Monday, April 6, 2009

Rally gets an encore

Last week stocks extended their rally into a fourth week adding another 3%. After Monday's steep sell off, the bulls returned to the trough and pushed up the Dow above 8000 closing at 8017 while the S&P finished at 842. Indian markets also rose as ended above some important resistance levels as the Nifty closed at 3211 and the Sensex at 10,348. While I was bearish for last week, I left open the possibility that the negative fallout from the Mars-Saturn aspect may well manifest this week instead. Also, I did call for weakness early on which was somewhat fulfilled in Monday's pullback. The midweek recovery was also within the boundary of my forecast given the bullishness of the Venus-Jupiter aspect.

So despite having underestimated the strength of this rally, I think a downside bias makes more sense this week. Besides, the Mars-Saturn opposition aspect, the Sun is also part of that alignment around 22-23 degrees. And as I mentioned last week, Uranus changes signs this weekend as it moves into sidereal Pisces (according to the Lahiri ayanamsha) so this may act as an amplifier for prevailing market sentiment. Uranus is the planet of sudden and explosive energy, and the sign changes often correlate with significant events and big market swings. Uranus changed signs on October 17, 1987 just two days before the world markets had their biggest single-day decline. Seven years later on February 6, 1994, Uranus changed signs again this time entering Capricorn. This occurred just two days after the markets lost between 5-8% worldwide. Of course the correlation is not perfect as there are many occasions when a Uranus ingress did not coincide with a major market move. Nonetheless, it is a potential factor to include in our analysis and given the pattern in the sky at the moment, it increases the likelihood for some kind of significant sell off. The larger symbolism of Uranus entering Pisces may also indicate some fundamental changes occurring in areas ruled by Pisces. These may reflect the return of the welfare state and more socialistic government policies given Pisces connection with compassion and caring.

Gold looks pretty bearish here, as does crude oil. I expect the dollar to resume its bounce this week.