GameStop short squeeze roils markets

  (27 January 2021) Stocks tanked today as nervous investors headed for the exits amid the GameStop short squeeze.  The video game retailer (ticker: GME) has become the focus of intense speculation in the past two weeks as members of the Reddit chatroom, WallStreetBets, co-ordinated a short squeeze against large hedge funds that had heavily shorted the stock, largely through the purchase of highly leveraged call options. 

As a result of the explosive 20-fold rise in the share price, the older, established hedge funds have lost billions of dollars at the hands of mostly young, amateur traders.  This generational David and Goliath story is taking place when the market is at all-time record highs, thanks largely to injections of Fed liquidity, QE asset purchases and near-zero interest rates.  The unprecedented speculative frenzy is leading some observers to wonder if the current financial bubble is about burst. 

There is also some worry on Wall St. that these hedge funds may now be at risk of insolvency.  This raises the possibility of a systemic disruption in financial markets as the hedge funds are forced to sell other stocks in order to cover their losses.  It is possible that part of today's decline may have been the result of this forced liquidation, although many investors may simply have decided to take profits and avoid any other potential turbulence in the days ahead.

The horoscope of GameStop provides an interesting perspective on this epic short squeeze rally.  While I don't know the exact time of its IPO, the first trade occurred on February 13, 2002.  Not surprisingly, the chart is very bullish here.  The Sun-Jupiter conjunction at 14 Capricorn forms a close 120 degree trine aspect to Saturn (14 Taurus).  The condition of Saturn is doubly important in this chart since it is sign dispositor of all four of those Aquarius planets (Sun, Uranus, Venus, Moon).  Basically, the positive Jupiter influence on Saturn is thereby 'distributed' back to the four Aquarius planets.

The other really positive influence this week is that Mercury (1 Aquarius) is exactly conjunct the natal Sun-Uranus conjunction, which is, in turn, aligned with natal Rahu (1 Gemini).  Both Uranus and Rahu serve as amplifying planets to the core Mercury-Sun conjunction. 

But the really unusual feature here that directed contributed to today's 130% gain is that Mercury is approaching its retrograde station and is moving very slowly.  As a rule, slow moving planets around the time of their stations become more powerful, for good or ill.  For benefic Mercury, the effect of the conjunction was therefore magnified.  Mercury is due to turn retrograde at 2 Aquarius on Friday afternoon, just one degree past exact with Sun-Uranus.  It's a very powerful configuration. 

There are two potential problems for GME, however.  The Sun-Jupiter-Saturn alignment will be exact tomorrow (Thursday) and will begin to separate.  This suggests a reduction in positive sentiment could occur as soon as tomorrow.  It could linger for a few more days perhaps, but most of its positive energy will be released this week. 

Second, Mercury will move past its conjunction with Sun-Uranus by tomorrow. This also suggests a diminishing bullish influence.  At the time of writing (Wed. evening), GameStop (GME) is already down sharply in after-hours trading.  It is very possible that we have seen the top already and that it will decline further tomorrow. 

Of course, once Mercury turns retrograde on Friday, it will again transit across the Sun-Uranus conjunction next week.  This could provide another boost for the stock price, if only for a couple of days.  But the declining positive energy next week from the Sun-Jupiter-Saturn alignment suggests that higher highs above 380 are less likely. 


Weekly Market Forecast

Stocks have moved lower thus far this week.  The bearish Sun-Saturn conjunction that I noted in last week's discussion of the S&P 500 chart is part of the reason, albeit it manifested a bit later than I expected.  The Sun is now approaching its conjunction with Jupiter tomorrow.  While this pairing is normally bullish, there is also a Full Moon tomorrow.  Full Moons have a bearish bias, even if the statistical effect is fairly modest.  There is also an ongoing square alignment with Mars which is another reason to keep an open mind about outcomes.  

Tomorrow is also noteworthy as it will feature as Venus-Pluto conjunction.  Again, this is normally a bullish pairing although this one comes with a caveat.  The conjunction occurs at 1 Capricorn, which is the exact location of the south node of Saturn.  Anything to do with Saturn is cause for some concern, so this putative bullish Venus-Pluto conjunction has a rather large asterisk.  While I would not be surprised if we got a strong rally tomorrow and/or Friday, the influence of Saturn and the Full Moon introduces some uncertainty into the equation.  

The outlook next week is mixed at best as the Sun-Mars square will likely bring some additional downside at some point.


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Markets cheer Biden Inauguration

(20 January 2021) US stocks rallied to new all-time highs today as Joe Biden was sworn-in as the 46th president of the United States.  Markets have responded favourably to Biden's promise of more Covid stimulus and more infrastructure spending amid an ongoing pandemic which has left millions without jobs and without hope.  While the economy continues to sputter, the outlook for 2021 is more positive as vaccine rollouts should allow for a full recovery. 

The stock rally looks very overbought here as the S&P 500 is trading 14% above its 200-day moving average.  Other indexes are even more stretched as the Nasdaq-100 is trading at 19% above its 200 DMA and the small cap Russell 2000 is trading at an incredible 29% over its 200 DMA.   While the powerful upward momentum is clearly bullish, it seems that a significant pullback is only a matter of time. 

The current planetary alignments suggest that a pullback is becoming very likely in the coming days.  As I noted last week, there is a gradual shift underway as bullish Jupiter is weakening while bearish Saturn appears to be strengthening.  Today's planets actually held considerable bearish potential as Mercury and Saturn aligned with Neptune and Rahu (North Lunar Node) while Mars conjoined Uranus.  Despite these alignments, stocks rose anyway, possibly due to the proximity of Jupiter to Saturn in sidereal Capricorn.

Nonetheless, Jupiter's positive influence seems likely to diminish as it moves away from its conjunction with Saturn.  The gradual separation of Jupiter from Saturn will create a more unstable condition in the sky which should manifest in negative collective sentiment.  We can also see that Saturn (10 Capricorn) is fast approaching its square aspect with Uranus (12 Aries) which will be another bearish planetary influence in the coming weeks.  The exact Saturn-Uranus square will occur on February 17. 

More specifically, the current Saturn position may be doubly difficult for markets since it occurs in a sensitive place in the horoscope of the S&P 500 Index.  In my experience, markets tend to fall whenever Saturn transits one of the house cusps in this chart.  Currently, Saturn is just one degree from the 9th house cusp.  Aside from any other transit configurations, this Saturn placement makes declines more likely in the coming days.  One pattern worth watching is the Sun's conjunction with Saturn atop the 9th house cusp on Friday the 22nd and Monday.  While Jupiter's lingering proximity could offset some of the negativity, it is nonetheless a pattern with some bearish potential.


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Twitter bans President Trump after US Capitol attack

 (13 January 2021) These are anxious days for the United States.  In the wake of the attack on the Capitol building in Washington, DC, Americans are being confronted with some serious questions about the direction of their country.  Even though the Trump presidency will end next week, Trump is likely to remain a significant source of opposition over the next four years. 

Not even a Senate impeachment conviction in the coming weeks will keep Trump from maintaining his hold over most of the conservative half of this deeply divided country.  While a conviction of the impeachment charge would forbid him from holding the presidency again, Trump will still have millions of loyal supporters who will continue to feel aggrieved over this election result.

An effort is already underway to isolate and marginalize Trump as Twitter shut down his account along with the accounts of thousands of his supporters over the weekend.  While this banning was not surprising given the accusations of incitement made against Trump, it does raise larger questions about the future of freedom of speech in the internet age. 

Twitter, Google and Facebook are all private companies who are within their rights to remove anyone who does not abide by their terms of service.  However, they enjoy near-monopolistic power and have become de facto public utilities not unlike the phone companies of old.   Social media companies like Twitter may therefore be targeted for antitrust break-up or perhaps some kind of government oversight down the road. 

The backlash against Twitter was swift this week as the stock has declined 10% in recent days.  Politics aside, part of the reason for the decline is that Twitter has lost its most famous and profitable user, President Trump.  But the other reason for the decline was that Twitter could see its traffic decline as alienated conservative users abandon the platform.  While the rival app Parler has been shut down by its webhost owner, Amazon, it seems likely that rival conservative social media may emerge during the post-Trump era.

The Twitter stock price provides a possible window into future developments.  In the near term, we could see more troubles for Twitter in the coming days.  The Mars-Uranus conjunction on January 20 will align with natal Ketu and could coincide with more volatility in the share price.  The Sun-Saturn conjunction on January 22-23 will reiterate the T-square affliction to Mercury and the Midheaven again. 

Of course, it is important to remember that these planetary alignments may simply reflect more downside in the share price and may not necessarily indicate more backlash against Twitter's policies.  But these alignment do suggest that the month of January as a whole could prove challenging for Twitter and its CEO, Jack Dorsey.

February doesn't look much better as Saturn will form a square aspect with natal Rahu (13 Libra) and then conjoin the 2nd house cusp (14 Capricorn).   These negative influences suggest more downside for the stock price is very possible.  It also increases the likelihood that Twitter and Dorsey will remain on the defensive in the free speech debate.

The outlook for Twitter improves in the late spring, however, as Jupiter will station retrograde at 8 Aquarius in June.  This Jupiter placement will exactly aspect Mercury and the Midheaven and should reflect better days for Twitter.  This suggests some favorable resolution is more likely, perhaps such as clarifying its free speech policy which brings back conservative users.   We shall see how this important debate unfolds in the months ahead. 


Weekly Market Forecast

Despite last week's events, most stocks markets are still trading at or near their all-time highs this week.  Investors are focused on the promise of a much larger Covid stimulus package from the incoming Biden administration.  Biden is expected to announce the details tomorrow so we will see how the market reacts.   The continuing rally is perhaps less surprising given the multi-planet alignment of Jupiter, Saturn, Mercury, Mars, Uranus and Chiron. 

However, bullish planets Jupiter and Mercury are now separating from the alignment which may weaken positive sentiment.  Moreover, this will leave more bearish planets (Mars, Saturn, Uranus, Chiron) in the alignment which will increase the downside risk in the coming days. 

Next Wednesday's Mars-Uranus conjunction is also worth marking on the calendar.  This is a more volatile combination which is likely inauspicious for the incoming Biden administration, and probably unwelcome for the stock market. 


For more details, check out my weekly subscriber newsletter which is published every Saturday afternoon (EST).   I outline the key technical and planetary influences for US and Indian stocks for the short and medium term, as well as currencies, gold and oil.