Saturday, April 16, 2011

Stocks drift lower; Mercury-Mars-Saturn this week

Stocks edged lower last week as inflation fears and unimpressive corporate earnings weighed on markets. In New York, the Dow rallied late in the week but still ended lower closing at 12,341 while the S&P500 finished at 1319. In Mumbai, the Sensex reversed after Wednesday's gain and closed lower at 19,386 while the Nifty finished at 5824. I thought we might see more early week upside on the Mercury-Jupiter conjunction but we only saw some gains arrive on Wednesday. Friday's Sun-Rahu aspect was more of a toss-up and this coincided with a decline in India, although the US market continued to rise.

Inflation remains an ongoing concern here as oil and gold are both seen as hedges against rising prices and a falling US Dollar. Both phenomena are at least partially due to the Fed's QE2 policy which comes to an end on June 30. The debate now is whether the economy and the market are strong enough to stand on their own two feet once this policy ends. While the jury is out on that question, it does seem reasonable to assume that once the injection of Fed cash ends, there will be less inflationary pressure around the world. This will tend to moderate or lower asset prices including stocks, oil and gold. However, it seems unlikely that prices will simply begin to fall the day after QE2 ends. Markets typically don't work that way. It seems more likely that we could get some adjustment in asset prices before the end of the Fed's buy back program. We have seen some correction already, especially in emerging markets like India, although oil and gold are still riding high. As Jupiter approaches its aspect with Rahu in early May we could see a new dynamic enter the market. Rahu tends to disrupt the status quo so its association with Jupiter (wealth, finances, growth) may interrupt the prevailing trend. Rahu can also symbolize speculation and greed, so it's possible that some markets will continue to rise until the aspect is exact.

This week begins with a difficult alignment of Mercury, Mars and Saturn. Mars opposes Saturn on Monday while Mars conjoins Mercury on Tuesday. Since the bearish planets (Mars, Saturn) outnumber bullish Mercury, there is a greater likelihood of declines this week, especially in the early going. The late week period offers somewhat more positive outcomes as the Sun and Venus form aspects to Neptune.