Are stocks in a bubble?

(8 April 2021) If the Fed has its way, the party may never end.  US stocks cruised to a new record high today as the Federal Reserve again reassured investors that its easy-money policies would remain in place for the foreseeable future.  Stock indexes have nearly doubled from their Covid lockdown lows in March 2020 as the Fed's QE asset purchases has successfully enticed capital into riskier instruments like stocks in an effort to stimulate economic growth.

While the gains have been impressive over the past 12 months, some observers are beginning to wonder how long the good times can last.  All theses government and Fed interventions raise the possibility that the 12-year old bull market may have entered an unsustainable bubble stage.   And yet as inflation expectations rise alongside bond yields, it is still possible that the rally could continue for a while yet as the trapped Fed has no other options but to further inflate the bubble or else face systemic insolvency. 

The astrological outlook suggests the current rally may become increasingly vulnerable in 2021.  One important source of data in this respect is the horoscope of the benchmark S&P 500 Index (March 4, 1957).  The current dasha period for this chart is Rahu-Saturn which began in October 2020 and will last until August 2023.  Both of these planets are malefics  and therefore creates a more difficult background sentiment for the next two years. 

However, Rahu's influence may be improved by virtue of its placement in the 6th house where it tends to do well.  Also, its dispositor Venus is very well placed in conjunction with Mercury in the 10th house.  The close opposition aspect from Mars is a significant blemish, however.  Saturn has a more difficult temporal role in the chart as it aspects the Ascendant from the 7th house and forms a close square alignment with the Sun.  While other interpretations of Rahu-Saturn are possible, I would think this dasha period is a bearish influence overall and suggests that stocks are more likely to be lower than their current level by the end of the period in 2023.

Of course, we have seen little evidence thus far of any bearish influence as stocks have generally risen since the start of the dasha last October.  However, we are still in relatively early days of the three-year long dasha period.  In that sense, a brief rise in the market during a bearish dasha does not necessarily disprove the effect of dasha.  For that, we would have to examine the whole three-year period and weigh the outcomes against bearish expectations. 

Another way to look at long-term trends in stocks is through secondary progressions.  While these are a Western astrological technique, they nonetheless can provide useful information for identifying major trends.  The current secondary progressed chart has two major close alignments, one bullish and one bearish.  The bullish pairing of Venus (29Ar45) and Jupiter (28Le51) is just past exact and is now separating.  This is likely one reason for the strength in stocks over the past year.  However, these aspects tend to weaken as they separate so there may be much less upside for stocks going forward.  Some short term gains are still possible as progressed Venus enters the bullish first degree of Taurus in the summer, but generally this looks like a waning bullish influence.

On the other hand, progressed Mercury is approaching its 150 degree alignment with Saturn, both natal and progressed.  Mercury (20Ar59) is retrograde so it is backing into its alignment over the next year or two.  As a general rule, alignments tend to strengthen as they approach exactitude. Since Mercury-Saturn aspects are bearish, a strengthening of this aspect would likely translate into a weaker stock market.  

Since both the dasha period and the prevailing progressed alignments lean bearish over the next year or two, it seems more likely that the bull market may be fast approaching its climax.


Weekly Market Forecast

Stocks have pushed higher over the past week as bond yields may have started to moderate and even reverse their previous upward trend.  The early week gain appeared to coincide with the bullish entry of Jupiter into Aquarius, which also carried gold and bonds higher.  While I expected gold and bonds to rally, I thought stocks might have been more volatile on the Mars-Neptune square, but so far the bulls remain in firm control. 

The exact Mars-Neptune aspect occurs tomorrow (Friday) so there is a possibility for some downside.   Next week is a mix of influences.  The early week entry of Mars into Gemini is decidedly bearish, however, although some of the negative energy may be offset by the alignment of the Sun with Jupiter and  Pluto. 


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