Washington fiddles as markets burn; Mercury-Neptune confounds debt efforts

Transits for Wednesday August 3, 2011 9.30 a.m. New York

Markets did not take kindly to the protracted US debt ceiling negotiations as the risk of a default loomed larger with the approach of the August 2 deadline. Stocks in New York fell more than 4% with the Dow closing at 12,143 and the S&P500 finishing the week at 1292. It was a similar story in Mumbai as the RBI's surprise fifty-point rate hike on Tuesday only added to anxiety levels. The BSE-Sensex lost more than 2% closing at 18,197 with the Nifty ending the week at 5482. I thought the chances were high for early week decline on the entry of Mars into sidereal Gemini and that corresponded with Tuesday's significant losses. However, my expectation for a late week recovery was wide of the mark as markets remained on edge as the debt drama entered its final act. While I had expected some disappointment and confusion over these debt ceiling negotiations, I thought we would see them closer to the deadline. However, the problems inherent in the critical Mercury-Neptune opposition have manifested somewhat earlier here.

As I have noted previously, the poignant coincidence of Mercury turning retrograde while in close opposition to Neptune exactly on the August 2 deadline is already delivering its karmic payload in the form of all the confusion surrounding the debt talks. Not only is it unclear if a deal will get done in time, but no one is really certain how binding the deadline actually is. Some commentators have suggested that Obama could extend it a few days in order for both sides to hammer out the details. Others have suggested the government won't run out of money for another week or two. And even if a deal is struck, US debt may still suffer a credit downgrade anyway by one of the rating agencies. In the end, it's all about preserving a good credit rating so that the US can continue to borrow money at low interest rates. Anything that jeopardizes confidence in the ability of the US to repay its loans will result in higher rates which will hurt the economy. The stock market is also likely to take a negative view of higher interest rates.

Mercury's retrograde station this week -- due near midnight EDT on Tuesday -- heightens the negative effect of its aspect with Neptune. Since Neptune is no friend to clear logical thinking, we should expect more fallout from these negotiations as uncertainty and unproductive analysis is likely to persist for much of the week. Could the US actually default here? While I had not seriously considered the possibility, I have noted that this Mercury-Neptune aspect did boost the possibility of such an outcome. A more likely outcome is some kind of confused interregnum where somehow the key players buy extra time to work out a deal. This may or may not be before the August 2 deadline. The planets look pretty bad over the next couple of weeks so I would not rule out any negative or disappointing scenarios.

With Mercury turning retrograde late Tuesday/early Wednesday, we could easily see more downside in stocks. That said, there are a couple of Jupiter aspects that could give a temporary lift to sentiment. The Sun forms a square aspect with Jupiter on Monday and into Tuesday while Venus does likewise on Thursday and into Friday. The presence of this influence offers some possibility for gains, although it is unclear to what extent the gains will apply to stocks. Perhaps commodities like gold and oil will be more directly influenced by these bullish aspects.

Stocks rise on EU bailout; US debt deal uncertain

Stocks generally moved higher last week as the EU attempted to arrest the ongoing debt contagion by agreeing to a second Greek bailout. In New York, the Dow was ahead by almost 2% closing at 12,681 while the S&P500 finished at 1345. Indian markets followed suit as the BSE-Sensex moved above a key resistance level closing at 18,722 and the Nifty finished at 5633. Not surprisingly, Monday's Mercury-Rahu aspect turned out to be bearish across the board. Buyers came back on Tuesday as the market reversed higher near the entry of Mercury into Leo. This was largely in keeping with expectations as I thought the midweek would be more positive. Sentiment continued to stay mostly strong all the way into Friday, however, as the potential trouble from the Mars-Ketu conjunction did not manifest until after markets had closed for the week, i.e. Boehner suddenly ended debt talks with Obama and the Norway attacks.

The US debt ceiling talks appear to be going right down to the wire as Republican Speaker John Boehner walked away from negotiations with President Obama late Friday. If a deal is not reached by the August 2 deadline, the US will default on its debt since it could no longer borrow enough money to cover its expenses. Nobody really expects this to happen, but what is unknown is the kind of deal that will be struck and who will gain political advantage. The political posturing is likely more important here as both parties are vying to make their case for the 2012 election cycle.

Since neither Jupiter nor Saturn are especially dominant in the sky right now, it seems unlikely that the Republicans will get their way and force large spending cuts. Such austerity measures are more symbolic of a strong Saturn but we don't seem to have that here as Saturn is moving forward at its normal speed through sidereal Virgo and is not forming any significant aspects with other planets. This suggests that either a compromise short term solution will be found or Obama's preference for a blend of cuts and increased taxes will carry the day. Obama's chart looks quite stressed at the moment so it seems unlikely that he will win his version of the deal in the coming days. Of course, the other problem with this debt ceiling deadline is that Mercury will turn retrograde on the same day. It's a peculiar coincidence that suggests that the deal may not be final or some of the details may be disputed after the fact by one of the parties.

This week sees Mars enter sidereal Gemini on Monday and Tuesday. This excess of Mars energy can be a disruptive influence which may increase the odds of declines early in the week. But the mood is likely to turn positive by midweek as the Sun forms a alignment with Uranus and Pluto on Wednesday and Thursday. The late week period also features a supportive configuration involving Mercury, Venus and Neptune. So while we could see some downside in the first half of the week, the chances are fairly good that the subsequent rebound will more than make for it.

Stocks decline on Venus-Saturn; Sun and Mercury to change signs

Despite Ben Bernanke's best efforts to talk up the market by keeping the door open for a possible QE3, markets drifted lower this past week as the world seems increasingly mired in debt quicksand. The more it struggles to escape through bailouts and austerity programs, the deeper it sinks. In New York, the Dow tumbled lost about 2% closing at 12,479 while the S&P500 finished at 1316. It was much the same story in Mumbai as the BSE-Sensex fell back below technical support levels closing at 18,561 with the Nifty finishing at 5581. Amidst all this uncertainty, gold reached a new all-time high closing at $1590.

This bearish result was in keeping with expectations given the influence of aspects involving malefics Mars and Saturn. Monday's decline fit nicely with the Mercury-Mars aspect while Tuesday's loss reflected the Venus-Saturn aspect with a good dose of Moon-Mars that bumped up the arrival time by a day. The midweek rally attempt on the Moon-Venus aspect fell short, however, and weakness returned in time for Friday.

All the talk this week was about debt and how to avoid its worst consequences. The news out of Europe suggested that current debt levels in Ireland and Italy were unsustainable as bond yields shot up to reflect the increased risk of default in these over-leveraged economies. The bond vigilantes are back in force and they smell blood. In the US, the debate over the debt ceiling reached a new level of urgency as there appears to be no deal on the horizon yet with the August 2 deadline fast approaching. Both parties agree on the need for some austerity measures and significant government spending cuts, but Obama and the Democrats want to raise taxes also and thereby bridge the budget gap from both sides. A major agreement to cut spending in the long term looks more unlikely now, as both parties may have to content themselves with a short term fix. Whether financial markets will be satisfied with such a band-aid solution remains to be seen, although the Moody's downgrade threat of US credit rating from AAA would suggest there could be some negative fallout. A minor deal would likely send bond yields higher as it would increase the risk of default as well as increase future supply. Of course, failure to make any kind of deal would trigger a US default and generate even nastier consequences in the bond market. This would likely increase volatility in the stock market with potential short term gains, closely followed by declines as investors would realize that the whole financial house of cards would be one step closer to collapse.

In astrological terms, all this talk about debt and austerity is very Saturnian. After two years of Jupiter's faith in a Keynesian future of borrowing and spending, the return of Saturn's "less is more" approach has marked a discernible shift in tone. There is a growing realization that Jupiter-driven stimulus measures cannot solve our current economic problems alone. Saturn reminds us that sometimes the best solutions are ones where we pare back to essentials and discard what is no longer needed. Saturn's solutions tend to be harsh, not unlike purging the system of toxins. Although they can be unpleasant, they can be effective in the long run. However, Saturn is not fully in command of the sky at the moment as Jupiter still exerts some influence. This suggests that bailouts and the Keynesian spending approach will likely retain some appeal for governments such as the EU alongside the demand for greater responsibility and austerity.

The more immediate concern for the US government, however, is whether they can get a deal before the deadline. While the planets look somewhat cooperative over the next week or two, I do note that the August 2 deadline corresponds with the beginning of the Mercury retrograde cycle. This is not a indication of a successful action that relieves anxiety and resolves a problem. It reminds me of the situation on November 7, 2000 when Mercury turned retrograde right on election night in the US. That produced the famous hanging chad recount between Bush and Gore that went all the way to the Supreme Court. The election was ultimately decided more than a month later. What's worse is that Mercury will be opposite Neptune at the time it turns retrograde. Mercury-Neptune combinations speak to confusion and deception and lead to eventual disappointment. Perhaps there will be a deal but we could see some buyer's regret once the deadline passes, as one side recognizes they've been had. It seems a little implausible to expect there to be no deal at all, although the difficult planets at this time do increase the odds of this scenario as well. It seems more likely that the market will be disappointed with whatever transpires up to and including August 2.

This week is more of a mixed bag. The early week Mercury-Rahu aspect could go either way, although it's always hard to put much trust in Rahu. Mercury enters Leo on Wednesday so that may suggest some upside is more likely. The Sun's entry into sidereal Cancer this week could signal a change in direction, especially for the gold market. A reversal lower in gold would therefore be somewhat more likely. I will be paying close attention to the late week period as Mars approaches its conjunction with Ketu (south lunar node). This is a potentially explosive pairing that could spark some hard selling, although the exact conjunction will only occur after the close on Friday in New York. This may mute its effects.

Stocks rise again with Jupiter; Venus-Saturn this week

Stocks ended higher last week as improved corporate earnings kept the
summer rally going for another week. Despite Friday's decline on the
disappointing jobs report, the Dow added 75 points for the week closing
at 12,657 while the S&P500 finished at 1343. Indian stocks also rose as
the Sensex broke above some important technical resistance and ended the
week at 18,858 while the Nifty closed at 5660.

This bullish outcome was not unexpected as I thought that Jupiter's
optimism would carry the day. The early week gains in Mumbai coincided
quite closely with Monday's Venus and Jupiter aspects, even if they were
fairly modest. As expected, the midweek Mars-Saturn aspect tempered
Jupiter's bullishness and we saw some mild selling occur in most global
markets. Once that negative influence had passed, Jupiter took over
again and stocks and commodities moved higher on Thursday's Venus-Uranus
aspect. And as often happens, we got a reversal just as the powerful
Jupiter-Pluto aspect peaked on Friday.

With all of the main medium term Jupiter aspects now out of the way for
a while, one wonders where stocks are headed to next. The easy gains
are likely behind us now as bulls will be harder pressed to find other
sources of planetary fuel. They may well be running on fumes for a
while. And yet Saturn doesn't appear to be offering much to the bears
here either in the way of aspects, so we could see some aimless
wandering for the key indexes.

This week offers up some decent bear food in the form of Saturn's square
aspect to Venus. This makes its tightest angle on Tuesday/Wednesday,
although I would expect the Moon's position opposite Mars on Tuesday
makes that day somewhat more negative. The early week also features a
Mercury-Mars aspect that is iffy at best so it's hard to imagine stocks
making much more headway here. There could be a bias towards caution
this week that generates some selling. Of course, we should see some up
days along the way too, although they are likely to be offset by
Saturn's influence.

Stocks take flight on Jupiter; New Moon/eclipse cycle tested again

Jumping Jupiter! Stocks soared last week as investor confidence was restored following Greece's approval of the EU's austerity program. The biggest gains were in New York as the Dow climbed 5% closing at 12,582 while the S&P500 finished at 1339. Indian stocks also rose by almost 3% as the Sensex briefly touched 19K before settling at 18,782. The Nifty closed above a key technical resistance level of 5600 ending the week at 5627.

While I had expected some upside on the strong Jupiter aspects, I did not expect the move to be so forceful. It was an impressive manifestation of Jupiter's bullish energy as its more powerful aspects with Uranus and Pluto aligned nicely with its aspect with the faster-moving Mars. All this Jupiter energy translated into a big relief rally as stocks bounced off their recent lows. What was more perplexing, however, was the failure of Friday's solar eclipse to generate any selling pressure. Indian markets pulled back modestly on Friday, but US markets continued to run higher. It was a sobering reminder of the limits of my astrological knowledge, and perhaps the epistemological limits of astrology itself.

While the eclipse may not have exactly coincided with a decline, it is still a phenomena worthy of our attention. Recently, US markets have tended to make highs near the New Moon, and then fall into the period of the Full Moon. Eclipses are a special type of New Moon where the orbits of the Moon and Earth intersect sufficiently for the Moon to cast a shadow upon the Earth. The May 2 high occurred right on the day of the New Moon, while the lower high on June 1 also fell within one day of a New Moon and solar eclipse. If stocks begin to fall this week in the wake of the eclipse, then the pattern will have repeated once again. I'm not sure we have seen a high, since this New Moon cycle is only one of several that affects the markets. But it nonetheless increases the odds somewhat that a reversal lower is imminent.

One reason why this New Moon/eclipse reversal may not quite fit with that pattern is that Jupiter still looks quite strong. It will form its exact trine aspect with Pluto on Friday July 8 and then begin to weaken once again. This suggests there will be a significant amount of bullish buying power available for this week so that may reduce the probability of an immediate post-eclipse decline.

But astrology is nothing else if not a multi-headed hydra, and there are always other influences to consider. Wednesday's Mars-Saturn aspect, although technically a "minor" one, is a potential source of bearishness. This could depress sentiment in the midweek period, especially since Monday and perhaps Tuesday appear to be fairly positive with the Mercury-Jupiter aspect. The end of the week offers the bulls another opportunity to take the reins as Venus moves into alignment with Uranus and Jupiter. So while those short-term aspects look mixed to positive this week, we will still have to wait and see if the New Moon cycle will assert itself once again. I'm not holding my breath on that, but Jupiter's bullish influence may well be fading after this week.