bearish for much of the year.  As I see it, 2019 is shaping up to be a negative year for most global stock markets as the bear market is likely to worsen.  Even if there is a significant recovery going into spring, it seems unlikely they will return to their previous highs. 

Based on a review of several major bear markets, I have identified the key common factors that are found the planetary alignments during declines of more than 30%.  This list of factors is certainly not exhaustive but it does appear to be crucial in determining whether a decline will be a smaller 10% correction or a historically significant bear market where stocks fall by more than 30%.  In that sense, these planetary factors may be seen as necessary, but probably not sufficient conditions for a bear market.

Here they are in no particular order:

1) there must be a close 15, or ideally, 30 degree multiple alignments of Saturn or the Nodes with at least one slow moving planet --  Uranus, Neptune, Pluto and Chiron.  
2) during the duration of the decline, Saturn should station either direct or retrograde while in close alignment with at least one other slow moving planet
3) these alignments will have greater negative influence if they align closely to key natal planets/points in the horoscope of the New York Stock Exchange (1792), especially if they are in hard aspect (90, 180 degrees).
4) there must be close alignments involving Saturn and Mars and at least two other planets in the pertinent progressed charts of the NYSE
5) eclipses will intensify the bearish sentiment if they are aligned with Saturn or with sensitive points in the NYSE chart.

Ray Dalio's 1937 analog

One intriguing comparative case is the bear market of 1937-8 in which stocks fell 60% over a one-year period.  Hedge fund guru Ray Dalio (pictured above) has highlighted the 1937 case as being the most analogous to the present day since at that time the Fed was similarly raising rates after the economy appeared to be recovering following the Great Depression.  Over the past two years, the Fed has also been gradually raising rates after keeping them near zero for seven years after the 2008 meltdown.  

The recent market sell-off reflects the unwillingness of investors to buy stocks on margin if they have to pay interest on the money they borrow.  Just as in the 1930s, the recovery from the 2007-2009 bear market depended on essentially free money from the Fed.  This ultra loose monetary policy has, in turn, produced another bubble which is now showing the first signs of bursting.  That's why the Fed backpedaled last week as it may have no choice but to stop raising rates in 2019 and keep the easy money flowing longer.

The Dow topped out in February 1937 and matched that high again in July (DJIA=185).  Then stocks sold off sharply for the rest of the year making a low in December (DJIA=120) for a net decline of 35%.  They fell 20% further by March 1938.  We can see how the alignments for the interim bottom in December 1937 paint a grim picture.  Saturn (5 Pisces) stationed powerfully in early December and formed a near exact 3rd house/60 degree aspect with the Sun (6 Taurus).  While the 60 degree sextile aspect involving Saturn is seen as more neutral in Western astrology, it is clearly malefic in Vedic astrology and this is reflected in this massive decline. 

In addition, we can see that Saturn forms an exact 135 degree aspect with the Ascendant (20 Cancer). This stationary aspect to the Ascendant degree is intensely negative and will usually correlate with a significant pullback in its own right. 

Saturn was also square Chiron and aligned with Pluto with a 120 degree aspect during this last quarter of 1937.  This fulfills another bear market requirement.  The conjunction of Neptune with Mars throughout 1937 was another contributing factor since these energies typically do not mesh well. 

The alignments for 2019 exhibit some important similarities with 1937.  Transiting Saturn will conjoin Pluto and Ketu (South Lunar Node) in the spring and this rare triple conjunction will last until October.  Both Saturn and Ketu are considered malefic planets and the alignment with Pluto does not look positive at all.  This alignment is at least as bad as the Saturn-Chiron-Pluto alignment in 1937. 

But the real problem here is that the Saturn-Ketu conjunction will culminate at the time of the Saturn direct station at 20 Sagittarius in late summer.  Any Saturn station at or near 20 degrees of a sign is more likely to coincide with large declines since it will be in an exact alignment with the Ascendant of the NYSE chart at 20 Cancer.  Saturn (5 Pisces) formed a no-less potent 135 degree alignment with the Ascendant in 1937.  Saturn (21 Leo) also aligned with Rahu/Ketu and Chiron and the NYSE Ascendant in October 2008 at the worse phase of the financial meltdown.  And it is worth noting that Saturn (20 Taurus) stationed direct just a few weeks after the 9/11 attacks and therefore was very close to that degree when the market declined in September 2001. 

Pluto is also going to form a tense square alignment with the Moon (28 Pisces) in the NYSE chart. Since Pluto travels very slowly, this square will be in effect for most of the year.  The last time Pluto formed a square with the Moon was in 1931-1932 at the depths of the depression.  Obviously, this isn't bullish.

We can also see that the solar and lunar eclipses this July will align closely with Saturn and Pluto.  This suggests that the period immediately after the eclipses are more likely to correspond with declines. Since Saturn is due to station in September, this greatly increases the probability of a major decline in the late summer and early fall.

Of course, stocks may well rise ahead of the tightening of the Saturn-Ketu-Pluto conjunction in April.  But another move lower does look quite likely at some point after that.  Given the level of affliction to the NYSE chart, I would expect the decline to be larger than what we have seen over the past three months.  It does seem like a bear market is coming in 2019.

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Tuesday, December 25, 2018

US government shutdown hammers markets

(25 December 2018) The US government shutdown is just the latest development to sideswipe the stock market.  The month of December has seen the Dow lose 4000 points as investors are re-evaluating their risk appetite against the background of an increasingly chaotic White House.   Markets fell in early December as hopes dimmed for a US-China trade deal and then selling accelerated last week after Fed Chair Jerome Powell issued an unexpectedly hawkish statement about rate hikes in 2019.  Then on Friday the US government shut down due to a disagreement over funding for the US-Mexico border wall, a key Trump election promise.  President Trump has now made a bad situation worse through his repeated criticisms of the Fed Chair Powell and his stated desire to fire him.  

All this chaos and uncertainty was too much for many investors as they rushed to the exits rather than waiting for a happy ending to the latest episode of The Trump Show.  In last week's post, I mistakenly thought there was a plausible case for some upside following Wednesday's Fed meeting.    However, I didn't have high confidence in that forecast given the presence of some significant offsetting energies.  The Full Moon of Saturday the 22nd was a potential red flag in that respect as Full Moons tend to coincide with periods of market weakness. 

But now that the Full Moon is behind us, what are the prospects for the stock market?  In the short term, a lot will depend on when the US government shutdown will end. While I haven't made a thorough study of US government shutdowns, one astrological pattern I have noticed is that Mercury tends to be destabilized at the time of the shutdown.  One main reason is that Mercury rules the 10th house (Virgo) of government in the USA national horoscope (6.30 p.m. 4 July 1776).  When it is afflicted by transit, government is more likely to be dysfunctional in some way. 

We can see that Mercury (3 Cancer) is currently conjoined by transiting Rahu (North Lunar Node).  Rahu is often a disruptive influence as it is associated with interruptions of the status quo and the seeking of new solutions, irrespective of consequences.  As it happens, we have another disruptive influence now, as Uranus (4 Aries) forms a 90-degree alignment with Mercury as well.  In Western astrology, Uranus has similar symbolism of sudden changes and upsets, especially when in hard (90,180) aspect to other planets.  So that is a double dose of disruption and dysfunction for Mercury-related activities such as government.  And we should note that since commerce and stock trading are also in the purview of Mercury, its affliction here aptly reflects the current sell-off in the markets.

We can also see that Mars, the planet of conflict and frustration, was front and center at the time of the shutdown on Friday night as it exactly squared its natal position at 0 Gemini.  The fact that Saturn (16 Sagittarius) is now opposite all of those Gemini planets, especially Jupiter, is not helpful for any speedy resolution to the entrenched animosity in Washington. 

By way of comparison, we can see some similar patterns at the time of the famous Clinton-Gingrich shutdown in November 1995.  Amazingly, the Lunar Nodes and Uranus are again aligned with Mercury.  This time Rahu is square to Mercury within one degree while Uranus is exactly opposite Mercury.  The 1995 shutdown only lasted for five days but marked the beginning of a very dysfunctional period in US politics as Republicans sought to undermine the Clinton presidency at every turn.  Indeed, there was a second shutdown just four weeks later that lasted three weeks.

But while there are some planetary correlates for a shutdown, it is less clear how to spot a resolution.  The 1995 shutdown ended as the Sun and Mercury aligned with Rahu and hence with natal Mercury.  The apparent completion of the Rahu-Mercury energy by the Sun and Mercury could be seen as positive, although there were no obvious benefic aspects in play.  Similarly, the end of the second shutdown on January 6, 1996 lacks clarity.  Mars had just moved past its opposition aspect to Mercury a day or two prior as if to signal a level of maximum frustration.  Once it moved past Mercury, the shutdown ended.  I would have expected some benefic transit involving Jupiter or Venus to symbolize a level of peace and cooperation between the two sides.  But it's not really here.

This time around we can spot an interesting parallel with Mars.  Mars will align with Rahu and that natal Mercury on Wednesday and Thursday this week.  On the face of it, this is a negative influence on the USA's Mercury which is likely to translate into more downside in the markets.  And yet if the 1995-6 shutdown patterns hold true here, Mars will only have move a little past Mercury for the negativity to diminish and for a resolution of the shutdown to occur.  This could mean a resolution is possible as early as Thursday-Friday this week, although I would not say I had high confidence in that expectation.  It seems more likely that next week's alignment of Venus and Mercury with Rahu-Mercury is a safer and more prudent position to take for timing of the end of the government shutdown. 

In market terms, I would think we could see additional declines Wednesday but Thursday looks more positive, even if it may not signal a formal shutdown deal.  The upcoming Jupiter-Neptune alignment in January suggests that a significant rebound is approaching.  All of which suggests we are probably getting very close to a bottom in the markets, even if it proves temporary.

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Monday, December 17, 2018

The Fed's Jay Powell: Santa or Scrooge?

(17 December 2018)  All eyes are on Federal Reserve Chair Jay Powell this week.  Given recent volatility in financial markets, this Wednesday's FOMC statement and press conference will be more carefully watched than usual.  Up to now, Powell had indicated a preference for raising rates in December and then several more times through 2019.  This path of "interest rate normalization" was intended to keep inflation under control to avoid overheating the strong US economy. 

But recent economic data have been more mixed and could force the Fed to rethink its approach.  The US housing sector is showing signs of slowing, and global growth is also looking weaker as China may be compelled to undertake yet another stimulus program.  And then there are the financial markets themselves. 

While it is not an explicit part of the Fed's mandate, it is clear that a falling stock market undermines the "wealth effect" which can thereby dampen investment and business activity.  And since the stock market is sitting precariously on key technical support levels (SPX = 2600, Dow = 24,000), the market may force the Fed's hand.  More than a few observers are now calling for the Fed to save the market by either cancelling its widely telegraphed December hike, or more likely, to dial back its hawkish plan for three or four hikes in 2019, to two or even just one. 

So will Fed Chair Powell be Santa or Scrooge on Wednesday?  And more to the point, how will the market react?  His personal horoscope looks a little stressed but nothing too major just yet.  Mars is aspecting his Moon by the full strength 8th house aspect but that may simply reflect the enormous personal stress Powell is under given the historical significance of this rate decision.  Rahu (North Lunar Node) aspects the natal Mars but it is past exact and thus likely diminishing in its influence. 

As a general rule, I would think that if the market sells off sharply after Wednesday, it should show up in Powell's chart since it is unlikely that he would desire this kind of outcome.  Of course, we cannot know for sure what Powell and the Fed really wants, since a sell-off would at least push more investors into bonds thus lowering yields.  Lower rates on the burgeoning US debt could be very much what want the Fed ultimately wants, but perhaps not at the expense of all those 401Ks.

Therefore, we can say that Powell's horoscope doesn't really provide evidence for a bullish or bearish outcome this week.  I think Powell is likely to become more frustrated and depressed in 2019 as Saturn closely squares his Virgo Moon.  This will likely reflect the bear market that I can see emerging in 2019. 

But for now the transits similarly seem somewhat mixed.  For the bulls, Mercury conjoins Jupiter on Friday and could well correspond with a favorable reaction to the Wednesday Fed statement.  And yet there is reason to be cautious in this assessment.  First, the Mercury-Jupiter conjunction aligns closely with Saturn.  This introduces a somewhat more negative spin on the proceedings, even if it doesn't quite push the needle over in the bearish column. 

The other big problem this week is that we are approaching a Full Moon on Saturday, the 22nd.  Full Moons tend to be bearish so it could be more difficult for markets to rally before the Full Moon takes place.  The market declined at the time of the October and November Full Moons so there is some risk this could happen again. 

But I would think a bullish outcome is boosted because of the multi-planet alignment with Venus.  Venus is in a 120 degree alignment with Neptune (within one degree) and Venus also aligns with the Lunar Nodes, Chiron and the Sun if we include multiples of 15 degrees.  While the bullish case is less clear than I would like, all those Venus aspects are hard to reconcile with a negative market reaction the Fed on Wednesday.  It therefore seems more likely that stocks will rise after the FOMC meeting.

So even with the planetary overview, there remains considerable uncertainty about what will happen this week.  But my reading of the planetary influences should make bears uncomfortable as the net effect looks more bullish than bearish, even if I won't be surprised either way.  Using a 0-100 financial astrology index, I would say the index is greater than 50 this week, probably in the 60-70 range, especially after Wednesday at 2 p.m.  The early week could be more negative. 

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Monday, December 3, 2018

Stocks rise on 90-day US-China trade truce

(3 December 2018)  Stocks are poised to rally further on Monday after the weekend agreement by the US and China to delay the imposition of any possible further tariffs by 90 days.  This truce in the trade way is the latest piece of good news for financial markets after stocks bottomed out during Thanksgiving week.  Since then, investors have also cheered the Fed's more dovish comments indicative of fewer interest rate hikes for 2019.  A more gradual return to normal interest rates would be welcome by heavily indebted companies and consumers alike. 

This strong rebound is not too surprising from our astrological vantage point.  To be sure, I had expected some downside at some point during the Mercury retrograde cycle (Nov 16 - Dec 6) and that has come to pass given the final dip we saw into the US holiday week on Nov 23.  But Mercury retrograde cycles are usually not all bearish and so we have seen a rebound last week and this week has also started on a bullish foot.  As I had forecast in my weekly subscriber newsletter, last week's triple conjunction of the Sun, Mercury and Jupiter was very likely going to coincide with a rally of some size.  I wasn't sure how strong it would be but it certainly looked bullish.  (N.B. Readers will have to excuse my absence from this space over the past few weeks as I have been busy while doing some travelling.  I have kept publishing the newsletter during this time but could not write posts on the website.)

As far as this week goes, the rally today seems appropriate given the Moon-Venus-Uranus alignment.  As an added plus, this lines up nicely with the Ascendant-Descendant of the NASDAQ horoscope.  This horoscope is a good proxy for US markets as a whole.  And yet the planets for the rest of this week suggest that stocks are less likely to extend their gains towards the end of the week.  The problem is that Mars conjoins Neptune while both are in a 90-degree alignment with the Sun.  This introduces a downside risk that has been absent for the last week or so.  It needn't always manifest as a decline since multiple planet alignments are less predictable than two-planet alignments, however. 

But an additional bearish factor here is that the Sun is conjunct the natal Mars in the NASDAQ horoscope.  This increases the probability of a pullback this week.  The other alignment I am watching is the Mercury direct station on Thursday and Friday.  By itself, this is neither bullish nor bearish.  But the station will occur in an exact 120 degree alignment with Rahu, the North Lunar Node.  This is a destabilizing influence on collective psychology where expectations and analysis may be distorted or disrupted.  Therefore, this increases the risk of some downside this week also. 

Of course, the technical analysis of the market suggests that a pullback is likely quite soon.  The S&P 500 has reached its previous interim highs from mid-October and mid-November.  While it is possible stocks will just continue to power higher, a pullback at the 2800-2820 level is more likely.  Futures are pointing to an opening at that level so we shall see how strong the Moon-Venus influence is.

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Monday, November 12, 2018

Stocks vulnerable as Mercury retrograde approaches

 (12 November 2018) It's that time again.  Mercury is due to station retrograde later this week on Friday, November 16.  Even among the non-astrologically-inclined, most people have heard of Mercury retrograde.  They know it connotes something bad or unexpected, and that things are more likely to go haywire during the three-week period when it moves backwards in the night sky.  As the mythological winged messenger, Mercury symbolizes communication, commerce, transportation and rational thought, among other things. 

When Mercury is moving in normal direct motion, it is believed that there is a greater likelihood for things to work out as planned.  But every four months or so, it stations retrograde (Rx) and appears to move backwards across 15-18 degrees of arc.  This departure from its normal motion conjures up images of hassles, delays, technical breakdowns, computer viruses and the like.  The most famous Mercury Rx station in recent times was election night in the US in November 2000 which produced the unprecedented Bush-Gore stalemate.  The election outcome was undecided until it was settled finally in the Supreme Court a month later.

One of the best ways to see how Mercury retrograde may (or may not) be working, is to look at how the stock market performs during its Rx periods.  The theory holds that stocks should be less positive and more vulnerable to declines, either through actual malfunctions in the stock exchange, or more commonly through misunderstandings and unexpected news in the economic data that traders rely on for their buy or sell decisions.  So we can ask: is Mercury retrograde really bearish for stocks?

In my view, Mercury retrograde is only one factor out of many and is less likely to be decisive.   Other alignments may override its influence, although I suspect it has a negative bias.  It is similar to the Venus retrograde periods in that respect.  They don't always correlate with declines, but the downside risks rise during the Rx period. 

I haven't done an exhaustive study by any means but I did want to present some recent Mercury Rx history here.  As these two charts for 2017 and 2018 show, each Mercury retrograde period has featured at least one dip, typically near the beginning of its retrograde period.  It doesn't appear to strongly correlate with an overall negative performance although that may happen in some situations where other bearish patterns are in play.

The April 2017 period was modestly bearish for the first week or two after the Rx station but stocks recovered and pushed higher by the time Mercury resumed its forward motion in May.  The August-September 2017 Rx period was more bearish as the Dow fell soon after the station and didn't recover.  The December 2017 Rx period was quite bullish actually, although we should note that stocks fell for a few days immediately following the Rx station. 

The March-April 2018 period was bearish to start and marked the important April 2nd low for the stock market.  Prices rebounded by the end of the Rx period, however.  The July-Aug 2018 period was more bearish, perhaps as stocks reversed lower immediately after Mercury turned retrograde on July 26th.  While stocks rebounded by the end of the period, it was generally negative. 

And that brings up to the next period from November 16 to December 7.  Stocks are down sharply already in the US today (Monday).  I think this negative bias is likely to continue this week as the Rx period gets closer.  This is less to do with Mercury turning retrograde than the fact that it will square Neptune later this week.  This is a pretty bearish set up. 

But if recent Rx periods are any guide, then we are likely to see stocks experience at least one significant pullback after Friday, the 16th and before December 7th.  Between the Mercury retrograde period, its Neptune square, and negative alignments of Mars this week, the midterm election rebound is looking quite fragile at the moment.  A retest of the October low seems more likely than not.

For more detailed market analysis, please check out my weekly subscriber newsletter.  It is published every Saturday and covers US and Indian stocks, as well as currencies, gold and oil.

Tuesday, November 6, 2018

Stocks bounce after bad week; Q3 earnings in focus

(29 October 2018) Stocks sold off sharply last week on renewed fears that Trump's trade war will reduce revenues and profits of many large US corporations.  The Dow lost 3% on the week and closed below 25,000 for the first time since July.  Indian stocks joined the global sell-off as the Sensex fell almost 1000 points and came close to testing its March low. 

Stocks have rebounded here on Monday in Europe and the US on the proverbial oversold bounce.  Besides bargain hunting, investors may also be looking forward to corporate earnings as some big names will report Q3 earnings this week.  Facebook reports on Tuesday, Apple reports on Thursday, and Exxon Mobil on Friday.  While it is still possible the news could disappoint the market, at least it changes the subject for a few days away from the gloom that has been hanging over the US market during October. 

Last week's decline was in keeping with my bearish expectation as I thought the Saturn influence would be problematic at very least.  Saturn was aligned with the Sun and retrograde Venus during the week so there was good reason to be cautious.  If that weren't enough, Wednesday's Full Moon also suggested that caution might be a more prudent strategy.  In fact, Wednesday turned out to be the worst day of the week.

Not surprisingly, this week has started off on a more positive note as the Sun and Venus have moved away from Saturn's influence.  In addition, Mercury conjoined bullish Jupiter today and both will align with Rahu (North Lunar Node) and Chiron this week so that is another reason to think that we could see stocks rebound further.  We can also see how the Mercury-Jupiter conjunction in Scorpio is aligning with the Mercury-Sun conjunction in Taurus in the NYSE chart.   This looks fairly positive in any event.  The Moon joins the alignment tomorrow (Tuesday Oct 30, see chart), so it seems likely we will have more gains this week.  Venus also aligns with Rahu and Uranus so that is another potentially positive influence.  It's difficult to be certain which other days may be bullish although I think Thursday's Moon-Mars opposition could be bearish.

So is the correction over?  I'm not sure, although I suspect there could be some more significant weakness upcoming later in November and possibly into December.  Whether or not it creates lower lows is another question.

For more details on possible scenarios for this correction in the coming days, weeks and months, check out my weekly subscriber newsletter which is published every Saturday.  I cover US and Indian stock markets, as well as currencies, oil and gold.