2011 ends on down note; Saturn-Rahu could dampen start of 2012

2011 ended on a quietly somber note as global markets factored in lower growth expectations from the ongoing Eurozone problems and rising Italian bond yields. In New York, the Dow slipped less than 1% on reduced volume closing at 12,217 while the S&P 500 finished at 1257. As has often been the case this year, Mumbai suffered a larger loss as the Sensex declined 2% closing at 15,454 with the Nifty ending the year at 4624. This bearish outcome was largely in keeping with expectations as the Mercury-Rahu conjunctions on Tuesday/Wednesday and the Sun-Pluto conjunction on Thursday weighed down sentiment. As expected, we did see a brief rise on Monday in India right on the same day that Jupiter became stationary. This was a fairly clear bullish indication. Friday's Moon-Mars aspect also corresponded with declines on the final trading day of the year.

On the whole, 2011 was a negative year for the economy and most global markets as runaway inflation and diminishing growth prospects weighed heavily. US markets were mostly flat on the year, while European and Asian markets suffered heavier losses. India declined 25%. Given the rash of Saturn aspects through 2011, this negative performance certainly did not come as a surprise. I thought we might have seen more downside in US market than we did, but generally the market appeared to reflect my understanding of the various planetary energies at work. As ever, Saturn revealed itself again as the killjoy of the solar system as its aspects approximated times of particular pessimism in the markets while Jupiter's aspects tended to correlate with periods of expansion and optimism. There is still so much we (meaning I, of course) don't know about how planetary positions may correlate with financial sentiment. The margin of error in financial astrology is depressingly huge. And yet it is somewhat reassuring when such basic first principles such as Saturn = bad and Jupiter = good are broadly reaffirmed by a fresh batch of data points. This suggests to me that astrology has more in common with science than intuitive art and should be amenable to scientific investigation -- with apologies to Galileo. Financial markets provide an excellent source of data on which some of these seemingly implausible assertions about the significance of the position of the planets can be tested.

The first week of 2012 seems like a good candidate for more declines. The medium term influences are apparently negative: Saturn is almost at its closest aspect with Jupiter, while Rahu is also moving into position for its aspect with Saturn. Saturn-Rahu aspects are notoriously bearish, although it is conceivable that it could manifest next week rather than this week. Mercury's entry into sidereal Sagittarius on Tuesday and Wednesday could correspond with some optimism but it does not look particularly robust. At the same time, the Sun will be forming an aspect with Rahu which may further undermine sentiment. All in all, the cards seemed stacked against the market here, perhaps in a big way. And yet there is an absence of any clear short term triggering aspects that makes me wonder if some larger moves could be postponed for a while.

Overall, 2012 looks like another difficult year for the markets. The current configuration of Jupiter-Saturn alongside Neptune and Uranus may well exercise a negative pull on markets into February. Jupiter will take over for a while after that and could bring a good relief rally into March. But the problem is that Jupiter will weaken after March while Saturn remains quite strong through much of the spring. This greatly increases the likelihood for more troubles in the financial world during Q2. To make matters worse, we will have an exact square aspect between Uranus and Pluto in June. These two distant planets only form aspects quite rarely so this aspect is definitely one to watch. Generally it is considered bearish and disruptive to the status quo. Since markets don't like uncertainty, we can expect to see some fallout from this aspect near the middle part of the year. This aspect will last through much of 2012 and will tend to create more upheavals and uncertainty. If anything, 2012 looks like it may be worse than 2011 in terms of global market performance.

Santa arrives bearing ECB gifts; Jupiter stations on Monday

Stocks rallied last week as Santa Claus arrived carrying a sack full of ECB liquidity. In the latest attempt to solve the European debt crisis, the ECB announced plans to buy bank $600 Billion in bonds as a way of supporting the broken sovereign debt market. After some early week jitters, the Dow rose more than 3% closing at 12,294 while the S&P 500 finished at 1265. Indian stocks also participated in the rally as the Sensex climbed more than 1% closing at 15,738 while the Nifty ended the week at 4714. This bullish result was in keeping with our expectations as the Sun and Venus aspects to Jupiter laid the cosmic groundwork for higher stock prices. I was also correct in my forecast for some early week declines as Monday's Sun-Saturn aspect corresponded with significant down move. Once Venus moved into alignment with Jupiter on Tuesday/Wednesday, buyers moved in.

Central bankers continue to prop up markets as best they can as the European banking crisis threatens to engulf the global financial system. With so many European banks over-leveraged, they remain dangerously exposed in the event of any national default. This makes it more important that bond yields be kept as low as possible lest borrowing costs spiral out of control. With so few buyers left in the bond market, the ECB stepped in where others were afraid to tread and provided a floor. Last week's Jupiterian intervention did calm markets although it is unclear for how long. Several hundred billion euros worth of debt is scheduled to come due in the next couple of months. Will the ECB simply go more deeply into debt in order to buy these up and keep rates low? It is possible, but Germany may grow increasingly uncomfortable with the ECB's increasingly burdened balance sheet as Merkel faces political opposition at home.

The planets suggest that the usual solution of throwing money at the problem may run into some problems in the near term. To be sure, Jupiter is quite strong at the moment as it prepares to station on Monday December 26. Stationing planets are very powerful so we cannot rule out the possibility of more bank intervention to keep all the plates spinning in the air. Jupiter equates to optimism in a general sense and to economic solutions that are often rooted in borrowing and greater levels of debt. Debt is, after all, a statement of confidence and optimism of a brighter future where projected revenues can cover all interest payments. But the close opposition aspect between Saturn and Jupiter suggests that the tried and true solutions may not gain traction in the short term. Saturn's presence in the current mix indicates a possible obstacle or disappointment which could affect the economic bottom line and sidetrack the markets. Saturn is the cosmic pessimist (or is that realist?) and takes a dim view of excessive borrowing. If the glass is half-empty, then how will all this borrowed money ever be paid back? That may become more of a worry over the next few weeks.

This week looks more troublesome. Jupiter does station on Monday (when most markets are closed, however) so it is possible that we could see some very early gains, especially in Asian markets. But the conjunction of Mercury and Rahu (North Lunar Node) on Tuesday and Wednesday could be more of a problem. Rahu creates distortions and uncertainty so there is a bigger opportunity for declines. As an added source of potential trouble, the Sun conjoins Pluto on Thursday. This is less clearly bearish but it is less likely to boost the prospects for any follow through for the Santa Claus rally. Friday's Moon-Mars opposition will also be another burden for investors to negotiate, especially in Asia.

Markets have second thoughts on EU fiscal pact

After reading the fine print on the EU's new fiscal pact, investors had a change of heart last week as stocks and commodities tumbled across the board. Confidence in the proposed fiscal union quickly unraveled as the market realized that economic growth may be more difficult under stricter austerity measures. US Stocks fell 3% as the Dow finished at 11,866 and the S&P 500 ended the week at 1219. Indian stocks were even weaker as the Sensex lost 4% closing at 15,491 with the Nifty coming in at 4651. Gold plunged 7% and broke below $1600 for the first time since July. This bearish outcome was pretty much in line with expectations as the Mars-Rahu aspect depressed sentiment. I thought this would likely make the first half of the week more vulnerable to declines and this was the case in the US and in commodity markets such as gold and oil. The late week brought the anticipated rebound as the dual ingresses of the Sun and Venus injected a measure of relief. Mumbai extended its slump into the late week, however, as worries over the falling rupee and the RBI update undermined the otherwise improving mood.

The problem is that the European Central Bank is unwilling to give the markets what they want. The bond market is signaling that debt levels are unsustainable and must be brought down. This is what the latest EU agreement addressed by imposing strict limits on the size of future government deficits in the Eurozone. But that means that governments will have to cut spending and raise taxes -- two things that reduce economic activity. A slowing economy means lower corporate profits, and this creates a drag on stocks as investors rethink the risk-reward of owning stocks. Theoretically, the ECB could undertake a Fed-style quantitative easing program and buy large amounts of sovereign debt from teetering economies like Italy and Spain, but its mandate does not permit it to do so. In addition, there is a political unwillingness to undertake such an inflationary policy, probably because Germany is the puppet master here and it does not want to fuel inflation and thereby lower its standard of living.

The stock market was looking for more stimulus and liquidity from the EU and the ECB but it was disappointed when all it got were more promises to cut spending. As I have been saying for a while now, the growing strength of Saturn here tends to reduce the possibility of a stimulus QE-style program. Saturn's opposition with Jupiter limits the range of policy action as collective psychology may be more geared towards accountability and responsibility. "Getting one's house in order" and "doing the right thing" are very typical catch phrases of this conservative Saturn-Jupiter ethos. Parenthetically, I should say that I don't actually believe that the planets somehow 'cause' these mental states or events. It may only be that there is a correlation between planetary positions and the ebb and flow of these collective phenomena. A giant cosmic clock, so to speak, where the planets are the hands of the clock and they tell us what 'time' it is, i.e. what mood should prevail. Metaphysics aside, the current Saturn-Jupiter aspect would tend reduce the probability of an announcement of any major central bank liquidity "bazooka" in the near term. The aspect is due to make its closest angle in early January and will still be quite close until Saturn's retrograde station on February 9.

The planets this week seem more positive than last week as Jupiter is seemingly highlighted more than Saturn. That said, the early week period does look more vulnerable to declines as Monday's Sun-Saturn aspect could see distress involving governments (more EU downgrades?). This could easily correlate with a decline in stocks and especially gold which is usually more sensitive to afflictions to the Sun. Tuesday's Moon-Saturn conjunction is another potentially problematic aspects, although it may be offset somewhat by Venus-Jupiter. A rebound seems set to begin on Tuesday or Wednesday as Venus moves into aspect with Jupiter and Uranus. The Sun follows suit by Thursday so that should serve to lift the mood of the markets. Friday's Moon-Rahu conjunction is more suspect, however, so weakness may be more likely at that time.

EU summit agrees on fiscal union; Saturn guides Merkel to austerity

If at first you don't succeed, try, try, try again. European leaders came together last week and forged yet another agreement to solve the continent's ongoing debt crisis. Rather than raising bailout money for insolvent countries as they did in October, this time the emphasis was on fiscal responsibility. The new fiscal pact will therefore regulate government spending levels by member states in an effort to reduce debt levels and thereby reduce borrowing costs. The German-led plan will attempt to improve the balance sheet through collective austerity at the expense of national sovereignty. The UK was the only EU country that did not sign on to the fiscal union, much to the ire of its European partners.

Germany's focus on austerity and fiscal responsibility carried the day and suggests that there will be not be a quick fix for the Eurozone. Interestingly, on the previous day the European Central Bank (ECB) had ruled out any inflationary QE-style bond buy back program. Both of these developments seem to be an appropriate reflection of growing strength of Saturn. As the planetary symbol of restraint and responsibility, Saturn will tend to emphasize caution and reduce the appeal of free spending (liquidity) and excessive borrowing in order to solve economic difficulties. True, we have seen some modest attempts to inject money into the system recently as the ECB reduced its overnight rates to 1% shortly after the Fed opened up its wallet to European banks earlier in the month. As we know, planets are constantly in motion and their influences are subject to ebb and flow. Expansive Jupiter and risk-taking Uranus have recently come into close aspect and this is one reason why we have seen some efforts to keep the financial system afloat through inflationary means. But these efforts will probably be fairly limited given Saturn's proximity for the next two months.

World markets reacted favourably to the latest EU plan as the Dow rose 1% closing at 12,184 while the S&P 500 finished at 1255. Indian stocks were more negative in part due to political opposition to a proposal to allow FDI in the retail sector. The BSE lost almost 4% closing at 16,213 while the Nifty ended the week at 4866.

The global financial situation continues to be quite shaky at the moment as opposing economic philosophies do battle. Keynesian-inspired inflationistas seek to borrow more money to revive confidence and stimulate spending and thereby boost government revenues. Most market participants seem to favour this approach since the increased liquidity (free money from the Fed, ECB, RBI ,etc) means greater economic activity and the reduction of risk. We can see how dependent the stock market has become on this approach from Thursday's sharp decline. Stocks sold off after the new ECB Chair Mario Draghi announced there would be no Eurobonds and no QE-style buy back program. In others, we was not going to follow in the footsteps of Ben Bernanke. If the stock market tends to prefer the free spending largesse of most central bankers, the bond market tends to gravitate towards the stricter accounting procedures of the free market school of Austrian economics. If a country spends and borrows beyond its means, buyers of its debt demand a higher yield on their bonds since the risk of default is greater. This is where Europe is now and one of the main reasons why it has chosen to focus on reducing debt.

At this point, it is unknown if the financial markets will accept the current focus on austerity and debt reduction. Austerity will tend to lower bond yields which is very important to recovery, but austerity usually also entails a painful period of economic slowdown that the stock market does not like. This is the main reason why stocks will tend to decline during times of debt reduction. The astrological dimension here suggests that Saturn's preference for austerity, caution and accountability is more likely to be the driver's seat (alongside Angela Merkel) for several more weeks at least. While Jupiter-Uranus may generate some stimulative proposals, they are unlikely to be significant as the market will tend to focus on the pitfalls of spending (excessive debt) rather than its upside of more economic activity.

This week will feature a potentially nasty Mars-Rahu aspect in the first half of the week that suggests more downside. Saturday's lunar eclipse may serve to amplify the proceedings so there is a wild card element at work here. At the same time, Jupiter and Uranus will form their exact 30 degree aspect this week, so that may provide some support for buyers along the way. It may also serve as an accelerator of events and consciousness in a more generic way. The sidereal sign ingress of both Venus and the Sun in the late week period also would seem to boost the possibility for gains then.

Stocks rally on cheap Fed loans to Europe; EU summit due Friday one day before eclipse

How do you solve a debt crisis? With more debt, of course! Europe's financial endgame was put on hold last week as a coordinated central bank intervention flooded its crippled banking sector with cheap US dollars. The Fed's injection of fresh liquidity was widely applauded as global stocks markets soared and bond yields fell back to earth. In New York, the Dow zoomed higher by 7% closing at 12,019 while the S&P 500 finished at 1244. While the size of the rally was unexpected, I did suggest that the first half of the week was somewhat harder to call and that upside surprises were more likely to occur then. Such sudden developments are not uncommon during eclipse periods such as we are in now. As expected, the late week was weaker on the Mars influence, although its negative effects were quite muted. Indian markets also moved sharply higher throughout the week as the Sensex rose 7% closing at 16,846 while the Nifty ended the week at 5050.

Now we are one step closer to some kind of resolution -- for good or ill -- to the European debt crisis. An EU summit is scheduled for this Friday where the latest bailout package will be unveiled for all to see. What will the markets think? In previous posts, I have noted the approach of the Jupiter-Saturn opposition aspect in December and January and how this is likely to create a mood of caution and skepticism towards any new Eurozone bailout plans. Last week's free spending intervention was suggested that we might have to wait a little longer for the the true spirit of Saturn to settle in. The complicating factor in the upcoming Jupiter-Saturn aspect is that these two planets will have company. As I have discussed in more detail in my newsletter, Uranus and Neptune will also figure prominently in a much larger four-planet alignment that will be in its tightest configuration in January. At the moment, risk-taking Uranus (6 Pisces) may well be resonating more closely with expansionary Jupiter (6 Aries). This is usually a bullish pairing that often coincides with rallies. Their unusually long conjunction in 2009 and 2010 was a key factor in a huge QE1 and QE2 recovery rally after the meltdown. So this latest example of inflationary Fed largesse is more likely the result of this Jupiter-Uranus aspect. It is worth noting that both planets are moving very slowly this month since Uranus stations this Saturday and Jupiter is due to station in late December. Slow planets are more powerful, and powerful bullish planets can translate into optimism and significantly higher prices for assets.

But Saturn is gradually edging its way into this equation as it moves closer. Just when we might see more fear and caution enter the markets is harder to say. It could be next week, or it could be next month. But what we can say is that the presence of Saturn in this larger alignment undermines the likelihood of a quick resolution to the Eurozone crisis. If Jupiter and Uranus like to solve debt problems through by issuing more debt and stoking inflation, Saturn prefers the tougher road of austerity and constraint. Germany's PM Angela Merkel appears to be holding fast onto this more Saturnian approach to the crisis as she has categorically refused the possibility of issuing Eurobonds which would weaken Germany's credit rating and fan the flames of inflation. As Saturn is likely to strengthen over the coming weeks, there is little reason to expect Merkel's view will change. The markets may want a full-blown money printing QE-type solution, but they are unlikely to get what they want with Saturn sitting on the doorstep. It will be recalled that the first brush with Greece's insolvency appeared in mid-2010. Markets fell sharply in May (the flash crash) as the vulnerability of the Eurozone became apparent. It was no coincidence that Saturn played a key role in that event as it formed a close alignment with Jupiter, Uranus and Neptune from May to August 2010. The same planets are involved this time around, although the angular arrangement is different. History may not exactly repeat itself, but it may well rhyme.

This week could see some weakness in the early going due to the Sun-Rahu conjunction on Tuesday and the approach of the Mars-Rahu aspect. Both of these are short term influences however, so it is unclear if they will be enough to crowd out the otherwise bullish influence of Jupiter and Uranus. Perhaps gains are more likely as we get closer to Friday. Uranus will be super strong on Saturday for its direct station as it concludes its four month retrograde cycle and returns to direct motion. Uranus stations can be turning points in the market that deserve close watching. What makes this particular station particularly interesting is that a lunar eclipse occurs on the same day. Since this will be just one day after the EU summit, there is a greater chance for major new developments. On paper, this eclipse + Uranus combination should not be positive for finding a durable solution for Europe. Eclipses are destabilizing influences which shake the status quo. More conservatively, it is possible this energy will simply reflect proposals for a new fiscal union in the Eurozone. This would chart a course that would fundamentally change the EU from a simple currency union between countries into something that resembles a "United States of Europe" that is more closely integrated. Whether or not it will be favourably received is harder to say. Saturn's fairly close proximity here makes me think the reaction won't be good, although it may not happen immediately.

Germany's bond auction undermines confidence; Eurozone faces tough choices

What if you held an auction and nobody came? Germany's failed bond auction sent markets lower across the board last week as the Eurozone debt crisis appeared to enter a new and more ominous stage. Now the loss of confidence in the Euro has made its way into the very heart of the EU as the debt contagion threatens to engulf the entire region. In New York, the Dow lost 4% closing at 11,231 while the S&P 500 finished at 1158. In Mumbai, the Sensex also lost around 4% closing near support at 15,695 while the Nifty ended the week at 4710. As expected, we did have some significant downside moves in the first half of the week around the deadline for the US Congressional Supercommittee on spending reduction. The declines coincided fairly closely with the Venus-Saturn aspect which normally constrains buying and reduces cooperation. The late week recovery was more spotty than expected, however, as Asia and Europe only saw small bounces while the US market tumbled in all four sessions of the holiday-shortened week. All in all, these declines seemed to be appropriate given the strong Saturn influence that has dominated the month of November.

World markets are growing more impatient with the EU as it attempts to solve its endless debt crisis. The trouble now is that a lasting solution requires Germany, the economic engine of the whole EU system, to accept some measure of pain. Most observers now believe that the only way to stabilize markets is for the ECB to either embark on a massive quantitative easing (QE) bond buyback scheme or become the lender of last resort and issue its own eurobonds which would effectively guarantee the bonds of all member countries. The problem is that such a move would inflict damage on Germany through higher inflation and rising debt service costs as its once-unassailable AAA+ rating would likely be downgraded. Germany is also reluctant to agree to backstop the bad debts of peripheral EU countries because this would reduce the incentive to commit to reforms and to cut spending. Too much carrot, not enough stick in other words.

So the dynamic between Germany, the other Eurozone members, and the financial markets now resembles a version of game theory where the interests of the self and the collective are nominally separate but intrinsically related. Germany wants Italy, Greece and Spain to cut spending. But with more investors now increasingly reluctant to buy any Eurozone debt, Germany now must accept that it may have to share the pain in the form of inflation and higher debt service costs due to rising bond yields. In seeking to protect German interests, Angela Merkel may attempt to fashion a compromise solution whereby the ECB undertakes a limited quantitative easing plan to resuscitate the forlorn EU bond market. Whether or not the bond market accepts such a lesser intervention remains to be seen, however. The choices available to policymakers appear to be narrowing as the market is demanding a bold move which reverses this loss of confidence. In crafting a solution to the impasse, Merkel and the ECB have to calculate where the most effective common interests of all EU members lie. Because the governing structure of the EU is interdependent, it may not be possible for Germany to protect its own narrow interests in the short term without suffering some negative consequence down the road. The difficult choice facing Germany now is that it can no longer escape the damage from the economic sins of its neighbours. A quick and painless exit from the Eurozone is not an option. While the EU member states may retain narrow self-interest, their collective interest may now take precedence.

From an astrological perspective, the current strength of Saturn is likely to make Germany and the ECB less amenable to some huge QE-style money printing scheme. Saturn is soon approaching its opposition aspect with Jupiter (closest aspect due in early January), so that would tend to suggest that inflating their way out of trouble would have less appeal or be less successful. Saturn demands responsibility and control over one's actions, so I think it is unlikely that Merkel would agree to any plan which creates moral hazard for the indebted nations of southern Europe. Merkel will likely continue to insist upon accountability for economic reforms in the periphery. While this may not preclude some important new measures by the ECB, I somehow doubt they will be a far-reaching as, say, the Fed's attempts at QE1 and QE2.

The planets this week seem tilted towards the negative as malefic Mars may rule the roost. Mars is now forming a difficult square aspect with the Sun, Rahu (NN) and Mercury over the next two weeks. This is a bad combination and the fact that these planets are clustering here makes it that much worse. The Mars-Sun aspect is closest at the end of the week so we could look for declines to be more likely and more pronounced at that time. The first half of the week lacks any close aspects so that opens up a range of possible outcomes. We are still in an unstable eclipse period (Nov 26-Dec 10), so that may reduce the chances for any lasting rebound. But eclipses are all about surprises and shocks so we cannot rule out the possibility of some pleasant surprises also. However, the Mars aspect stands out a like a bit of sore thumb this week so it seems that surprises will be on the downside.

Markets unimpressed with new Italian PM; solar eclipse due Friday

Well, it didn't take long before the markets cast their dissenting vote on the new governments in Greece and Italy. The initial sense of relief quickly gave way to rising skepticism that the pro-austerity technocratic duo of Papademos and Monti were going to magically solve Europe's crushing debt overhang. Politicians can offer soothing sound bites but economics is where the rubber meets the road. Bond yields on Italian debt once again pushed above the critical 7% level by midweek and stocks promptly sold off. The Dow lost 3% for the week closing at 11,796 while the S&P 500 finished at 1215. It was a similar story in Mumbai as the Sensex tumbled 4% closing at 16,371 with Nifty ending the week at 4905.

This negative outcome was largely in keeping with expectations although I thought we might see more downside in the early week. The malefic tandem of Saturn and Rahu (NN) were true to form as Monday was lower across the board. Saturn's entry into sidereal Libra suggested was likely going to correlate with a rise in caution. We saw the bounce from the Mars-Jupiter arrive a little early on Tuesday in the US and that set the stage for a surprisingly bearish Sun-Saturn aspect on Thursday.

It seems that Saturn is calling the shots for now. It's perhaps not surprising that stocks are been driven by the dictates of the bond market. Since bonds are debt and Saturn symbolizes debt and loss (i.e. money owed), Saturn's grand entrance into Libra last week placed the bond vigilantes front and center. As European bond yields rise into the danger zone, the market is telling policy makers that their current plans are insufficient and the risk of default remains. As it currently stands, the EU has a credibility problem. It can only resist the logic of the market for so long before it relents. The late October agreement sounded good but was short on specifics and probably short of cash as well since Italy's debt is beyond the scope of the current EFSF bailout package. The current focus on the dangers of debt is likely to continue as Saturn approaches its opposition aspect with Jupiter over the coming weeks. The aspect is closest in early January when the two planets are separated by 178 degrees. Such opposition aspects tend to highlight tension, slow progress, and frustration.

This week marks the beginning of the bi-annual eclipse period as a partial solar eclipse occurs on Friday. This eclipse does not look especially powerful or disruptive so it may not exert any immediate influence. The close aspect between the Sun-Moon and bullish Jupiter suggests that gains are more likely late in the week. This would be in keeping with the bullish tendency near the US Thanksgiving holiday. On Wednesday, however, the deadline for the Congressional Supercommittee to cut government spending (Saturn!) arrives so we could see some nervousness ahead of that date. The early week Venus-Saturn aspect looks negative and could translate into a reluctance to buy stocks. So I would not be surprised to see some early week downside and then for gains to accrue in the second half of the week. Large moves seem more unlikely this week, however.

Europe steps back from the brink; Saturn enters Libra this week

Europe backed away from the precipice last week as both Greece and Italy finally ceded to the austerity demands of their paymasters. Greece swapped Papandreou for Papademos, while Italy's Berlusconi agreed to resign as the Senate passed the EU's austerity package. Financial markets approved of these changes as US stocks staged an impressive rally after Wednesday's frightening sell-off. The Dow closed about 1% higher on the week closing at 12,153 while the S&P500 finished at 1263. Indian fared worse, however, as slumping industrial production and rising oil prices dragged down stocks. The Sensex fell by 2% closing at 17,192 and the Nifty ended the week at 5168.

Wednesday's near-death experience coincided with Neptune's direct station just as it was opposite Mars. I had expected some significant downside around this aspect as this was likely to highlight confusion and uncertainty. Up to that point, the Italian government under Berlusconi had not yet agreed to the austerity package as bond yields spiked beyond the crucial threshold of 7%. Somewhat unexpectedly, US market did manage to rise early in the week ahead of this Neptune station. The late week was more positive as we saw a rebound on both Thursday and Friday in the US. Indian markets missed much of the Wednesday sell-off and therefore played catch up on Friday.

Well if Neptune is all about confusion, then Saturn brings austerity. As the leaders of Greece and Italy took firm steps to address their debt burdens, we might suggest they were reflecting the Saturnian principles: long-term progress only comes through appropriate restraint and ultimate social harmony requires a measure of control and order. It is no surprise that these efforts should come just as Saturn is about to leave sidereal Virgo and enter Libra. As Saturn changes signs its energies may manifest more readily. This often translates into lower prices as caution and pessimism win out over spending and risk. On this occasion, however, we may also see the acceptance of austerity as generating a kind of Saturn-driven rally. Austerity was deemed necessary by market players, and Greece and Italy made their promise. Everybody is happy. Well, at least for now.

This week features a couple of potentially powerful aspects. First, Saturn enters sidereal Libra on Monday. This is generally a bearish influence although this energy need not always express itself through financial markets. Since Saturn only changes signs once every 2.5 years, we should pay attention to any fundamental changes in intermarket dynamics that may develop in the coming days weeks. Will bonds prices continue to be inversely related to stocks? Will gold maintain its value as a flight to safety play? Perhaps more immediately, we also get a triple conjunction of Mercury, Venus and Rahu on Monday. Mercury and Venus are mostly positive planets but their association with unpredictable Rahu (North Lunar Node) is cause for some concern. While Rahu can sometimes create unrealistic desires that fuel buying sprees (read: gains), it is more commonly connected with uncertainty and sudden events. While this would tend towards a negative outcome early in the week, more generally we can also say that this pattern will increase the size of the move in either direction. Mars then forms an apparently bullish aspect with Jupiter by Wednesday so this may produce more optimism. The Sun enters sidereal Scorpio on Thursday where it will form a minor aspect with Saturn. On the face of it, this combination looks bad, although I'm not sure it will push down stocks that much. Friday's Moon-Mars conjunction is more likely to boost sentiment given both are on the receiving end of Jupiter's aspect. With the eclipse period just around the corner (Solar: Nov 25; Lunar: Dec 10), we may still be in a preliminary phase here before the main feature begins.

Italian situation prompts sell-off

We finally saw some downside today as Italian bond yields pushed above the danger zone threshold of 7%. Beyond this level, Italy cannot service its debt and would run the risk of default.

The Mars-Neptune opposition finally weighed in on the day that Neptune was stationary in the sky and was therefore most powerful. Well, better late than never. I thought we would get this downside earlier in the week.

Chiron is due to also station and turn direct on Friday while exactly opposite Mars. That looks like another nasty combination. Moreover, Mars will enter the tropical sign of Virgo on Friday. The close aspect with Uranus will only serve to amplify its effects.

The trend looks down for the week although I would not be surprised to see Thursday finish higher in the US.

Stocks fall on EU soap opera; Mars-Neptune peaks this week

Investors were not amused by the latest Greek attempt to turn the ongoing EU debt drama into a sitcom ("Everybody Hates Papandreou") as stocks stumbled on most world markets. In New York, the Dow lost more than 2% closing at 11,983 while the S&P500 finished at 1253. Indian markets also followed the down trend as the Sensex slipped more than 1% closing at 17,562 with the Nifty ending the week at 5284. Overall, this outcome was in keeping with my expectations. With Jupiter moving into the background here, we did see less optimism and more of a focus on Saturnian austerity as markets contemplated the implications of a possible disorderly Greek default. As expected, the early week period saw the largest declines as Mars entered sidereal Leo. Some significant recovery began midweek as Mercury conjoined Venus and formed an alignment with risk-taking Uranus. Friday also largely fit with the forecast as most global markets were lower.

Whatever its economic merits, the EU bailout plan is now confronting the rather difficult political realities surrounding austerity. Greek PM Papandreou has won a confidence vote and will remain in power through some new coalition and has promised not to call a referendum on the EFSF. Meanwhile, Italy is now coming under more scrutiny as the bond market is now questioning its ability to adhere to the austerity measures requested by the plan. Italian government bonds saw a spike in yields last week despite reassurances from PM Berlusconi that all was well. Berlusconi may well on the verge of resigning. While economics may be neatly theoretical, politics is messy and more uncertain. All this austerity talk is very much a reflection of Saturn's rising influence at the moment as it prepares to enter the sign of Libra on November 14. Politicians are looking for ways to persuade their electorates to accept less. That is the way of Saturn -- it removes what is no longer needed no matter if you are ready to accept the loss or not. Standards of living are just beginning to fall throughout the developed world as the financial meltdown which started in 2007 continues to work its way through the system.

In addition, there is a significant amount of confusion in the air at the moment. Can the new Greek coalition government actually work and will the Greek people accept the new plan? Will Berlusconi survive the current crisis and what role does the IMF "monitoring" play in Italy? There are a lot of unknowns at the moment. It is therefore not surprising that Neptune should be more prominent. Neptune symbolizes confusion and vagueness, which can sometimes morph into outright deceit. Neptune is now concluding its retrograde cycle and is especially powerful right now as it is stationary in the fifth degree of sidereal Aquarius. It reverses direction and resumes forward motion on Wednesday November 9. We may see more Neptunian confusion this week since it will be opposed by malefic Mars. This is definitely a bad time to try to form any lasting arrangements.

Mars exactly opposes Neptune on Monday so we might expect more downside impact then. Nonetheless, the aspect is still within range for most of the week so the fallout may manifest at any time throughout the week. In addition, Saturn forms a minor aspect with Mercury and Venus on Tuesday so that suggests the first half of the week could be more negative. Gains are perhaps more likely on Thursday or Friday, although Mercury and Venus are moving towards their conjunction with unpredictable Rahu at that time.

Stocks cheer EU deal on Jupiter-Pluto

Investors broke out the champagne last week as the EU finally got a deal done to address the debt crisis in Greece. The Dow rose by 4% closing at 12,231 while the S&P500 finished the week at 1285. Indian markets were even stronger as the RBI was more favourable. The Sensex jumped 6% closing at 17,804 while the Nifty ended the week at 5360.

While I thought we might see more volatility from the Mars and Saturn aspects, this bullish result did not come as surprise given the completion of the Jupiter-Pluto aspect. I had noted that Friday's very tight alignment between the Sun, Jupiter and Pluto could be bullish. The deal was actually announced early on Thursday just one day before the exact 120 degree aspect between Jupiter and Pluto. Some of the negative Mars and Saturn influences did manifest more modestly in Tuesday's down session in the US. Overall, this huge October rally has fit quite well with the Jupiter-Pluto aspect.

EU leaders reflected the energy of the Jupiter-Pluto aspect quite appropriately as prosperity (Jupiter) was pursued through large organizations and the exercise of political power (Pluto). While investors cheered the $1.4 Trillion agreement, some economists have already suggested that the deal does not contain enough specifics and will not be sufficient. I suspect that these critical voices will grow louder in the days to come as the optimistic energy from Jupiter-Pluto begins to diminish. The aspect is now separating and is losing its power. Just when the stock market will also lose confidence in the Euro and the Eurozone remains to be seen. Saturn is due to make a cameo appearance in November through its entry into sidereal Libra on the 14th. Saturn is said to be exalted in Libra and hence its more positive qualities may be more in evidence. Nonetheless, Saturn is still Saturn so even if we suddenly recognize the need for austerity once again, sentiment is perhaps somewhat more likely to head south. If the markets may be in a partying mood now, there is a real risk of nasty hangover sooner rather than later.

We will get our first test of the post-Jupiter-Pluto period this week. Given the rise that accompanied this aspect, we should now expect a reduction in optimism. As an added negative, Mars enters Leo on Monday. There is often some fallout whenever Mars changes signs so this perhaps tilts outcomes towards declines. On the other hand, Mercury is approaching its conjunction with Venus this week. This is usually a bullish combination. And we can see that this pairing forms potentially positive aspects with Neptune on Monday and Uranus on Wednesday and Thursday. So that offers up the real possibility of some upside this week also. The end of the week may be more prone to selling as Friday's Moon-Mars opposition could reflect some anxiety and frayed nerves. So there is some planetary evidence for both positive and negative outcomes here.

Stocks edge higher on EU hopes; Jupiter-Pluto culmintes this week

US stocks moved higher on hopes that an effective Eurozone bailout plan would be announced in the coming days. Despite some choppiness, the Dow gained more than 1% closing at 11,808 while the S&P500 finished at 1238. Indian shares fared worse, however, as concerns about inflation and a possible rate hike took prices lower. The Sensex lost 2% closing at 16,785 while the Nifty ended the week at 5049.

The generally upbeat mood of most global markets was an apt reflection of the ongoing Jupiter-Pluto influence. Jupiter usually boosts confidence whenever it is in aspect with a slow moving outer planet. Through its aspect to Pluto, Jupiter's influence suggests efficient organization directed towards prosperity and wealth. That is very much the case as European officials are working intensely to stave off a banking crisis that threatens the global financial system. As Saturn has receded into the background here, the emphasis has shifted away from austerity towards more borrowing and money printing as a solution to pressing problems. It is unclear how effective this approach will be in the long run. As we saw with the Fed's QE1 and QE2 efforts, some stimulative measures can show positive results in the short term, although the jury is still out on whether these plans did anything other than temporarily lift financial markets and create inflation. In the present case, the EU has the added problem of trying to coordinate the interests of different countries, especially Germany and France. This makes the challenge that much more difficult.

With the Jupiter-Pluto aspect becoming exact this week on Friday, we can see there is an appropriate planetary signature for a significant EU deal. The culmination of the aspect seems likely to reflect an agreement that can address the current debt problem. Just how the market will react is another matter. As market watchers know investors often "sell the news", meaning that run-ups in prices before the fact often trigger a sell-off once the news is announced. This could happen this time around even if the deal is regarded as comprehensive and successful.

In addition, we have a fairly tense alignment involving Mars, Saturn, Mercury and Venus this week. This is likely to create more volatility than we have seen recently, although the presence of the positive Sun-Jupiter aspect complicates the picture somewhat. The completion of the Jupiter-Pluto aspect suggests that we are very close to the maximum positive effect of this aspect as the odds of a sell-off increase here. Wednesday's New Moon is one possible candidate of a significant market turning point, as is Friday's exact alignment between the Sun, Jupiter and Pluto. Once this Jupiter-Pluto aspect begins to separate after this week, the market will become more susceptible to declines. And with Saturn entering sidereal Libra in November, optimism may again be in shorter supply for a time.

Stocks surge on EU hopes; Jupiter-Pluto rules

As the Occupy Wall Street protests gather momentum around the world, we are poised for yet another round of bank bailouts as the Eurozone took additional steps to contain their crisis last week. This latest round of bank bailouts are likely to further increase resentment towards the financial elite as the average person has seen very little benefit from the many billions of taxpayer Dollars and Euros deployed to solve this problem. Despite the protests, the EU made all the right noises to convince investors that the problem was fixable as stocks extended their rebound for the second straight week. In New York, the Dow climbed 5% closing at 11,644 while the S&P500 finished the week near a key resistance level at 1224. It was much the same story in Mumbai as the Sensex jumped 800 points closing at 17,082 with the Nifty ending the week at 5132.

All this new-found optimism is more evidence that Jupiter is in control of sentiment at the moment as the recessionary gloom of Saturn in now in full retreat. I thought we might have seen more downside from Tuesday's Full Moon and Sun-Saturn conjunction on Thursday. While both of these days did buck the bullish trend with either flat or negative closes, the pullback was quite modest and was easily offset by the positive aspects in play. Monday's surge coincided nicely with Mercury's ingress into sidereal Libra. While the extent of these gains were a little unexpected, they were not that surprising either as I had noted that October was likely to have a bullish bias due to the Jupiter-Pluto aspect which is exact on October 28.

The re-emergence of Jupiter this month fits well with the promise of more bailouts to bankrupt countries and bankrupt banks. While Jupiter is traditionally seen as the planet of optimism and wisdom, its aspect with Pluto this month modifies this somewhat. Since Pluto represents power and large organizations, its association with Jupiter reflects this coordinated program to solve the current crisis through borrowing and inflating a stagnant economy. Just how effective this initiative will be is hard to say. Saturn is due to strengthen in the coming weeks and this is likely to shine a more unforgiving light onto the latest attempts to solve the debt crisis. Saturn's entry into sidereal Libra in November will likely tilt collective sentiment back towards recession, austerity and pessimism. This time around, however, Saturn's prominence will be paralleled with Jupiter as it forms tight aspects with Uranus and Neptune over the next three months. This could set up a make or break scenario where Saturn's presence in the larger planetary alignment could completely scuttle all rescue plans or it could deliver the necessary dose of realism which provides for a lasting solution.

This week begins with Monday's Mercury-Jupiter aspect. Jupiter has been a reliable source of optimism lately so there is little reason to expect this outcome to be any different. The Sun enters sidereal Libra on Tuesday. While the Sun is debilitated in Libra, this blemish may well be offset by the aspect it will receive from Jupiter. Between those two measurements, we could well see further gains early in the week. Once the Mercury-Jupiter aspect begins to separate, however, some sober second thoughts are likely to creep into the equation by midweek. Generally, the second half of the week may be somewhat shakier than the first half. Of course, the Jupiter-Pluto aspect is still gathering strength here so that may serve to mitigate the size of declines.

ECB rescue plan buoys stocks; Full Moon on Tuesday

The European Central Bank threw a life preserver to the crumbling European banking system last week in an effort to stave off the looming crisis. The ECB embarked on its own quantitative easing program as a way to loosen credit and restore confidence in the debt-ridden Eurozone. Markets in the US and Europe applauded the plan as stocks rallied off their lows early Tuesday. In New York, the Dow gained 2% on the week closing at 11,103 while the S&P500 finished at 1155. Indian stocks fared worse, however, as the Sensex lost 1% on the week closing at 16,232 and the Nifty at 4888.

While I thought we could see some optimism on Tuesday as Venus entered sidereal Libra, I did not expect the huge reversal rally to begin and last for much of the week in US markets. For the most part, the Mercury-Saturn aspect played a relatively minor role as it dragged down sentiment in India. The late week Venus-Neptune aspect was perhaps the appropriate bookend on the rally as prices peaked in the US Friday morning and then trended lower. India got a full measure of this second injection of bullish Venus energy as it rebounded Friday after a holiday closing.

Last week's rally suggests that Saturn's bearish energy is on the wane here as it separates from its aspect with Ketu (South Lunar Node). This aspect was exact on September 23 and has been slowly separating ever since. It is still within 2 degrees but separating aspects tend to lose their power fairly quickly. The US market bottomed on Tuesday morning less than two weeks after this exact aspect. Less Saturn usually means higher prices so perhaps that could mean stocks rally a bit here. Jupiter may also be stepping into the breach as it approaches its aspect with Pluto in late October. So not only do we have less Saturn to contend with, but we have more Jupiter as well. That offers a reasonable planetary framework for more upside, other factors notwithstanding.

This week is another opportunity to see what Saturn has left in the tank as the Sun conjoins the gloomy ringed planet on Thursday. The Full Moon on Tuesday with Saturn in close attendance does not look very favourable to stocks as pessimism will likely carry the day. The Sun is in aspect with Ketu on Sunday and Monday so that is another problematic influence, especially on governments and gold which are symbolized by the Sun. On the plus side, Monday's ingress of Mercury into Libra could inject a measure of optimism into the proceedings. On Thursday, there is an apparently pleasant configuration of the Moon, Venus, and Jupiter which ought to encourage some investors. Friday's Mars-Rahu is another aspect with nasty potential that will likely undermine any rally attempts. There is a sense here that these good aspects may get squeezed out by the bad aspects this week.

Recession now "inevitable"; stocks struggle on Saturn-Ketu aspect

It seems we are on the verge of a new recession. (Did the last one ever actually end?) The highly reliable ECRI report this week showed a continuation of the trend of declining economic activity that began in May. The report maintains that a recession is now inevitable and there is nothing the US government can do to stop it. As the reflection of all available data, the stock market appears to confirm this pessimistic expectation. After another rally attempt early in the week, the market slipped again with a major retreat on Friday. While the Dow ended a little higher closing at 10,913 the broader S&P500 index fell modestly to 1131. Indian markets fared somewhat better as the Sensex rose 2% closing at 16,453 with the Nifty finishing at 4943.

This bearish outcome was in keeping with our forecast as the second half of the week did not look favourable given the strong Saturn influence. As I have noted, the ongoing Saturn-Ketu aspect was likely to have a depressive effect on the markets. While we have not yet seen huge drops, stocks have been struggling. I was also correct in calling for some early week gains on the Sun-Mercury-Uranus alignment as markets rallied strongly across Monday and Tuesday. Wednesday's Mars aspect to the Sun-Mercury conjunction abruptly reversed this up trend and took stocks lower.

The gloomy atmosphere is more palpable now as not even Germany's approval of the Greek bailout funding was enough to lift the mood. A new recession will entail more job losses, less consumer spending and continued pressure on government balance sheets as revenues will fall and spending will increase. Cutbacks and austerity programs will not be popular when unemployment is rising. But none of this comes as any surprise to us as the powerful Saturn-Ketu aspect was likely a harbinger of a leaner outlook that focused on constraint and limits rather than expansion and growth. By itself, Saturn symbolizes losses, pessimism and debt. Ketu's association with renunciation only tends to exaggerate these tendencies. Ketu's influence on Saturn here may well correspond with the re-ordering (Ketu) of debt (Saturn) in Greece through its eventual default. Over the next few months, Saturn will move into aspect with Jupiter, Uranus, and Neptune. While these three other planets work well together and usually correlate with growth scenarios as we saw in 2009 and 2010, Saturn has the power to convert the planets it associates with to the dark side. For this reason, the medium term outlook has an increased downside risk.

This week will feature another dose of Saturnian discipline as the Mercury-Saturn conjunction is exact on Thursday. This is likely to weaken stocks around midweek. Some upside is possible before the conjunction, however, as Venus may be strengthening. Venus enters sidereal Libra on Tuesday so that could spur some buying in the early week. Similarly, Venus makes an appearance on Friday as it approaches its aspect with Neptune.

Twist and sell: stocks plunge after Fed on Saturn-Ketu aspect

Twist and sell is more like it. Markets tanked worldwide last week as Fed Chair Ben Bernanke took away the Fed's punch bowl of easy money. Instead of the much hoped for QE3 stimulus, the Fed offered up a more fiscally prudent Operation Twist where short term bonds were exchanged for long term notes as a way of keeping interest rates low. This was bad news for stocks and commodities which had come to rely on the inflationary policies of the Federal Reserve. When all was said and done, Dow declined 6% closing at 10,771 while the S&P500 finished at 1136. In Mumbai, the Sensex was down 4% closing at 16,162 with the Nifty ending the week at 4867. Oil and gold also sold off up to 10% as the minimalist Fed program and prospect of another recession undermined their value as inflation hedges.

This bearish outcome was very much in keeping with expectations as I thought that the exact Saturn-Ketu aspect would enforce caution and austerity on the market. Saturn is all about restraint and conservative action so there was not much chance that Bernanke would announce QE3. It was therefore not surprising that the market declined on this aspect. Monday was also lower on Mercury's passing alignment to the Saturn-Ketu aspect. The late week Mars-Uranus aspect acted as a trigger for the release of the reservoir of pessimism and disappointment that often accompanies Saturn transits. For the past several months, I had noted the likelihood of a major decline around this aspect at this time, so it was heartening to see how well financial astrology can work. Since it is very much a probabilistic science, not all aspects will play out as expected, but knowing the relevant planetary influences can provide an additional level of insight.

Although the Saturn-Ketu aspect is now separating, we will likely remain under the influence of bearish Saturn this week. Actually the early week offers some possibility of some upside as the Sun-Mercury-Uranus pattern could boost risk taking. But Tuesday's New Moon may also be a critical turning point as the Mars aspect to the Sun-Mercury conjunction appears to ramp up agitation and frustration going into midweek . The Venus-Saturn conjunction on Thursday may well bring more downside. The high number of aspects this week would appear to increase the size and speed of price movements. Given the number of malefic planets involved (Mars, Saturn, Ketu), the most likely outcome is for more steep declines. Just where and when this will all end is hard to say. The bullish Jupiter-Pluto aspect in the second half of October may provide some relief for beleaguered financial markets.

EU affirms support for Greece; Saturn-Ketu suggests caution

Stocks rose last week as European leaders again re-affirmed their commitment to Greece and assured investors it would not default. Private commercial banks were also aided by a coordinated effort by central banks to inject more liquidity into the system so that credit flows would not dry up. It's all part of the ongoing Eurozone saga that is seemingly without end. A crisis emerges, a remedy is offered, calm is restored for a while then a new crisis pops up somewhere else. Rinse and repeat until bankruptcy and/or hyperinflation. In New York, the Dow rallied more than 4% closing at 11,509 while the S&P500 finished at 1216. Indian stocks fared less well, however, although the Sensex did manage a modest gain closing at 16,933 and the Nifty at 5084.

This bullish result was largely in keeping with expectations as I thought the Mercury-Jupiter aspect would likely lift sentiment into Thursday. The negative effect of Monday's entry of Venus into the sign of Virgo also seemed to manifest as expected as Mumbai was significantly lower. The effect had waned somewhat by the time US markets opened as the morning was lower but then reversed in the afternoon. It's also worth noting that this Monday low and reversal occurred on the Full Moon just as the lunar cycle would predict. While some of the enthusiasm had dissipated by Friday;s Mars aspect, the trend remained in place.

This week shapes up to be less hopeful and uplifting however as Saturn appears to take over for Jupiter. The aspect between Saturn and Ketu (South Lunar Node) is exact at the end of the week so this is likely to cast some kind of shadow on the market. Interestingly, there will be a much-anticipated announcement by Fed Chair Bernanke on Wednesday after the FOMC meeting. Many investors are hoping for bold new plans from Bernanke that will stimulate a stagnating US economy. If the Fed delivers something big, then the market could rally further. However, if the Fed is more cautious in its approach, then there is a greater chance for disappointment and declines. Since Saturn is all about austerity and constraint, it seems more likely that Bernanke will remain fairly cautious here. As a result there is a greater chance for declines this week, especially after Wednesday's announcement. We can also see that Monday's Mercury-Saturn-Ketu alignment looks generally bearish. Friday's Mars-Uranus aspect also looks bearish. In between, we could see some positive sentiment as a result of a passing Venus-Jupiter aspect.

EU troubles take Euro and stocks lower; Mercury-Jupiter offers some hope

It was a bad week for Europe. A member of the European Central Bank resigned for undisclosed reasons, while new rumours swirled of a Greek default that prompted Germany to plan contingencies in the event of any ensuing financial crisis. The market reflected a growing faithlessness as credit default swaps between major private commercial banks soared to new highs and the Euro broke below the 1.40 level to a new 6-month low. Not surprisingly, global stock markets didn't like the sound of any of this and retreated late in the week after posting gains earlier in the week. In New York, the Dow lost 2% closing at 10,992 while the S&P500 finished at 1154. Indian markets fared somewhat better as the BSE Sensex edged slightly higher to 16,866 while the Nifty ended the week at 5059.

This week unfolded largely as expected as I thought we would see some late week selling on the Mercury-Neptune aspect and Mars' entry into sidereal Cancer. We saw declines on both Thursday and Friday when these key influences were in play. As expected, the early week proved to be somewhat more bullish as Mercury's entry in Leo on Monday may have lifted sentiment. This was perhaps more in evident in Mumbai, as buyers did not appear in New York until Wednesday's session.

The situation in Europe looks like it will rankle markets for a while longer until some satisfactory solution is found for the debt crisis. As I have noted, the Euro chart is very troubled these days. While the German court decision was essentially a non-event last week, it is not at all clear sailing for Europe. I continue to believe that the Euro will fall much further in the months ahead and this should be a drag on stock prices. This should enhance the appeal of the US Dollar as safe haven. As a result, gold and other commodities are likely to come under more selling pressure in the weeks to come.

We may be witnessing the beginning of the end of the Euro as cracks are deepening between the core members (Germany, France) and the less solvent periphery (Greece, Portugal, Spain, Italy). From an astrological perspective, this apparent crumbling of a previously solid edifice is in keeping with the symbolism of the dominant planets in the sky -- Saturn and Ketu (South Lunar Node). Saturn represents structure, order and tradition. When on its best behaviour, Ketu is more of a spiritual influence that can engender feelings of union with the whole and self-revelation. But this energy does not translate well into the mundane world of business and finance. As a result, Ketu is more often associated with notions of re-organization and change. When these two energies align, they can describe situations where structures and organizations have to make major adjustments. A period of painful instability and change is common. The aspect is exact on September 23 but due to the relatively slow velocity of both planets, we can consider them to be in aspect for the next few weeks.

This week hay hinge on the bullish potential of a Mercury-Jupiter aspect that is exact on Wednesday and early Thursday. Both of these planets are positive influences, and previous aspects involving Jupiter have produced solid gains in recent weeks around the time of its retrograde station on Aug 30. But Jupiter may be losing some of its power as it picks up speed, so the upside could be fairly limited here. Venus enters sidereal Virgo over the weekend, so that is a background negative influence that may exert some influence over Monday's session. The late week looks more vulnerable to declines as Mars forms an aspect with Neptune on Thursday and Friday.

Rallying towards Eurogeddon?; Mercury-Neptune on Thursday

Stocks mounted an impressive rally early last week as investors parsed the economic data from a half-full perspective. US stocks rose into midweek but eventually sold off on the disappointing jobs report that showed employment growth is stagnant. The Dow ended flat for the week closing at 11,240 while the S&P500 finished at 1173. It was a rosier picture in India, however, as the bulls prevailed in all three trading sessions in the holiday-shortened week. The Sensex surged 6% to 16,821 and the Nifty climbed to 5040.

The early week optimism was very much in keeping with my expectations as we saw some noteworthy Jupiter influences in the mix. Monday's Venus-Jupiter aspect combined the energies of two positive planets and produced an impressively positive result. Jupiter also stationed and turned retrograde early on Tuesday and this may have provided an additional boost for sentiment. As it happened, the lion's share of the gains this week did occur in this two-day window. Optimism waned after Wednesday, however, just in time for the Mars-Rahu aspect on Thursday and Friday. While I had been equivocal about the net effect of this aspect, I did sound a note of caution about any Mars aspect. This turned out to be correct as US and European markets declined more than 3%.

While this relief rally began to take root with the helping hand of Jupiter, more alarm bells are ringing in Europe as the banking crisis is again threatening to get out of control. Greek bond yields are again rising to stratospheric levels reflecting growing concern that Greece will be unable to repay its debts. There has also been a sharp rise in the amount of funds that international central banks have deposited with the US Federal Reserve. Normally, excess funds are deposited with private commercial banks in Europe such as Paribas and Societe Generale. But there is growing anxiety that many private European banks are on the verge of insolvency and so many institutions and central banks have decided to bypass them altogether. It seems that we are edging closer to a Eurogeddon scenario where the monetary union needs to be reshuffled or broken up completely. To make matters more interesting, the German High Court will hand down its decision on Wednesday on the constitutionality of German participation with the new European bailout fund (EFSF). Needless to say, if the court rules against the Merkel government, it would likely put stress on the Euro and on stock markets worldwide. The European Central Bank may then be compelled to reduce interest rates in order to stanch the bleeding. Even if the Eurozone manages to dodge this latest bullet, the problems there look protracted and there is no easy solution in sight. The horoscope of the Euro is heavily afflicted in the months ahead so we should assume the situation to worsen before it gets better.

The only unambiguous planetary influences this week appear to be on the negative side, although we may continue to bask in Jupiter's lingering near-stationary glow for a little while longer. Mercury enters Leo on Monday which may offer additional support to stocks. This is not usually a hugely positive influence, but given the wide aspect from Jupiter, it may keep investors in buying mode. But my attention this week is focused on the effects of the Mercury-Neptune opposition late on Wednesday and into Thursday. This looks bearish for stocks.

It's worth remembering that much of the decline in the first week of August and the US debt ceiling debate also occurred when Mercury was opposition to Neptune. That alignment was significant worse, however, since Mercury was close to a retrograde station and hence was moving more slowly. But the aspect this week revisits that energy of confusion and disappointment, if only briefly. Given that it occurs so close after the German legal decision, we should be alert to a possible negative outcome on that front. The Sun is also in minor aspect with Saturn on that day, so that could be a bad day for governments (Sun). Friday presents more of a puzzle. Mars enters sidereal Cancer on that day in the US and this is often a bearish influence. But Mercury will enter tropical Virgo on the same day and this is often a bullish influence. I would tend to favour the negative Mars energy here, but the picture is fairly complex. In any event, the late week could be troublesome.

Fed delays decision; Mercury-Rahu creates uncertainty midweek

So stimulus if necessary, but not necessarily stimulus. US Stocks staged an impressive rebound last week as Friday's speech from Fed Chair Bernanke put off any decision on further quantitative easing (QE3) until September. This deferred decision was good enough for markets as the Dow climbed 4% closing at 11,284 while the S&P500 finished the week at 1176. The picture was more bearish in Mumbai, however, the Sensex made new lows for the year closing at 15,848. The Nifty ended the week at 4747.

This outcome was disappointing as I had expected more across the board selling on the late week Mars-Saturn aspect. While Thursday was lower when the aspect was exact, the size of the decline was more modest than expected. Indian markets were more directly affected by this bearish combination, however, due to a close affliction in the BSE natal chart. We also saw some significant gains on most global markets in the early week period from the Sun-Venus-Neptune pattern. The Sun-Neptune opposition coincided quite closely with the precipitous drop in gold on Tuesday and Wednesday just as the Sun was entering tropical Virgo.

So while bearish Saturn still seems to be the dominant energy these days, we saw a glimpse of Jupiter's optimistic nature last week ahead of its retrograde station on August 30. It is not unusual for planets to express themselves more fully around the time of their direct and retrograde stations, especially a slow moving and powerful planet like Jupiter. Bernanke's tentative approach to the Fed's next move was perhaps an appropriate manifestation of this competing energy of both Saturn and Jupiter. A weaker Jupiter might have precluded any further easing, but on this occasion we got a kind of stalemate between the need to expand and the need to constrain. Interestingly, the next Fed meeting will occur on September 20-21, just a few days before the Saturn-Ketu aspect. This suggests that optimism may be in short supply and there could be a limited appetite for more easing as Saturn's preference for austerity is more in evidence. The interaction with Ketu suggests some kind of fundamental or structural reordering may be in the air. This could result either from new and unusual moves the Fed makes, or perhaps from the reaction to its announcement. What would happen if the Fed threw another stimulus party but nobody came?

This week looks like a mixed bag. Jupiter's retrograde station on Monday and Tuesday could be a mostly positive influence here. A bullish Venus-Jupiter aspect early in the week gives way to another dubious looking aspect between Mercury and Rahu by Wednesday. The end of the week offers up a dog's breakfast of aspects as the bullish Sun-Jupiter aspect occurs simultaneously to a nasty Mars-Rahu aspect. These could conceivably cancel each other out, but the presence of Mars is cause for some concern here.

Transits for Monday, August 29, 2011 9.30 a.m. New York