Markets mostly flat ahead of Fed meeting and Mars-Ketu

US Stocks were mostly flat last week as offsetting economic data was enough to maintain the holding pattern ahead of the midterm elections and this week's crucial Fed meeting. The Dow finished slightly lower at 11,118 while the S&P500 remained stuck at 1183. Indian markets fared somewhat worse as the Sensex closed less than 1% lower at 20,032 and the Nifty at 6017. While I thought the heavy planetary traffic might create a little more movement last week, the outcome was not unexpected. Monday's gain coincided nicely with the Mercury-Venus conjunction, while the midweek Sun-Ketu aspect also fit well with Wednesday's decline, even if prices rebounded somewhat by the close. Thursday was also higher as expected on the Sun-Venus conjunction although most of the gains occurred at the open.

This week could see a significant break from the recent narrow trading range as the Fed meets on Tuesday and Wednesday and will likely announce the scope of its latest round of stimulus measures, so-called QE2. As far as stocks are concerned, bigger is better so any amount of treasury buy backs in excess of $1 Trillion will likely spark some buying. This seems unlikely, however, as Fed bankers have been hinting that QE2 will likely be smaller, perhaps closer to $500 Billion. Since this number has largely been discounted already by the market, it could possibly spark a "sell the news" reaction. Interestingly, the Reserve Bank of India also meets on Tuesday so that will be another important piece of information for the market to consider. The consensus view is for a modest 25 point hike as the RBI tries to tame inflationary pressures.

In astrological terms, the early week has a decent chance for gains as Venus, Mars and Pluto form an alignment on Monday. Tuesday and Wednesday look more uncertain as Mars forms a close aspect with Ketu, the South Lunar Node. Mars-Ketu aspects are very unpredictable and are often connected with fast-changing circumstances. Since these are both considered negative planets, there is a greater likelihood that markets will selloff midweek, perhaps in reaction to either the US midterm elections or the Fed announcement. The possibility of a major reaction to the news is boosted somewhat by the fact that Ketu is involved in a close opposition to Pluto. While this opposition will become exact early next week on Nov 9, some of that energy may be released through this Mars aspect here. The end of the week looks somewhat more stable as Thursday's Mercury-Jupiter brings together two positive planets.

"Doubt is not a pleasant state but certainty is a ridiculous one." -- Voltaire

Markets tread water; Venus meets Ketu this week

Transits for Monday October 25, 2010

Stocks mostly treaded water for another week as positive earnings reports offset the fallout from China's unexpected interest rate hike. In New York, the Dow briefly traded at levels last seen in near its April high before closing at 11,132 while the S&P500 finished at 1183. The Indian market was also mostly unchanged despite growing worries over the fast rising Rupee. After trading below 20,000 midweek, the Sensex ended the week at 20,165 with the Nifty closing at 6066. While I thought we might see more downside towards the end of the week on the Mars-Neptune aspect, prices adhered fairly closely to the storyline described by the key aspects, at least in the US. I had expected some upside from the Sun-Jupiter aspect on Monday and the Mars-Jupiter aspect on Wednesday and we did indeed see broadly based gains on both those days. (In Mumbai, however, the effects from the Mars-Jupiter aspect lagged somewhat as the 2% gain arrived on Thursday.) Tuesday's decline was quite steep and roughly corresponded to the difficult Venus-Saturn aspect, although I did not have an inkling that the selloff would be as large as it was.

As Fed Chair Ben Bernanke continues to promise endless stimulus through the purchasing of US treasuries, market sentiment has remained quite positive. Much of the rally since September has been driven by the assumption of another round of quantitative easing (so-called QE2) which will likely be announced sooner rather than later. With the next Fed meeting slated for November 3, it's worth reflecting on the possible outcomes of any announcements. Ketu (aka the South Lunar Node) will be in aspect with Mars on that day and this may well capture the jittery market mood then. Mars-Ketu combinations are usually found in situations that release a lot of energy in a short time and are sometimes found in accidents, violence, and other unpleasant circumstances. While Mars-Ketu contacts are not always connected with "negative" events, both planets are considered malefic by nature and there could be an urgency there that is incompatible with smooth or routinized behaviour. At very least, we know that trading volumes will likely rise sharply around that time.

This week will see an unusual blending of positive and negative forces as there will be two Venus conjunctions along with a strengthening of Ketu (South Node). Mercury conjoins retrograde Venus on Monday and when these two benefic planets combine there is usually a lift in the mood that accompanies higher prices. At the same time, however, this conjunction will occur in fairly close aspect to Ketu. Ketu can be a disruptive influence which undermines the status quo and generates surprising outcomes. This could either act as a mirror that flips the expected outcome from positive to negative or it may act as a magnifier that actually intensifies positive outcomes. A more clearly problematic set up occurs midweek on the Sun-Ketu aspect as confidence may ebb as government and leadership is called into question. On Thursday, there is a second Venus conjunction, this time with the Sun. This is also usually a favourable alignment of planets that boosts happiness although again, the presence of weird Ketu confuses matters somewhat. If nothing else, the impact of these two Venus conjunctions will probably be exaggerated in either direction, so larger price moves are more likely.

Quote of the week: "Coming events cast their shadows forward." – Goethe

Stocks stay firm after Venus retrograde

US stocks edged higher last week on the hope that the Federal Reserve
would undertake a new round of stimulus measures to revive the flagging
economy. Despite the the deepening of concern over the foreclosure
scandal that implicates many large banks, the Dow closed slightly higher
at 11,062 and the S&P500 finished the week at 1176. It was a somewhat
different story in India, however, as investors took profits on worries
the rising Rupee might undermine exports and outsourcing. The BSE
Sensex lost 1% to close at 20,2125 and the Nifty ended Friday's session
at 6062. This was our first glimpse at the possible effects of the
Venus retrograde period (Oct 7 - Nov 18) and the results were a little
underwhelming. A change in direction in Venus might have corresponded
with the rally coming to an end and prices moving lower. It's harder to
make that argument now since prices have generally drifted higher,
albeit not by much. Last week's Mars aspects on Monday and Friday saw
some weakness, especially in India, although the early week period was
fairly strong. The midweek Venus-Uranus aspect did correlate nicely
with Wednesday's big gain.

This rally that began in September is largely rooted in the assumption
that Ben Bernanke will continue to pump liquidity into the system in
order to stave off a deflationary spiral. With interest rates near
zero, stocks become a very attractive investment, especially as the US
Dollar is on the verge of turning into a Third World currency. This
belief in the power of cheap, risk-free government money to paper over
any economic shortcomings might be linked to the recent Jupiter-Uranus
conjunction that was exact in September. Jupiter symbolizes expansion
and wealth, while Uranus embodies the notion of risk and excitement.
Together, these planets increase the appetite for risk and may well
reflect the market's infatuation with the Fed's intention to "pump it
up", regardless of the consequences. While this conjunction is now
separating and therefore weakening, there seems to be a continued
reservoir of belief in this 'glass as half-full' approach. The
retrograde motion of Venus offered the possibility that the current
approach to shopping, buying and the valuation process may be undergoing
some kind of change or review.

This week has an unusually high number of close aspects involving both
Jupiter and Saturn. On the face of it, it would seem that the optimists
may claim bragging rights as Monday's Sun-Jupiter aspect inclines
towards the bullish camp. Wednesday's Mars-Jupiter aspect appears to
support wise (Jupiter) actions (Mars) and in the past often coincides
with gains. In between these configurations is more of a mixed picture,
however, as Venus is in aspect with Saturn in the midweek and
afterwards. The Mars-Neptune square late on Friday also seems more
negative as actions may lose their focus or be subordinated by hidden or
deceptive means. And with Mars simultaneously in a harmonic aspect with
Saturn here, the late week period could be significantly negative.

"The only principle that does not inhibit progress is: anything goes".
-- Paul Feyerabend

US Stocks rise into Venus retrograde

Despite another bad employment report, stocks moved higher last week on the likelihood of further Fed stimulus measures. The Dow rose 2% on the week to close at 11,006 while the S&P500 finished at 1165. It was a different story in Mumbai as Indian stocks lost 1% as the Sensex ended the week at 20,250 and the Nifty at 6103. Gold also surged to new highs near $1350 as more investors abandoned the US Dollar in favour of safer havens. I thought the early week conjunction between Venus and Mars would generate some skittishness and we did see stocks fall on Monday and into Tuesday in Asia when the aspect was exact. As noted last week, the midweek Sun-Venus aspect also appeared to correlate quite well with the big rise on Tuesday in the US and Wednesday in India. The late week period tilted towards the negative with the approach of Friday's Venus retrograde station. I had wondered if Friday might be significant in some way, either with a major move or perhaps in hindsight through the marking of a high point. For US markets, Friday was quite positive as a key technical resistance level was broken to the upside. Of course, it remains to be seen if this will mark any kind of high point here.

This week we will get our first look at the quality of the six-week Venus retrograde cycle. In addition, the planet Mars will figure prominently in the sky as it forms aspects with the Sun and Mercury. Owing to its often excessive nature, Mars is usually a negative influence so that stacks the deck somewhat towards the negative. A minor Sun-Mars aspect occurs on Monday while the late week features a Mercury-Mars aspect. As a rough rule of thumb, Mercury-Mars aspects are often more damaging. In between these Martian power plays, the midweek aspect between Venus and Uranus may offer some relief, so that could boost sentiment on either Tuesday or Wednesday.

The gold rally is taking on a life of its own over the past month as the US Dollar is being unceremoniously dumped around the world. With the US Federal Reserve promising to stimulate the economy without limit, there is a growing risk of inflation and Dollar devaluation. The growing currency instability is not a positive sign for long term global financial prospects as the falling Dollar is causing severe problems for export-driven economies. The main beneficiary of the falling Dollar has been gold as prices have risen 20% over the summer. In astrological terms, part of the reason for the run-up was likely the Jupiter-Uranus conjunction which encouraged speculative activity. Now that that aspect is losing steam here, we may wonder how much higher gold can go in the short term. Venus may also be relevant to the gold story here since it is symbolic of luxuries. On the face of it, retrograde Venus may not be very good for gold, although the fact that the cycle will take place in the sidereal Libra may lessen the damage that would otherwise be forthcoming.

"People always say that time changes things, but you actually have to change them yourself." -- Andy Warhol

Stocks flat ahead of Venus retrograde; Mars strengthens

Stocks took a breather from their recent rally last week as mixed economic signals lessened the appetite for risk. The Dow Jones Industrial Average ended down slightly for the week at 10,829 while the S&P500 closed at 1146. Indian stocks fared better, however, as they extended their impressive winning streak for another week with the Sensex gaining 2% at 20,445 with the Nifty finishing at 6143. While the US market was more tentative last week, I thought we might get more bearishness on the Saturn-Ketu square aspect. Friday's positive performance across the board also seemed anomalous given the apparently negative Sun-Saturn conjunction that day. Sometimes these aspects act as reversal points rather than simple market correlates although the latter view is somewhat more common. Moreover, the ability of these planets to move sentiment is also contingent on any forthcoming alignments. With the retrograde cycle of Venus beginning on Friday, October 8, we have to wonder if the whole Saturn-for-Jupiter hand off scenario could be forestalled until then.

Not only will we have the beginning of the Venus retrograde cycle this week, but it is important to note that Venus will be in close conjunction with Mars. Given the red planet's reputation for nastiness, this could have a onerous effect on Venusian activities such as spending, buying and enjoying luxuries. Mars is an active energy so it may well increase trade volume here, and there is an unreliable, erratic quality to Mars that could take things off the rails. The combination of these two measurements therefore increases the likelihood of price declines through the week. The Venus-Mars conjunction is exact on Sunday, so that could inflict damage on Monday's market. We can spot a passing Sun-Venus aspect on Tuesday and Wednesday that could inject some optimism in the equation. The late week period will center around the end of the forward motion of Venus on Friday and the commencement of its backward journey through sidereal Libra that lasts until November 18. It's worth noting that the last Venus retrograde cycle occurred at an important reversal in the market in March 2009. At that time, Venus began its retrograde cycle on March 7, just one day after the stock market reached its lowest point in the market meltdown that began in 2008. While these reversals in planetary direction do not always correlate with changes in market directions, they nonetheless increase the likelihood of such a shift in sentiment especially if coming after an established trend has been in a place for a while as we have now.

Friday also has the distinction of a Mercury-Saturn conjunction. As the planet of trading and commerce, Mercury's contacts with pessimistic Saturn often translate into selloffs as news of reduced economic activity may tilt the mood toward caution. Conjunctions are somewhat less negative than other aspects, however, so we will have to see how this plays out. But the fact that it is coming the same day as the Venus retrograde increases the potential for something significant to occur, either at the time or in hindsight.

"One may understand the cosmos, but never the ego; the self is more distant than any star." --G.K. Chesterton