Saturday, April 30, 2011

Jupiter-Rahu fuels inflation and speculation

US Stocks rose last week as investors cheered Fed Chair Ben Bernanke's restated commitment to the zero interest rate policy for the foreseeable future. In New York, the Dow gained more than 2%
closing at 12,810 while the S&P500 finished at 1363. Bernanke's comments also prompted gains in inflation hedges as such gold, silver and oil. It was a different story in India's already inflation-ravaged economy as the Sensex lost more than 2% closing at 19,135 while the Nifty ended the week at 5749.

As expected, we did see some decline on Monday's Mercury-Saturn opposition aspect. The US market rebounded after that as the bullish Sun-Venus-Pluto pattern coincided with gains that lasted for the rest of the week. The gains were largely a response to the pro-inflationary stance of the Fed, as most asset classes gained ground against a falling dollar. The Indian market fared less well, however, since the Fed policy would likely increase inflationary pressures that are already threatening the domestic economy. Interestingly, Friday's gains in crude and gold coincided with the Moon's entry into sidereal Pisces. I suggested last week that this transit might well coincide with gains in crude as it would enhance the strength of the five planets (Uranus, Mars, Mercury, Venus, Jupiter) that already occupy this constellation.

The recent gains in most asset classes is very much in keeping with the speculative nature of the approaching Jupiter-Rahu aspect. Jupiter's tendency towards expansion and growth is exaggerated by Rahu's penchant for distortion and disruption. The combination of these influences can result in greed and speculative excess that are commonly found in bubbles and manias. It is therefore no surprise that we see gold reaching new all-time highs every week and silver going parabolic. One of the features of Rahu, however, is that while it can generate gains, these are often unsustainable in the long term. Once the Jupiter-Rahu aspect begins to separate on May 7 (or May 13 depending on which measurement of Rahu/NN one uses), we will need to watch for signs of a trend reversal. There is an increased likelihood that this aspect may bring about changes in the financial landscape. Nothing is guaranteed obviously, but it is a combination that has the power to change the status quo.

This week begins with a potentially tricky aspect between Mars and Rahu. Since Mars is also entering sidereal Aries on Tuesday, this could increase the probability of some downside in the early week. This may be strong enough to manifest in most markets. But we could see a return to the pro-inflation bullishness after that, as the approaching conjunction between Venus and Mercury is likely to bring some gains into midweek, and perhaps later. Friday looks somewhat less positive, however, as the Moon conjoins Ketu/SN.