Markets fall after Saturn turns retrograde

Has the worm finally turned in the US stock market? The current wave of civil unrest in Egypt shook investors out of their QE2-induced complacency as the Dow broke its eight-week winning streak declining by less than 1% to 11,823 with the S&P500 closing at 1276. Indian markets fared worse, however, as inflation worries and the prospect of further rate hikes continued to weigh on investors. The BSE Sensex tumbled more than 3% to 18,395 and the Nifty ended the week at 5512.

This bearish outcome was more or less in keeping with expectations as last Wednesday's Saturn retrograde station may have helped usher in a new, more cautious investor mindset. I had thought we might have seen more midweek downside to go along with the tense Mercury-Saturn aspect, but that appeared only to manifest in more vulnerable markets such as India, China and commodities (gold, oil) all sold off significantly. This is perhaps understandable since these more speculative markets have been the biggest beneficiaries of the easy money Fed policy that has pumped up asset prices. With Saturn extra-strong here as it stands still in the sky, it may coincide with a less tolerant mood towards free spending, inflation and risk-taking -- all of which were the hallmarks of the recent Jupiter-Uranus fueled rally.

Saturn's penchant for restraint and austerity was reflected in news last week that the Standard and Poor's rating agency warned that a US downgrade may not be far off. This debt warning came in the aftermath of Obama's SOTU speech where precious little attention was paid to reducing the massive US debt. The US government is playing a risky game here as it is betting that bond markets will target other more spendthrift governments first before it has to face the music. As if to put an exclamation point on Saturn's renewed influence, Moody's downgraded Japan's debt rating as that country may soon face its own "high noon" with the bond vigilantes as its debt burden becomes unmanageable in the face of demographic stagnation.

As Saturn is now begins its backward retrograde journey through sidereal Virgo, it is due to encounter its arch-rival Jupiter in an opposition aspect on March 29. The last Jupiter-Saturn opposition occurred on May 22, 2010 in the midst of the correction that followed the May 6 flash crash. While history does not repeat itself exactly, this combination tends to be bearish and suggests a more stringent and cautious atmosphere may prevail in the market for the coming weeks. We can also expect some more unexpected events along the lines of these escalating Middle East protests as Rahu (greed, disruption of status quo) will form a square aspect with Uranus (risk, independence) on March 5. Between Saturn's pessimism and this unpredictable Uranian quality, it should prove to be a very eventful time.

The highlight this week is the Sun-Mars conjunction on Friday, February 4. These two fiery planets combine about once every two years but this time around they will be in close trine aspect to Saturn. The closest aspect actually occurs over the following weekend, but they could be close enough to produce some effects during the trading week. Since all three planets are considered malefic, this is definitely an alignment that "bears" close attention! Ahead of that, however, Mercury and Venus will combine their more positive energies in a configuration with Uranus and Neptune that hints at some early or midweek strength. This will likely apply to most world equity markets as well as commodities such as gold and oil.

Markets mixed ahead of Saturn retrograde station

Stocks were mixed last week as more positive earnings reports took the edge off a possible rate hike in China. In New York, the Dow was higher for the eighth week in a row closing with a 1% gain to 11,871, although the broader averages such as the S&P500 lost about 1% to close at 1283. In Mumbai, the BSE-Sensex finished with a gain of less than 1% to 19,007 while the Nifty ended the week at 5696. Meanwhile, gold continued to languish as it lost another 1%.

This outcome was mostly in keeping with expectations as the bulk of the gains coincided with the early week aspects involving the Sun, Uranus and, of course, Jupiter. Tuesday was the most positive day of the week, just ahead of the Sun-Jupiter aspect. As expected, gold also rallied modestly on this alignment. Sentiment turned more negative on Wednesday, however, as irascible Mars combined with disruptive Ketu as most global markets sold off and were generally weaker through the end of the week.

As Jupiter moves away from Uranus, we may be witnessing a change in attitude towards risk and inflation. While much of the recent rally in stocks and commodities has been fueled by the conjunction of these two planets, it has also contributed to rising inflation throughout much of Asia. As optimism and risk-appetite wanes with Jupiter losing some of its power, we could see a new approach to inflation as emerging economies try to grapple with the fallout to the Fed's easy money QE2 program. Perhaps this will take the form of raising interest rates in China and India more than expected. This would send a message that inflation is a serious problem and the government is willing to sacrifice some measure of economic growth in order to secure a more stable price regime. Alternatively, it may also translate into a more cautious reaction by investors to central bank moves, whatever they may be.

This week Saturn turns retrograde so we could well see more evidence of a new approach to risk and growth. What's especially interesting here is that India's central bank meets on Tuesday and will likely announce new measures to tackle the problem including some kind of rate hike. Saturn actually turns retrograde on Wednesday, although there may be some manifestation of Saturn's penchant for caution and pessimism before then. What makes this Saturn retrograde station more problematic is that Mercury will be in close square aspect. This increases the likelihood of a mood of disappointment, perhaps coming from poor economic data. This is quite a similar planetary alignment as occurred in mid-January 2010 that coincided with the beginning of a significant decline across most world markets. At that time, it was Mercury that was turning retrograde and it formed a tense square aspect with forward-moving Saturn. We shall see how reliable this usually bearish pattern is this time. There is a greater likelihood for some kind of gains later in the week, especially on Friday as the Moon joins Venus in sidereal Scorpio.

US Stocks rise with Jupiter; Saturn waits in the wings

US Stocks defied gravity for another week as investors cheered positive earnings reports and more upbeat government data. The Dow rose 1% to close at 11,787 while the S&P500 finished the week at 1293. As expected, the bullish effects of Jupiter proved to be a durable influence on markets as its early week aspect with Mercury put stocks an solid footing. Not even the more ambiguous Mars-Jupiter aspect late in the week could upset the mood as Friday's session ended with a respectable gain.

It was a very different outcome in Mumbai, however, as inflation worries continue to undermine sentiment. New December data suggested that inflation was worsening and that increased the likelihood of a rate hike from the RBI. As a result, the Sensex lost another 4% last week to close at 18,860 while the Nifty ended Friday at 5654. India's market may have bucked the otherwise bullish global trend due to specific afflictions to the Sun in the BSE 1875 horoscope.

On the surface, it may appear that little has changed in this post-eclipse period. US and European stocks have extended the rally and taken prices to new highs. And yet a number of more speculative markets have fallen since the first week of January. Many emerging markets like India and China have fallen while a number of commodities have also been subject to declines, gold being the most noteworthy. While it is possible to regard the eclipse and the Jupiter-Uranus conjunction as non-events, I still see them as important sign posts due to the worsening of sentiment in these other markets. This is perhaps the thin edge of the wedge as the downside of the Fed's QE2 policy may be on the verge of coming home to roost. The Fed's plan to buy up treasuries has encouraged a flow of 'hot money' into riskier currencies and asset classes. This is creating serious inflation problems in Asia and they are now being forced to come to terms with it by raising rates and choking off excessive growth. Eventually, the lowered demand out of China and India will likely reduce economic activity in the US and Europe, but for now, investors are choosing to ignore this possibility. Perhaps they will be reminded of the risks of Bernanke's excessive liquidity by Saturn's retrograde cycle which begins on January 26.

This week holds the promise of another mostly positive beginning as the Sun forms aspects with Uranus, Neptune on Monday, and then with Jupiter by Wednesday. This is likely to produce some buying for at least one or two days, especially in markets which have been bearish like India's. Gold may also benefit from this Jupiterian influence on the Sun. With US markets closed for the MLK holiday on Monday, however, some of this upside may be more muted there. The midweek Mars-Ketu aspect may nullify some of this enthusiasm so it is quite possible that optimism may fizzle with sellers prevailing into Thursday as the Moon opposes Mars. In other words, there is a good chance we will see more upside before any profit taking. But as Saturn slowly grinds to a halt in the sky ahead of its retrograde station, there is also an increased risk of more negativity here. Saturn is waiting in the wings for its moment on the stage.

Gold falls after eclipse; Mercury-Jupiter this week

Stocks in New York edged higher for another week as better than expected manufacturing data fueled hopes for a sustainable recovery. The Dow gained 1% to close at 11,674 while the S&P500 ended the week at 1271. Not surprisingly, the biggest rise came from Monday's Venus-Jupiter aspect with the market gradually weakening after that. The combination of Tuesdays' solar eclipse and Jupiter-Uranus conjunction had little immediate effect on equities, although it did send commodities such as gold and oil down sharply. Gold lost more than 3% for the week and finished below $1370. As expected, the late week Sun-Saturn aspect did exert a drag on sentiment as we saw modest declines on both days.

It was a more dramatic story in Mumbai, however, as Tuesday's eclipse appeared to divide the trend with gains on Monday's Venus-Jupiter aspect and then losses prevailing thereafter. The Sensex closed below the 20 K level at 19,691 with the Nifty finishing at 5904. Friday's sizable decline coincided closely with the Sun-Saturn aspect as this pairing often marks a loss of confidence and rise in pessimism.

So while most global stock markets appeared to have shrugged off the solar eclipse and the culmination of the Jupiter-Uranus conjunction, we may have seen a possible turn in commodities as they moved lower across the board last week. Whether or not they remain weak in the days and weeks to come is an open question. With Jupiter's optimism now in shorter supply, it may be harder for commodities to make speculative gains in this post-eclipse and post Jupiter-Uranus environment. The other additional factor to consider is, of course, Saturn. If Jupiter is the gas pedal, Saturn acts as the brake. The markets may have lost some of Jupiter's gas here in January but Saturn is due to put on the brakes. Saturn begins its retrograde cycle on January 26 and it promises to be a significant period owing to the concurrent bad aspect with Mercury. Remember that Saturn began its retrograde cycle in May 2010 while in bad aspect with Venus and then Jupiter -- just as the market was undergoing a major correction. While nothing is certain, it definitely is a pattern that warrants further watching.

This week features some minor aspects involving the Jupiter-Uranus conjunction so that tilts the table towards gains. The early week is perhaps more positive in that respect as Mercury is in square aspect with Uranus and Jupiter on Monday and Tuesday. Mars then takes the reins for the rest of the week as it aspects this bullish planetary duo. Mars is a more unpredictable factor than Mercury, however, so the probability of late week gains is somewhat lessened and indeed losses are also quite possible. Perhaps "mixed" is the word that best sums up the situation.

Jupiter conjoins Uranus; Solar Eclipse due on Tuesday

US Stocks tread water in the last week of 2010 as economic data supplied mixed signals in quiet holiday trading. The Dow was unchanged at 11,577 while the S&P500 ended the week at 1257. Indian stocks fared somewhat better as the Sensex rebounded after early weakness and closed 2% higher at 20,509 with the Nifty finishing the year at 6134. I thought we might see more downside from the Mars-Saturn square but there was only a very mild hiccup in Mumbai, although Chinese equities did appear to suffer early in the week. The late week period was generally more bullish on the Moon-Venus conjunction, although not all global markets participated and the US in particular stayed mostly flat.

The continued market effervescence is perhaps more in keeping with the approaching Jupiter-Uranus conjunction. These two planets have been bullish dance partners in sidereal Pisces since mid-2010 as they have rarely been more than a few degrees away from each other. The optimism of Jupiter and the risk-seeking of Uranus have combined to fuel the substantial rally in the second half of the year. Once the conjunction culminates exactly on Tuesday, January 4, this bullish pairing will not conjoin again until 2024. Obviously, their distinctly bullish energies will interact much sooner than that through aspecting (e.g. early 2012), but another protracted period of conjunction will be a long time coming.

Curiously, a solar eclipse at 19 degrees of sidereal Sagittarius is also slated for 3.50 a.m. EST on Tuesday. This is an intriguing coincidence of phenomena which increases the possibility of major new developments, including the prospect for major trend changes in the days to come. Eclipses are famous for stirring things up and interrupting the status quo, so we will have to see what kind of effects may manifest here.

The week will also feature a number of close planetary aspects. Benefic Venus is aspected by Jupiter early in the week so that generally boosts confidence and encourages buying. But Mercury and Mars are also in fairly tight aspect through much of the midweek period so that may let some air out of the balloon, especially after the eclipse has passed. The Sun is in a partial strength square aspect with Saturn on Thursday and Friday and that should also be seen as a negative influence on sentiment. Sun-Saturn aspects often have a special relevance for gold, and prices often fall near their aspects.