Fed delays decision; Mercury-Rahu creates uncertainty midweek

So stimulus if necessary, but not necessarily stimulus. US Stocks staged an impressive rebound last week as Friday's speech from Fed Chair Bernanke put off any decision on further quantitative easing (QE3) until September. This deferred decision was good enough for markets as the Dow climbed 4% closing at 11,284 while the S&P500 finished the week at 1176. The picture was more bearish in Mumbai, however, the Sensex made new lows for the year closing at 15,848. The Nifty ended the week at 4747.

This outcome was disappointing as I had expected more across the board selling on the late week Mars-Saturn aspect. While Thursday was lower when the aspect was exact, the size of the decline was more modest than expected. Indian markets were more directly affected by this bearish combination, however, due to a close affliction in the BSE natal chart. We also saw some significant gains on most global markets in the early week period from the Sun-Venus-Neptune pattern. The Sun-Neptune opposition coincided quite closely with the precipitous drop in gold on Tuesday and Wednesday just as the Sun was entering tropical Virgo.

So while bearish Saturn still seems to be the dominant energy these days, we saw a glimpse of Jupiter's optimistic nature last week ahead of its retrograde station on August 30. It is not unusual for planets to express themselves more fully around the time of their direct and retrograde stations, especially a slow moving and powerful planet like Jupiter. Bernanke's tentative approach to the Fed's next move was perhaps an appropriate manifestation of this competing energy of both Saturn and Jupiter. A weaker Jupiter might have precluded any further easing, but on this occasion we got a kind of stalemate between the need to expand and the need to constrain. Interestingly, the next Fed meeting will occur on September 20-21, just a few days before the Saturn-Ketu aspect. This suggests that optimism may be in short supply and there could be a limited appetite for more easing as Saturn's preference for austerity is more in evidence. The interaction with Ketu suggests some kind of fundamental or structural reordering may be in the air. This could result either from new and unusual moves the Fed makes, or perhaps from the reaction to its announcement. What would happen if the Fed threw another stimulus party but nobody came?

This week looks like a mixed bag. Jupiter's retrograde station on Monday and Tuesday could be a mostly positive influence here. A bullish Venus-Jupiter aspect early in the week gives way to another dubious looking aspect between Mercury and Rahu by Wednesday. The end of the week offers up a dog's breakfast of aspects as the bullish Sun-Jupiter aspect occurs simultaneously to a nasty Mars-Rahu aspect. These could conceivably cancel each other out, but the presence of Mars is cause for some concern here.

Transits for Monday, August 29, 2011 9.30 a.m. New York

A slow motion crash?: markets fall with Saturn

They say that when you're in a car accident, everything slows down. You become acutely aware that it's going to happen, and your senses heighten to take in the details as it all unfolds. These days the stock market appears to be involved in its own version of a slow motion accident. Stocks fell for the fourth straight week last week as the meeting between Merkel and Sarkozy produced little in the way of tangible solutions for the European debt crisis. In New York, the Dow fell more than 4% closing at 10,817 while the S&P500 finished the week at 1123. It was a similar story in Mumbai as the BSE-Sensex lost 4% closing at 16,141 with the Nifty ended the week below the 5K level for the first time since 2010 at 4845. While the extent of the late week declines were a little surprising, I was correct in my forecast for gains around the early week triple conjunction of Sun, Mercury and Venus. Most markets rose into Wednesday around this bullish alignment, but once the planets began to separate and weaken, the selling resumed. As I noted in last week's post, the Rahu aspect to Mercury created more the potential for more uncertainty and opened the door to unexpected and sudden developments.

With fear and anxiety rising over the renewed possibility of a recession, the declines have for the most part been fairly orderly. The 500 point daily swings in the Dow notwithstanding, we have not a proper crash yet, as the correction has been marked by a series of down days with the usual number of rebound up days sprinkled in to keep people guessing. The absence of any big news shock-type crash event has allowed the decline to inflict its damage piece meal. Most investors have largely stayed in the market hoping that this gradual decline will eventually turn around.

But as I have been suggesting for a while, the planets do not favour a reversal higher any time soon. Saturn the pessimist is very much in control here as it comes under the dual influences of Mars and Ketu. Both Mars and Ketu are considered negative and tend to bring out the worst in Saturn, i.e. excessive fear and caution. The Mars-Saturn aspect has been gathering energy over the past few weeks and may well peak this week as the exact aspect occurs on Thursday, August 25. The Saturn-Ketu aspect isn't due to be exact until September 23 so there is some reason to expect that the current negative outlook won't change significantly in the near term. Nonetheless, the first (slim) chance for a reversal will occur after Thursday.

What's doubly problematic for the markets right here is that Mercury, the planet of trading and commerce, ends its retrograde cycle on Friday. Its direct station at 24 Cancer therefore still falls under the influence of Rahu at 26 Scorpio. This increases the possibility of more unexpected movements in the markets and is generally a negative influence, especially given the Mars-Saturn square aspect. Coincidentally, Fed Chair Ben Bernanke will make his annual speech from Jackson Hole on Friday morning -- just hours after the exact Mars-Saturn aspect and hours before the Mercury direct station. The proximity of these events increases the odds that his speech will move markets significantly, although the direction is somewhat less clear. We can see some positive aspects in play that day such as the Sun-Venus aspects to Uranus and Pluto. However, the Mars-Saturn square is about as bad as it gets. But since it will be separating from its exact aspect at the time Bernanke is speaking, it is possible it will have less negative impact. Bernanke is expected to announce some kind of new policy to help the flagging US economy but it is unclear just what he has in mind. Since expansionary Jupiter turns retrograde on August 30, it seems more likely that Bernanke will offer some new program to increase liquidity and credit availability. However, it seems less likely that any new program will have the same positive market effect as last year's QE2 announcement.

The bottom line is this Mars-Saturn aspect could well produce more downside this week. It also increases the possibility of some larger, crash-type moves. I'm not saying a crash is probable, but the presence of these difficult aspects increases the odds of a crash from the usual 1 in 1000 to something quite a bit higher, like 1 in 4. That's no where near probable (50%+), of course, but it is something to consider. Perhaps 2011 will be remembered as the slow motion crash.

Mars panics markets after debt downgrade; triple conjunction offers relief

Markets suffered from a bout of temporary insanity (or perhaps schizophrenia?) last week following the US debt downgrade as investors sought out safer places to put their money. After gyrating more than 500 points in both directions on four consecutive days, the Dow was only 2% lower for the week closing at 11,269 while the S&P finished at 1178. Indian markets were less volatile although the Sensex still lost more than 2% overall closing at 16,839 with the Nifty ending the week at 5072.

All the panic and turmoil was very much in keeping with expectations as I anticipated that the Mars alignment with Uranus and Pluto would be negative. While we did not see any obvious manifestations of literal violence, the market did move violently as the unpredictable and powerful energy of the Mars affliction took its toll. I thought we would see most of the damage in the first half of the week and that was indeed the case in the US, Europe and Asia as Tuesday marked the low, at least on an intraday basis. Once the Mars alignment began separating after Wednesday, there was a gradual lessening of volatility and trading volume as prices rose into Friday.

While we can correlate the gradual strengthening of Saturn in recent weeks with the return of pessimism and caution, the US debt downgrade may also be seen in terms of the Uranus-Pluto square aspect. As I have written previously, the Uranus-Pluto square is the ultimate celestial prime mover these days as these two distant planets will remain in aspect until 2013. This aspect is mostly negative because it erodes stability and is often correlated with long term structural changes in the economy and society. This loss of stability therefore increases uncertainty and as we know, markets do not like uncertainty. As a result, the Uranus-Pluto aspect is usually negative for the value of riskier assets like stocks and positive for safe havens like gold, bonds, and certain unimpeachable currencies. The passing Mars alignment to this destabilizing Uranus-Pluto aspect last week was a significant release of this powerful energy for change and disruption. The US debt downgrade to AA+ by S&P is emblematic of this fundamental change, as the world's leading economy is no longer as strong as it once was. The debt downgrade may ultimately mark a key historic turning point in the eventual decline of the US from its previously unchallenged status as world superpower. Such epochal changes are typical of Uranus-Pluto aspects as old orders stagnate and decline while new structures and organizations rise to fill the vacuum.

This week looks calmer and even rather positive. There is a triple conjunction of Sun, Venus and retrograde Mercury that occurs in the last degree of Cancer on Tuesday/Wednesday. This is likely to generate more optimism and help to boost prices. The presence of the aspect from Rahu (North Lunar Node) is somewhat of a wild card, however. Rahu can distort and confuse the issue so this can reverse the polarity of a planet from positive to negative or exaggerate its effects. I think exaggeration is more likely this week as a dose of unsustainable Rahuvian enthusiasm could take over. The insanity continues in a different form. No matter how positive the news may be here, the planets suggest that the longer term prospects for economic recovery do not look very promising.

Stocks plunge on Mercury-Neptune; US debt downgrade previews Mars alignment this week

The tumultuous events in the markets last week reminded me of Karl Marx's description of capitalism: "All that is solid melts into air." Financial stability evaporated last week in the aftermath of the US debt ceiling deal and the spreading debt contagion in the Eurozone. What was remarkable was the speed at which safe, reliable assumptions about future growth seemed to disappear as investors got a harsh reality check. In New York, the Dow lost more than 6% closing at 11,444 while the S&P finished the week at 1199. The damage was less severe in Indian markets as the BSE-Sensex lost 4% closing at 17,305 with the Nifty ended the week at 5211.

As expected, the Mercury-Neptune opposition did coincide with significant fallout from the US debt deal. To make matters worse, Mercury stationed and turned retrograde on Tuesday so this amped up the strength of this affliction and Mars joined the alignment on Thursday, the day the Dow tumbled 500 points. Score one for astrology. While I had been unsure if the US would make the Aug 2 deadline, I was fairly certain that the market would react badly, which it did. Some of those mitigating Jupiter aspects only offered passing relief to the rising fear as Monday's Sun-Jupiter aspect delivered gains in Asia as well as a positive open in New York. These gains were the result of the immediate sense of relief from the signing of the debt ceiling deal. But it was all Mercury-Neptune after that as disillusion and dismay ruled the roost. Now that the US is compelled to follow a more austere regime of government spending, who is left to stimulate a stagnating economy that seems to be on the verge of a double dip recession? Well, no one it seems and therein lies the root of the sell-off. With Obama's hands tied and Fed Chair Bernanke also seemingly "out of bullets" despite new rumours of a possible QE3, markets are beginning to realize that the past two years was based entirely on "free" borrowed money which has not created a solid foundation for a sustainable bull market.

While I was surprised by the intensity of the decline, I noted in last week's forecast that the planets for early August looked quite bad and that one couldn't "rule out any negative or disappointing scenarios" for the next two weeks. We have a truckload of disappointment and negativity now, especially since Standard and Poor's has downgraded US debt to AA+ for the first time in its history. This sets up the likelihood of more downside this week as investors try to adapt to the new glass half-empty reality.

If last week's Mercury-Neptune was the first shoe to drop, this week's potent Mars-Uranus-Pluto alignment will the second. More like a boot perhaps. This is a very nasty pattern that can manifest as situations of shock and violence that are extremely disruptive. The debt downgrade is likely the partial result of this pattern as Mars slowly moves into position in the celestial cockpit. I have noted in previous forecasts how we are entering an extended period of upset and reorganization from the Uranus-Pluto square aspect. This aspect between these slow moving planets began earlier this year and will last into 2012 and 2013. It is likely to reshape the economic and political landscape much as it did the last time around. The previous Uranus-Pluto square occurred in 1931-1932 at the height of the depression and the beginning of Nazi Germany and FDR's New Deal in the US. Fast-moving Mars is currently activating this pattern so we should expect more chaos and uncertainty this week. I would not rule out a crash here, although governments may intervened to mitigate the damage so they may be able to prevent worst case scenarios. The alignment is closest on Tuesday and Wednesday so the first half of the week is perhaps more dangerous than the second half. I would expect some rebound to occur by Thursday and especially Friday on the Sun-Venus-Uranus pattern.