Saturday, August 13, 2011

Mars panics markets after debt downgrade; triple conjunction offers relief

Markets suffered from a bout of temporary insanity (or perhaps schizophrenia?) last week following the US debt downgrade as investors sought out safer places to put their money. After gyrating more than 500 points in both directions on four consecutive days, the Dow was only 2% lower for the week closing at 11,269 while the S&P finished at 1178. Indian markets were less volatile although the Sensex still lost more than 2% overall closing at 16,839 with the Nifty ending the week at 5072.

All the panic and turmoil was very much in keeping with expectations as I anticipated that the Mars alignment with Uranus and Pluto would be negative. While we did not see any obvious manifestations of literal violence, the market did move violently as the unpredictable and powerful energy of the Mars affliction took its toll. I thought we would see most of the damage in the first half of the week and that was indeed the case in the US, Europe and Asia as Tuesday marked the low, at least on an intraday basis. Once the Mars alignment began separating after Wednesday, there was a gradual lessening of volatility and trading volume as prices rose into Friday.

While we can correlate the gradual strengthening of Saturn in recent weeks with the return of pessimism and caution, the US debt downgrade may also be seen in terms of the Uranus-Pluto square aspect. As I have written previously, the Uranus-Pluto square is the ultimate celestial prime mover these days as these two distant planets will remain in aspect until 2013. This aspect is mostly negative because it erodes stability and is often correlated with long term structural changes in the economy and society. This loss of stability therefore increases uncertainty and as we know, markets do not like uncertainty. As a result, the Uranus-Pluto aspect is usually negative for the value of riskier assets like stocks and positive for safe havens like gold, bonds, and certain unimpeachable currencies. The passing Mars alignment to this destabilizing Uranus-Pluto aspect last week was a significant release of this powerful energy for change and disruption. The US debt downgrade to AA+ by S&P is emblematic of this fundamental change, as the world's leading economy is no longer as strong as it once was. The debt downgrade may ultimately mark a key historic turning point in the eventual decline of the US from its previously unchallenged status as world superpower. Such epochal changes are typical of Uranus-Pluto aspects as old orders stagnate and decline while new structures and organizations rise to fill the vacuum.

This week looks calmer and even rather positive. There is a triple conjunction of Sun, Venus and retrograde Mercury that occurs in the last degree of Cancer on Tuesday/Wednesday. This is likely to generate more optimism and help to boost prices. The presence of the aspect from Rahu (North Lunar Node) is somewhat of a wild card, however. Rahu can distort and confuse the issue so this can reverse the polarity of a planet from positive to negative or exaggerate its effects. I think exaggeration is more likely this week as a dose of unsustainable Rahuvian enthusiasm could take over. The insanity continues in a different form. No matter how positive the news may be here, the planets suggest that the longer term prospects for economic recovery do not look very promising.