Stocks higher on Fed easing; Venus-Mars this week

As the old song goes, "hurts so good". Fed Chair Ben Bernanke admitted that the US economy was sufficiently weak and listless that additional stimulative measures may be necessary. He extended the zero interest rate policy for another year to 2014 and promised to deliver another round of "quantitative easing" if the economy showed any signs of further deterioration. As bleak as his message was, financial markets largely cheered Bernanke's pledge to pump up the system with whatever liquidity was required. These days bad news for the economy can paradoxically be good news for the markets since it means money will continue to be printed as long as inflation remains within the target range of 2%. For the short term, liquidity trumps bad economic fundamentals. In New York, stocks inched higher with the Dow closing at 12,660 and the S&P 500 at 1316. Indian stocks were more positive as the RBI offered a similarly accommodative policy decision and eased the banking reserve ratio by 50 basis points. The indices rose by 3% with the Sensex closing at 17,233 and the Nifty at 5204.

I thought we might have seen more excitement from last week's Mars retrograde station on Monday/Tuesday but it seemed whatever negative energy there was from this measurement manifested simply as more slow growth economic forecasts. For the moment, this retrograde has been a bit of a non-event, although as I noted, they rarely operate like clockwork. I also pointed out the bullish potential of the midweek Moon-Venus conjunction which appeared to coincide with the upside that stemmed from the Bernanke FOMC statement.

Jupiter is still very prominent here as it remains in close aspect with Uranus. While it is gradually weakening at the moment, it is due to form another positive aspect with Pluto in March. Whether that translates into higher highs remains to be seen. With Saturn turning retrograde on February 7, there is a good astrological argument for some kind of down move before Jupiter's bullishness returns when it combines with Pluto.

This week will be an interesting test of the Mars retrograde cycle as Venus opposes Mars on Tuesday and Wednesday. This pairing is usually bearish in its short term effects. With Mars extra-powerful here from its slow, backwards motion in the sky, there is a chance that the move could be somewhat larger than it otherwise would be. Monday's Moon-Jupiter conjunction is more positive so that may temporarily boost sentiment. Venus enters sidereal Pisces on Friday so that is another potentially positive indication. Nonetheless, I would expect the difficult Venus-Mars aspect to dominate the proceedings this week.

S&P downgrades France and most of EU

Mon Dieu! In a widely anticipated move, the credit rating agency S&P downgraded France and 8 other EU countries on Friday. The downgrade again puts the spotlight on the intractability of the debt crisis in the Eurozone. Borrowing costs are likely to rise and the integrity of the EFSF bailout fund may also be called into question as a result of the loss of France's coveted AAA rating. While markets reacted negatively to the news, the declines were fairly modest, an indication that many investors were taking a wait and see approach. Indeed, the week was mostly a positive one as Italy's closely watched bond auction earlier in the week went fairly well with short term yields falling sharply. Stocks in New York rose 1% overall closing at 12,422 while the S&P 500 finished at 1289. Indian stocks did even better as the Sensex added 2% closing at 16,154 and the Nifty at 4866. I had been somewhat uncertain about the market last week given the high number of close and potentially offsetting aspects in play. I noted how the early week entry of Venus into Aquarius would likely be bullish and US stocks climbed on both Monday and Tuesday. Indian stocks reserved their up move to Tuesday only. The late week was more subdued than I expected, however, as most markets rose into Thursday as Venus approached its conjunction with Neptune but then sold off on Friday once the conjunction was exact.

This debt downgrade is another classic manifestation of Saturn. Saturn represents debt and caution and so it is not surprising that we should these symbolisms more prominent when Saturn is very strong. As I have noted previously, Saturn's opposition aspect with Jupiter over the past several weeks has made it unusually strong. This has translated into a focus on the dangers of the EU debt levels and the necessity to reduce spending. It will be recalled that the initial EU debt scare occurred back in May 2010 when the insolvency of Greece was brought to light. At that time, Saturn was similarly strong by virtue of its opposition both Jupiter and Uranus.

Of course, stocks have managed to drift higher in recent weeks despite this most recent Saturn aspect. This is likely due to the boost that Jupiter has received from its aspect with Uranus. Now Neptune is joining the fray so we have a very rare alignment of four of the five most powerful planets. While I thought Jupiter's presence could generate some upside, I thought that Saturn's presence would cast more of shadow here than it has done thus far. Nonetheless, the alignment still has several weeks left before its constituents go on their merry ways. This means that worries over debt levels and restraint will likely continue for the near term. Perhaps the Saturn retrograde station on February 7 will correspond with a significant development. Planets are usually very strong when they are moving very slowly near their stations so we may expect more Saturnian concerns (i.e. debt, recession, austerity, pessimism) to crop up as we approach that date.

This week will feature the closest aspect between optimistic Jupiter and speculative Uranus. This bullish pairing has likely been most responsible for propping up the market recently. As these planets form an exact 30 degree angle here, it increases the probability that the market is close to some kind of top. Once these planets begin to separate, they will lose their strength. Optimism may therefore be in shorter supply thereafter. Another planet that bears close watching is Mars. It begins its retrograde cycle next week on the 23rd. Since Mars only turns retrograde once every two years, these two-month long cycles can be important. While they are bearish, they are not an infallible source of negativity. Mars energy may increase, but it is still possible that the positive side of Mars may manifest. As a result, enthusiasm, trading volume and quick decisions may be front and centre over the next few days. Nonetheless, the close proximity of two retrograde stations of Mars and Saturn, the solar systems' most malefic planets, should be cause for concern. That will coincide with a lot of negative energy. But it seems more likely that the irascible energy of Mars will stay sheathed until next week. In the meantime, we could see some weakness in the early going this week as Mercury is in aspect with Rahu on Tuesday. By midweek, the Sun enters the alignment of Jupiter and Saturn so that may boost sentiment once again for a couple of days. The late week period is more uncertain, however, as Friday's Moon-Mars aspect could cause some problems.

2012 starts positively; Venus vs. Saturn this week

2012 started off on a positive note as stock markets climbed on more signs of global growth in China and the US. Friday's US jobs report showed gains of 200,000, although there were a number of caveats attached to this larger than expected number. In New York, stocks posted a 2% gain as the Dow closed at 12,359 while the S&P 500 finished at 1277. Indian stocks similarly put in a winning week with the closing almost 2% higher at 15,867 and the Nifty at 4754. While I thought we would see some early week upside on Mercury's entry into Sagittarius, the extent of the rise was somewhat surprising. As expected, the late week period was less positive as the Sun-Rahu aspect put a damper on enthusiasm.

The reaction to Friday's jobs number underlined the caution approach of financial markets these days. While the number was larger than expected, the US market actually declined modestly. Part of the reason for this was that the job growth was a little deceptive owing to a high number of temporary seasonal jobs. 200K is good, but it seems less likely to be duplicated when January's report comes out. The gains for the week also came despite more worrying signs coming out of Europe. With unemployment rising sharply (e.g. it is now 22% in Spain), it is unclear how the economy will begin to grow again. While stock traders appeared to have a fresh supply of rose-coloured glasses at the ready for 2012, the bond market was taking a less sanguine view of things as EU bond yields continued to inch higher. Higher yields means higher borrowing costs which will ultimately force more austerity and slower growth. Definitely not a recipe for recovery. Private European banks have become so fearful of lending to each other that they are choosing to forgo the higher interest rate and park their money at the ECB instead.

Perhaps its only fitting that such a mixed and convoluted financial situation would occur at a time when the planets are offering signs of both hope and fear. Bearish Saturn is still very much front and center as it opposes Jupiter. Its role in the larger alignment with Jupiter and Uranus over the past several weeks is one important reason that stocks have been limping along. While some markets have melted higher, volume has been low and conviction has been lacking. At the same time, bullish Jupiter is in a very close and powerful aspect with speculative Uranus. This has been a crucial reservoir of hope in the economy and one reason why some stock market investors have not hit the panic button. Although not yet robust, the signs of economic growth are there. And even if growth underwhelms, there is still the Fed which can be relied upon to inject another dose of its magical quantitative easing to goose the market higher. Neptune has now moved into this alignment but will be closer to Saturn over the next month or so. This could easily tilt the whole equation more clearly towards the negative. To make things even more ripe, Mars is due to turn retrograde on January 23.

This week is particularly interesting because of the high number of close aspects in play. Usually this suggests larger than normal gains or losses. Cautious Saturn is well represented as it makes its closest aspect with Jupiter. At the same time, it forms a 45 degree aspect with nefarious Rahu. These are both important sources of pessimism that should not be taken lightly. On the other hand, Jupiter is still just a few arc minutes away from its bullish aspect with Uranus so that might produce some significant upward movement along the way. The short term influences are no less potent. On Monday, bullish Venus enters sidereal Aquarius. Whenever Venus changes signs it often correlates with higher prices. The midweek has perhaps fewer distinguishing aspects so those medium term (negative) Saturn influences may have more opportunity to express themselves. The late week period is the real puzzle, however. Thursday and Friday sees a remarkable Venus-Neptune-Saturn alignment, a Mercury-Pluto conjunction and a Sun-Mars aspect. The concentration of these aspects suggests a larger than normal move is more likely here. But which direction? Mercury's affliction by Pluto looks negative as does the Sun-Mars aspect, but the Venus alignment has the potential to flip things into the plus column.