Oil price jumps on Iran tensions, Jupiter continues to inflate assets

As Iran threatened to cut off European oil imports in retaliation for EU sanctions, oil prices spiked higher last week reaching almost $110. The war of words over Iran's nuclear program continues unabated as investors are beginning to price in the possibility of a more severe supply disruption down the line. Military analysts suggest an Israeli air strike is very much avoidable and may still be several months away in any event, but the market is clearly getting nervous. Stock markets had different reactions to this renewed geopolitical instability. US markets edged higher as the Dow touched the 13K level for the first time since 2008 closing at 12,982 while the S&P 500 finished at 1365. Indian stocks fared less well as its energy-importing economy is more sensitive to oil price increases. The Sensex lost more than 2% closing at 17,923 with the Nifty ending the week at 5429.

I had been somewhat bearish last week given the midweek Mars aspects to Mercury and Venus. These aspects largely played out according to expectations, especially in India where Wednesday saw the largest decline of the week. Other global markets suffered more modest pullbacks on this aspect combination. The late week Moon-Uranus conjunction in Pisces was bullish for most markets. It also correlated closely with the biggest gains in oil prices. Oil often rises whenever the Moon transits water signs such as Pisces and is supported by other positive planets.

Much of the recent economic news appears to be related to the ongoing strength of Jupiter. As we know, Jupiter is the planet of expansion and optimism. It is frequently associated with rising prices, either a result of faith in the future or inflation. In this sense, Jupiter is usually "good" influence on markets, but sometimes you can have too much of good thing. This is when prices rise too sharply and cause inflation or worse, speculative bubbles. World markets may well be in the middle of a bubble right now as central banks have injected trillions of dollars worth of liquidity in an effort to stave off another economic disaster. In the wake of the latest Greek bailout, the EU began talks with the IMF and the G-20 to form a kind of super European bailout fund that will total $2 Trillion. Oh well, it's only (paper) money. All these money printing efforts to prop up the otherwise listless economy are very much Jupiterian in nature. Jupiter's most recent series of aspects dates back to October last year near the market bottom. Since that time, we have seen Jupiter form aspects with Pluto, Saturn, Uranus, Chiron and Neptune. The Jupiter-Uranus aspect was especially powerful as both planets were near-stationary and it lasted for the better part of December. As Jupiter prepares its final aspect for the next little while as it will trine Pluto again in March, we may well wonder if the planets are providing a flashing signal that the inflation party is about to end, or at least take a significant time out.

This week offers a mixed bag of influences. On the bullish side, Mercury and Venus both enter new signs on Monday and Wednesday respectively, but it is unclear if this will be enough to keep the mood upbeat. That's because the Sun is square Rahu (NN) on Tuesday while retrograde Mars is backing into a tricky looking aspect with Saturn in the late week. I am agnostic here about the eventual outcome, although the planets this week do offer a plausible scenario for more pullbacks. India again looks more vulnerable to declines.

Stocks gain on recovery hopes; Mars threatens this week

Stocks pushed higher yet again as positive economic data suggested the US recovery was gaining steam. The market also maintained its 'no news is good news' stance about Greece as the wrangling continues behind the scenes about the latest bailout conditions. In New York, the Dow rose 1% closing at 12,949 while the S&P 500 finished at 1361, just a hair's breath away from its 2011 high. Indian stocks were even more bullish as falling inflation numbers encouraged FII inflows. The Sensex gained 3% closing at 18,289 while the Nifty ended the week at 5564.

This bullish outcome was not surprising as I noted some potentially bullish patterns in last week's post. The early week Mercury-Saturn-Neptune alignment was a possible negative, although even that was somewhat ambiguous. We did see some minor pullback on US markets on Tuesday and Wednesday but the market was quite steady overall. The absence of any significant decline set the stage for the Mercury-Jupiter aspect which took the Indian market sharply higher on Wednesday with the US following suit on Thursday.

This market still very much belongs to Jupiter. Positive numbers continue to offer upside surprises in everything from manufacturing to housing, and official inflation numbers are still low. Crude oil has again moved over the troublesome $100 threshold, however, but there is a growing consensus that the recovery is underway. But is it real or is it temporary and fake? The Fed's zero interest rate policy and massive bond buying program appears to have helped the economy somewhat but it is unclear how sustainable the recovery will be once those policies end. Ben Bernanke has asserted that these unprecedented stimulative measures will remain in place for as long as necessary. The potential problem there is that the Fed cannot keep buying bonds indefinitely. Eventually, it will incur so much debt on its balance sheet that bond yields will start to rise as foreign buyers will demand a premium to offset the risk of possible US default. The market does not seem to be anywhere near this point now, especially since Jupiter is strong and still approaching its bullish aspect with Pluto in March. As long as Jupiter remains strong, there is less likelihood that some of these negative consequences will manifest. But time is growing short. The Jupiter-Pluto aspect is exact around March 13. We could see markets move lower before that date, but it seems more likely that any large corrective move will take place after.

This week again offers the possibility of some downside. This time the planet in focus is Mars. While Saturn has so far been unable to generate much downside at all, Mars may be a different story. Mars aspects both Mercury and Venus midweek so there is a possibility of some fairly significant downside near those aspects. With markets closed Monday, it is possible we could see a reversal as soon as Tuesday. Nonetheless, I would think Wednesday and Thursday are more problematic. Some rebound is more likely at the end of the week as the Moon enters Pisces and conjoins Uranus. Friday may be more bullish in this respect, although Thursday in the US could catch some of this positive energy also.

Greek doubts jeopardize rally; Saturn continues retrograde cycle

Once again Greece has moved to the front lines of the battle over European debt crisis. After coming to an agreement which will entitle Greece to receive another 115 billion Euros in aid in order to pay its bills due in March, the whole thing seems to have hit a few snags. Against a backdrop of a general strike, mass protests and rioting, some members of the Greek cabinet have resigned and the austerity plan has yet to pass Parliament. To matter worse more problematic, some EU officials are now saying that they need to see proof that austerity cuts are actually being implemented as promised before they release the funds.

All this renewed uncertainty has started to take its toll on the financial markets as Friday's session saw across the board losses after previously posting modest gains. US Stocks ended flat on the week with the Dow closing at 12,801 and the S&P 500 at 1342. Indian markets were somewhat stronger as the main indices rose 1% with the Sensex ending the week at 17,748 and the Nifty at 5381. Gold was also mostly flat. I had been fairly non-committal about last week because there was a real mix of influences at work. Of course, the key was Saturn's retrograde cycle which began last Tuesday. While normally a negative influence, it needn't manifest immediately. Since Saturn is the planet most closely associated with issues of debt and austerity, it was quite intriguing to see the re-emergence of the Greece problem during the same week that Saturn stationed and began its four-month long backward journey through the sky. Is Friday's decline just another small pullback or the start of a larger market decline?

As I have noted previously, Jupiter still has its aspect with Pluto in mid-March before it loses some power and recedes into the background. Such Jupiter aspects are usually bullish and have been a key reason why markets rallied strongly since making their lows in early October. But Saturn has the capacity to interrupt Jupiter's liquidity party, although to be honest, I thought we might have seen more evidence of Saturn's pessimism by now. Saturn's retrograde stations can be potential turning points in the market but like most things in life, there are no guarantees. Moreover, this Saturn station occurs in an environment of very strong Jupiter aspects which have generated considerable faith in future growth.

This week begins with a possible trigger of the Saturn retrograde cycle as Mercury forms an alignment with Neptune and Saturn on Monday. On paper, this looks bearish and increases the probability of some kind of pullback early in the week. But these multiple planets alignments can sometimes produce surprising effects. The midweek looks more positive as Mercury aspects Jupiter while Venus is in aspect with Pluto. This could produce a large gain at some point. The end of the week features a Venus-Rahu/NN aspect just as the Sun approaches its conjunction with Neptune. This looks volatile and could increase the size of the move, although the direction seems less clear to me. While there are some good astro arguments for a further pullback this week as Saturn finally gets activated by passing transits, it's a lot less categorical than I would like. And the short term bullish transits should also not be ignored so I also wouldn't be surprised if the market actually ended higher.

Stocks rise on US jobs report; Saturn turns retrograde on Tuesday

Barack Obama probably thanked his lucky stars on Friday as the latest employment report showed 243,000 new jobs were created and the unemployment rate fell to 8.3%. While some commentators suggested the drop in the rate was due to falling participation rates, markets nonetheless cheered the news. Stocks extended their winning streak as the indexes rose more than 2% as the Dow has risen to a stone's throw from its high of May 2011. The Dow closed at 12,862 while the S&P 500 finished at 1344. In Mumbai, Indian stocks were also bullish as positive earnings reports pushed the Sensex to 17,604 and the Nifty to 5325.

I thought we might have seen more downside from the midweek Venus-Mars aspect but Jupiter is still very much in control at the moment. While there was some weakness early in the week ahead of this aspect, investors continued to believe the Fed-induced recovery story and aggressively bought the dips. As expected, Friday was higher as Venus entered sidereal Pisces.

So far we have yet to see much downside from those perennial malefics, Mars and Saturn. Mars turned retrograde last week to little effect, while Saturn reversing its direction this week on Tuesday February 7. It seems somewhat unlikely that stocks can shrug off this influence and continue higher. And yet, so far in 2012 the markets have done just that as those series of Jupiter aspects with Uranus, Neptune, Chiron, and eventually Pluto may generate optimism that lasts into March. Saturn's retrograde motion could interrupt this positive trend, although it seems unlikely to completely reverse it.

The bullish view holds that in an election year the government and the Fed will do everything they can to pump up the economy and the stock market. As the old saying goes, "don't fight the Fed". According to this line of thinking, as long as it is engaging in mass injections of monetary stimulus in the form of zero interest rates, bond buy backs, and Dollar-Euro swaps with the European Central Bank, the market will stay inflated. It's quite a sensible view and no doubt one that informs all those investors that have been buying stocks since the lows last October. The Fed has got their back, the thinking goes, so there is very little actual downside risk.

Unfortunately, the astrological view does not offer much support to this bullish outlook. While this current series of Jupiter aspects could easily pump up the market for the next month or two, there seems to be a shortage of bullish Jupiter aspects after March 13. This would tend to suggest that further upward momentum will be harder to come by after that date. Moreover, the first of three exact Uranus-Pluto aspects is due in June. This is a fairly rare aspect between these two distant planets which could signal another period of economic and political instability. This aspect will last for a period of 3-4 years and could mark this decade as a time of dislocation, disintegration and reorganization.

This week all eyes are on Saturn as it turns retrograde before the start of trading on Tuesday in the US. At that time, the Sun will conjoin Mercury. This is often a bullish combination so it is somewhat unclear how this may manifest with the upgraded Saturn influence. Some downside is possible here. Later in the week, Mercury approaches a tense aspect with Mars so that is another potential trouble spot. By the end of the week, Venus will form a nice conjunction with Uranus while in alignment with Jupiter so this could produce some gains.