Saturday, June 4, 2011

Stocks fall with Saturn and eclipse; Jupiter stronger this week

US stocks staged a significant retreat last week as disappointing employment data suggested that the recovery may be in trouble. In New York, the Dow fell by more than 2% closing at 12,151 while the S&P500 finished at 1300, just above a critical technical support level. This bearish outcome seemed to reflect the planetary energies fairly well as the midweek Sun-Saturn aspect and solar eclipse coincided with Wednesday's big drop. I had been uncertain about Friday given the Neptune retrograde station but that decline was not a surprise. Indian stocks fared better, however, as they benefited from more early week upside which US markets missed due to the Memorial Day holiday. Despite two losing sessions at the end of the week, the Sensex rose by almost 1% to 18,376 with the Nifty settling at 5516.

The glass is looking half empty here as concerns grow that all the stimulus measures from the US Federal Reserve over the past two years are no longer working as advertised. But if QE1 and QE2 aren't enough, then surely this makes another round of stimulus more likely in the form of QE3? Well, one should never discount a government's desire to print more money to get out of jam, but there may be less tolerance for such a move now.

It turns out that all that "free" money really isn't free at all and comes with a price. The US debt has ballooned to $14 trillion and counting, the Dollar has plunged, and commodities like oil and gold have risen sharply. This has created an inflationary environment all around the world which has wreaked havoc in many emerging markets. It now also threatens to overtake the US economy as the implications of Bernanke's currency devaluation scheme are becoming more apparent. There is more talk that the US is running out of policy options and may simply have to face the music, even if it means rising unemployment, more falling house prices, and little or no growth for the near term. All this negativity is very much in keeping with strengthening Saturn as debt, recession and economic pessimism now predominate the discussion. I tend to think that Saturn could well remain in control up until the conclusion of its retrograde cycle on June 13 when it forms a square aspect with Pluto.

For all the gloomy Saturn influence, we could see more Jupiter this week as it forms an aspect with Neptune. While Neptune does have a bearish side, its aspects with Jupiter tend to be more bullish. Upside is perhaps even more likely in the second half of the week as Venus joins the alignment. Ahead of that time, however, Saturn will again be front and centre as its aspect with Mercury on Tuesday could indicate shakier markets in the early part of the week.