Stocks slipped again last week as new data out of China suggested slowing economic growth in an increasingly inflationary environment. This double whammy was too much for New York to bear as the Dow fell more than 1% closing at 12,044 while the S&P500 finished at 1304. It was much the same story in Mumbai as Indian stocks declined on the prospect of continued high oil prices. The BSE-Sensex tumbled almost 2% closing at 18,174 while the Nifty ended the week at 5445. This outcome was not wholly unexpected as I noted the likelihood of declines on Monday's Sun-Saturn aspect and at the end of the week. Most global markets fell on Monday and again towards the end of the week. I also corrected noted the probability of gains in the midweek period around the Mercury-Uranus conjunction. I thought we might see a little more offsetting upside on this conjunction that we got, but Tuesday and Wednesday were nonetheless mostly higher across the board. Of course, my medium term expectations were pretty bearish here in any event as we approach the Jupiter-Saturn opposition on March 28-29.
It's interesting to see how the discussion about inflation has evolved in recent weeks. Back when Jupiter (optimism, expansion) was in fairly close conjunction with Uranus (risk, change), we saw rising inflation in the emerging economies like India and China but the potential downside risks seemed fairly minimal as growth was expected to continued at a brisk clip. That optimism began to waver after the exact conjunction in early January as India's market began to decline in earnest. Clearly, more investors were realizing that inflation could be a big problem that could hamper growth in the future. But US and European markets continued to climb as inflation was less of a problem in those recession-ravaged economies. It was only with the ongoing Middle East crisis and the spike in the price of oil that inflation became a concern in developed countries. This was a reflection of the weakening of Jupiter's optimism as it began to separate from risk-seeking Uranus and approach cautious and pessimistic Saturn. The notion of good, or at least, benign inflation is now being replaced by bad inflation. Now that Jupiter is moving close to Saturn's aspect, worries about growth are increasing, the Eurozone debt problem is back on the table and the glass is very much half-empty. In other words, Jupiter's rosy outlook is getting schooled by Saturn's sobriety. This is a similar planetary set up to May 2010 when the last Jupiter-Saturn opposition coincided quite closely with the stock market correction and the Flash Crash.
This week features a high number of aspects, both bullish and bearish. Monday begins with the key Mars aspect to Saturn. This is a full strength 8th house or quincunx aspect that definitely has the potential to pack a punch, especially in India. In this instance, however, Venus will also be part of this three-planet alignment, so that may moderate some of the difficulties here. Nonetheless, I would be surprised to see anything other than a decline on Monday. US markets may fare somewhat better, if only because the aspect is exact at the open and will begin to weaken thereafter. The midweek period looks more positive as Mercury conjoins Jupiter on Tuesday and Wednesday. Both of these planets are considered bullish influences, so their combination here is likely to produce some significant upward thrust. Even here though the presence of Saturn's aspect suggests a potential mitigation of the inherent positive energy of Mercury-Jupiter. The late week period looks more negative again as Mercury lines up exactly opposite Saturn on Friday. Mercury-Saturn aspects usually correspond with pessimism and disappointing economic news so it is quite possible that any midweek gains may come under threat.
