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.
