Stocks in New York inched higher yet again last week as more positive earnings reports kept the QE2 rally intact. The Dow closed up 1% to close at 12,391 while the S&P500 finished at 1343. This bullish outcome was not unexpected given the Sun-Neptune conjunction that was exact on Thursday. This was a favourable pairing that corresponded fairly closely with larger up days. I had expected a little more in the way of downside due to the Saturn aspects on Monday and Friday, but the result was unimpressive as Monday-Tuesday was only mildly negative while Friday was actually an up day on the Dow, although broader indexes like the NYSE Composite were mostly flat.
Indian markets staged an impressive rebound last week as bargain hunters moved in and bought banking and metal shares. Despite a fairly sharp decline Friday, the BSE Sensex climbed almost 3% to 18,211 while the Nifty ended the week at 5458. While I thought the early week might be somewhat bearish, the overall strength of the market was not unexpected given the favourable placement of the Sun with Neptune. Friday's sell-off was a reminder of the continuing power of Saturn as its aspect with Venus saw a loss of optimism. Indian markets are attempting to rally after a severe correction and may also be buoyed by the fact they are in pre-budget mode as the government releases its Union Budget on 28 February. On the day of the budget, there will be an alignment of Jupiter and Pluto which will reflect bold and assertive plans to deal with pressing financial problems such as inflation. While this combination seems quite bullish, it also may ultimately be inflationary in the long run. We will have to see how that shakes out.
As reports of the economic recovery increasingly fill the US media, one wonders when this positive feedback loop will come to a stop. The good news continues to bring new money into the market as more fund managers put the recession behind them, and yet there is an irony here that poses a risk to the rally: if the economy recovers too quickly, the Fed may be forced to wind down its QE2 stimulus measures ahead of schedule. Fears of inflation are lurking in the background here so too much growth could cause the Fed to hit the brakes and withdraw the liquidity from the market. This would likely be problematic for stocks. With the Jupiter-Saturn opposition aspect coming up at the end of March, it would seem that we are getting closer to a more pessimistic view of the economy. This may or may not reflect new economic data. Since the market is all about perceptions, Saturn's growing influence may mean that we are simply shifting towards a 'glass half-empty' outlook.
This week promises to be very interesting as Mercury and Mars are in conjunction with Neptune and all three are in aspect with Ketu, the South Lunar Node. Mars-Neptune combinations generally reflect difficulty and the nodal influence from Ketu has the potential to both magnify and distort market behaviour. Since the aspects are closest in early and midweek, markets may be more vulnerable to declines then. (N.B. US markets are closed for a holiday Monday) Some markets may be subject to steep sell-offs here. The late week period appears to be somewhat positive as Mercury conjoins the Sun and both move into alignment with Jupiter on Friday.
