Tuesday, November 8, 2016

Stock markets anticipate a Hillary win but post-election looks uncertain

(8 November 2016) Stock markets rose sharply on Monday after the FBI's exoneration of Hillary Clinton boosted her chances in today's election.   After suffering losses all last week on growing fears of a Trump presidency, the Dow gained more than 2% to 18,259.  Indian stocks have enjoyed a much smaller rebound early this week after last week's declines as the BSE-Sensex is still well below 28,000.  This down-then-up pattern closely adhered to my expectations in last week's market forecast as I thought the midweek entry of Mars into sidereal Capricorn would turn sentiment negative but that Monday's entry of Venus into Sagittarius would likely coincide with a recovery.  This has more or less come to pass.

The markets are counting heavily on a Clinton win and I think that is very likely going to happen. A Brexit-type Trump surprise win would likely tank stocks at least 5% in a single day. And yet, I do think that stocks have a growing downside risk here in November and December as Saturn (21 Scorpio) aligns with Pluto (21 Sagittarius) among other factors. 

This decline could be the result of purely economic factors but as I noted in yesterday's post on the election, there is a special risk of political uncertainty after Election Day.  Given he has already said the system is rigged and he may not accept the result, a market decline could also be due to a refusal by Trump to concede.  He could then subsequently mount some kind of legal challenge of the results which may delay or block the transition of power.  There could also be some additional legal problems for Hillary and Bill Clinton which could give rise to some uncertainty about the Electoral College vote on 19th December.

This is all fairly speculative, however.  I am not predicting that a some kind stalemate after 8th November is certain or even probable.  But what I am suggesting is that the planetary afflictions to the Sun in the USA chart make me think that there is a higher than normal risk of unusual stresses and tensions surrounding the post-election transfer of power.  This would create political uncertainty in the US which would negatively impact stock markets.  A large decline is even more plausible here since stocks are still close to their all-time highs so it wouldn't take much to provoke a sudden sell-off as stocks are "priced to perfection". 

And let's add to the mix this intriguing fact.  Saturn is currently transiting 21 degrees of Scorpio.  The last time Saturn was in this place in the zodiac was in October 1987 when global stock markets experienced their biggest one-day decline in history.  The October 19th crash occurred with Saturn at 22 Scorpio and Saturn is due to pass over this point in the next couple of weeks.  As it happens, the south node of Uranus of the NYSE chart is located at 22 Scorpio and may be one reason why there is an added vulnerability when Saturn crosses this point in the sky. 

A reasonable and rational skeptic would correctly note that the previous Saturn transit of 22 Scorpio back in 1957 didn't correspond with much of anything.  And that is very true: one swallow does not a summer make. A single data point is not good evidence of anything.  But given the possible uncertainty surrounding the US election and the already difficult planetary alignments, it is one more reason for investors to be very cautious in the weeks ahead.

This week there is some likelihood of some selling after the election as Mars forms a minor aspect with Saturn.  This could hit as soon as Tuesday (Election Day) and also suggests that Wednesday and Thursday could be bearish.  Transiting Mars also forms a square alignment with Saturn and Neptune in the NYSE chart so that also looks negative for the midweek period after the election.  It seems less likely there will be a huge sell-off but it may still be fairly sizable.  Let's see how this unprecedented election actually unfolds as nothing would surprise me.  Bottom line, there is definitely an added downside risk here.  Friday may see a recovery of sorts.  Early next week looks somewhat bullish on the Mercury-Venus alignment.

For more details and analysis on market trends for this week, this month and this year, please check out my weekly MVA Investor Newsletter.  The newsletter is published every Saturday and includes extended discussion of US and Indian stock markets, as well as gold, oil and major currencies.