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(10 February 2021)
As US stocks hit another all-time high today, one wonders if this
12-year old bull market will ever end. With the Federal Reserve doing
somersaults to keep the bull party going, more observers are talking
about the bull market as the default setting for the foreseeable
future. Of course, from an historical perspective, stocks do tend to
rise over time. But previously, bull markets were followed by bear
markets as a reflection of the ebb and flow of the capitalist economic
cycle.
But ever since the 2008 meltdown, the Fed has been keen to keep
interest rates low and buy bonds and other debt instruments in order to
push more investors into risky assets like stocks. The Fed's stated
goal is to generate a "wealth effect" by driving stocks higher so that
enriched investors spend more freely and thereby boost the
consumer-based economy.
While we may question whether the Fed is wise to keep pushing markets
higher, several planetary alignments this year suggests an end of the
rally may at hand. One in particular is the approaching 90-degree
square aspect of Saturn and Uranus next week on February 17. Saturn and
Uranus do not blend their energies very easily as Saturn symbolizes
tradition and structure while Uranus represents change and rebellion.
Therefore Saturn-Uranus alignments, especially those in hard aspect (90
and 180 degrees), can be disruptive and signal breaks with the
prevailing trend.
Both of these distant planets are slow-moving and thus their alignments occur very infrequently. The complete Saturn-Uranus synodic cycle is 45 years, with the more disruptive, hard aspects occurring every 11 or so years. The last hard aspect was an opposition that took place from late 2008 until mid-2010. The previous Saturn-Uranus square occurred in 1999-2000. Typically, these hard aspects are within range for an extended time due to the retrograde cycles of both planets. Thus, Saturn and Uranus may form three or four exact squares during a 1-2 year period.
Students of stock market history will know that both of these previous Saturn-Uranus alignments had significant correlations with the market. The 1999-2000 square marked the end of the Reagan-Clinton bull market (1982-2000) and the start of the three-year bear market from 2000-2003. The 2008-2010 opposition aspect coincided with the end of the financial crisis and start of the current Fed-fueled bull market.
While there is a clearly bearish overtone in these Saturn-Uranus aspects, there exact aspects do not always correspond to falling markets. Instead, it seems better to think of the alignments as leading to changes in the prevailing trend. Even there, the effects may not be specifically associated with exact timed aspects but rather as underlying influences while Saturn and Uranus are within a wider range.
The Saturn-Uranus square 2021
Next week, Saturn will form a square aspect with Uranus on Wednesday, February 17. This will be the first of three exact square aspects in 2021, with the other alignments taking place on June 14 and December 23. Given that stocks have been in a bull market for 12 years, this year's Saturn-Uranus square suggest that change may be in the air. Volatility seems more likely to increase in the coming months during this protracted alignment, although it is possible some narrow sectors of the market could continue to rise in 2021, just as tech did in early 2000.
One thing we should note is that the first square aspect in the series may be more bearish than the other two. The price chart from 1999 actually shows an eerie coincidence of the interim high on the S&P 500 taking place on July 16, just two days before the exact Saturn-Uranus square. Stocks then fell 10% in the next four weeks. The correlation also occurs with the first Saturn-Uranus opposition (different angular separation but similar in symbolism) on November 4, 2008 on the same day stocks formed an interim high after October's brutal sell-off and then fell another 25% until the November 20 low.
So there is some reason for investors to be extra cautious in the coming days. It is very possible we could see a repeat of the above scenarios since the Feb 17 square will be the potentially more bearish first alignment out of the three set for 2021. And I would think that the near simultaneous Venus-Mars square late next week would create an even stronger negative resonance between all four planets.
Given the disruptive energy of Saturn and Uranus pervading through much of 2021, there is some reason to think that time is finally running out for this long bull market.
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