(8 October 2018) It's
a classic case of good news and bad news. The good news is that
US economy is getting stronger with historically low unemployment
rates and 4% GDP growth. But the bad news is that this is
creating inflation pressure so that interest rates must rise. The
Federal Reserve raised rates again at its September 26th meeting
and the bond market has seen yields spike last week as the
benchmark 10-year rate pushed above its previous high to close at
3.22%. This means that the cost of borrowing is going up and that
could eventually undermine the economy as debt servicing costs
rise.
The spike in yields proved too much for the stock market as US
stocks took a significant hit last week. It seems that US markets
are finally catching up with the rest of the world. Asian and
European markets have been falling since September -- or in some cases
like China, since January -- as rising US rates are creating havoc
for highly leveraged foreign corporations. Indian stocks, for
example, have tumbled more than 10% since their late August top as
the BSE-Sensex is now trading below 35,000.
I had been quite bearish for September given the unusually close
Saturn-Ketu-Uranus-Mars alignment. But US stocks had managed to
escape the pessimism of this pattern largely undamaged. Things
may be changing now that Venus turned retrograde (Rx) on Friday,
October 5th. Unlike nasty planets like Saturn, Ketu and Mars,
Venus is typically a benefic planet that is associated with
wealth, love, beauty and in the economic context, with value and
optimism. For this reason, Venus alignments more often coincide
with market gains.
But once every 18 months or so, Venus turns retrograde and begins
its 40-day retrograde cycle where it appears to move backwards in
the night sky. The energy of Venus is therefore transformed. Its
symbolic associations remain the same but they are expressed
differently and in often unpredictable and less pleasing ways. In
market terms, Venus retrograde periods have a more negative
correlation. If Venus is mostly bullish when it is moving
forward, it tends to have a bearish influence when it is
retrograde.
This is not to say that stocks decline throughout the entirety of
its 40-day retrograde cycle. But some kind of significant decline
is probable at some point during that cycle. And we should note
that some Venus retrograde cycles aren't bearish at all. This was
the case in March 2009 when the bear market
bottom coincided very closely with the Venus retrograde station, i.e. stocks rose
while Venus
was retrograde. This is another reminder that these sorts of single
planetary factors do not guarantee a particular outcome and should
be seen as probabilistic influences.
But if we take a look at recent Venus Rx periods, there is nonetheless a
strong bearish association. The previous Venus retrograde cycle
occurred on 4 March 2017 and lasted until 15 April. The Dow had
just peaked a few days earlier on 1 March as stocks began a
pullback that lasted for the duration of the Venus Rx cycle.
Venus ended its Rx cycle and stationed direct on 15 April just a
few days before stocks bottomed and the market resumed its
rally. If only Venus Rx cycles always worked this neatly!
The preceding cycle began on 25 July 2015 and lasted until 6
September. The Dow had been already edging lower during the
summer but the Venus retrograde cycle seemed to closely correlate
with a major sell-off in August. While the rebound began towards
the end of the Venus Rx cycle, stocks remained much lower than
they have been before the cycle began.
And before that, Venus turned retrograde on 21 December 2013 and
then stationed direct on 31 January 2014. Stocks had been
rallying at the time that Venus stationed Rx and they continued to
climb for another week before peaking and reversing lower. By the
time of the end of the Venus Rx cycle on 31 January, stocks had
suffered a net loss through the 40-day cycle. They would bottom
just two days after Venus stationed direct and resumed forward
motion.
And the preceding Venus retrograde cycle began on 15 May 2012 and ran
until 27 June 2012. This is perhaps the least compelling case of
the four cases here and yet Venus Rx was not bullish by any means.
Venus turned Rx on 15 May when it broke key horizontal support. This
bearish move produced substantially lower lows as the Venus retrograde
cycle lived up to its difficult reputation. However, stocks recovered
somewhat by the time Venus stationed direct on 27 June although they
remained well off their previous high. While stocks finished largely
flat for the 40-day cycle, one cannot characterize this Venus Rx cycle
as bullish in the slightest and the presence of an additional decline in
the middle of the cycle seems appropriately bearish.
The takeaway here is that Venus retrograde cycles have a deservedly
bearish reputation. While this sample size is admittedly small, stocks
are more likely to feature a decline during the cycle although they may
not necessarily end up lower.
As the current Venus Rx cycle began last Friday 5 October, it raises the
question of where stocks could be when Venus stations direct on 16
November. There are few things to note in this regard. First, I would
say there is a greater potential for more downside during the next six
weeks. This could mean that US stocks fall further but could rebound
by mid-November. Second, there is a somewhat greater likelihood that
stocks
will be lower in mid-November than they are now. How much
lower is impossible to say based on this single factor alone but
certainly the negative influence of Venus retrograde elevates the risk
to a level greater than chance. And, of course, there is still the
possibility of an outlier case like 2009 where the Rx station proved
significant but in an unexpected way as stocks rebounded while Venus
was retrograde in the weeks following the station.
This week could see additional declines as Venus exactly aligns in a
tense square aspect with Mars midweek. This was likely a factor at the
end of last week as it was within a couple of degrees but this week it
is exact. An added burden on sentiment may be the Mercury alignment
with Saturn and the Lunar Nodes, Rahu and Ketu, later in the week.
For more details, feel free to check out my
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(23 October 2018)
Stocks are falling again today as the market begins to digest the
fallout of Trump's trade war. There is growing concern that China's
economy is in trouble while bellwether Caterpillar disappointed
investors with their forward earnings guidance today. Rising costs and
tariffs were specifically mentioned as the reason for the expected
sales slowdown. The Dow has fallen 500 points so far, and is again
trading under 25,000 for the first time since early July. This is all
bad news for Trump, of course, as the midterm elections are just two
weeks away.
