Stocks mounted an impressive rally early last week as investors parsed the economic data from a half-full perspective. US stocks rose into midweek but eventually sold off on the disappointing jobs report that showed employment growth is stagnant. The Dow ended flat for the week closing at 11,240 while the S&P500 finished at 1173. It was a rosier picture in India, however, as the bulls prevailed in all three trading sessions in the holiday-shortened week. The Sensex surged 6% to 16,821 and the Nifty climbed to 5040.
The early week optimism was very much in keeping with my expectations as we saw some noteworthy Jupiter influences in the mix. Monday's Venus-Jupiter aspect combined the energies of two positive planets and produced an impressively positive result. Jupiter also stationed and turned retrograde early on Tuesday and this may have provided an additional boost for sentiment. As it happened, the lion's share of the gains this week did occur in this two-day window. Optimism waned after Wednesday, however, just in time for the Mars-Rahu aspect on Thursday and Friday. While I had been equivocal about the net effect of this aspect, I did sound a note of caution about any Mars aspect. This turned out to be correct as US and European markets declined more than 3%.
While this relief rally began to take root with the helping hand of Jupiter, more alarm bells are ringing in Europe as the banking crisis is again threatening to get out of control. Greek bond yields are again rising to stratospheric levels reflecting growing concern that Greece will be unable to repay its debts. There has also been a sharp rise in the amount of funds that international central banks have deposited with the US Federal Reserve. Normally, excess funds are deposited with private commercial banks in Europe such as Paribas and Societe Generale. But there is growing anxiety that many private European banks are on the verge of insolvency and so many institutions and central banks have decided to bypass them altogether. It seems that we are edging closer to a Eurogeddon scenario where the monetary union needs to be reshuffled or broken up completely. To make matters more interesting, the German High Court will hand down its decision on Wednesday on the constitutionality of German participation with the new European bailout fund (EFSF). Needless to say, if the court rules against the Merkel government, it would likely put stress on the Euro and on stock markets worldwide. The European Central Bank may then be compelled to reduce interest rates in order to stanch the bleeding. Even if the Eurozone manages to dodge this latest bullet, the problems there look protracted and there is no easy solution in sight. The horoscope of the Euro is heavily afflicted in the months ahead so we should assume the situation to worsen before it gets better.
The only unambiguous planetary influences this week appear to be on the negative side, although we may continue to bask in Jupiter's lingering near-stationary glow for a little while longer. Mercury enters Leo on Monday which may offer additional support to stocks. This is not usually a hugely positive influence, but given the wide aspect from Jupiter, it may keep investors in buying mode. But my attention this week is focused on the effects of the Mercury-Neptune opposition late on Wednesday and into Thursday. This looks bearish for stocks.
It's worth remembering that much of the decline in the first week of August and the US debt ceiling debate also occurred when Mercury was opposition to Neptune. That alignment was significant worse, however, since Mercury was close to a retrograde station and hence was moving more slowly. But the aspect this week revisits that energy of confusion and disappointment, if only briefly. Given that it occurs so close after the German legal decision, we should be alert to a possible negative outcome on that front. The Sun is also in minor aspect with Saturn on that day, so that could be a bad day for governments (Sun). Friday presents more of a puzzle. Mars enters sidereal Cancer on that day in the US and this is often a bearish influence. But Mercury will enter tropical Virgo on the same day and this is often a bullish influence. I would tend to favour the negative Mars energy here, but the picture is fairly complex. In any event, the late week could be troublesome.
