Stock Market Weekly Comments for the Week Beginning December 24, 2007

Written by Raymond Merriman

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Financial Astrology doesn’t get much better than we witnessed last week. Saturn turning retrograde last Wednesday, followed by the beginning of the Moon’s transit in Taurus on Thursday, kept equity prices in check for most of the week. But by Friday, the restriction lifted, and stocks in the Western Hemisphere rallied swiftly. Not only stocks, but precious metals also rallied strongly following Saturn station last Wednesday. As stated in last week’s column, “One of the more important signatures in this cluster happens this Wednesday as Saturn turns retrograde. Saturn stations, along with Venus and Uranus stations, have the highest correlation of all planetary stations to important reversals in U.S. stock indices, as reported in “The Ultimate Book on Stock Market Timing Volume 3: Geocosmic Correlations to Trading Cycles.” As demonstrated therein, Saturn retrograde has a 65% correlation to primary cycles within an orb of 11 trading days, and a 70% correlation to 4% or greater reversals within only 4 trading days. That’s the statistics. The astrological observation is that any financial markets that are declining into Saturn stations have a high probability of bottoming and turning right back up again within a couple of trading days. And as one can see, there are a number of financial markets that are declining right now, including precious metals, currencies, treasuries, and stocks.” The low in the Dow Jones Industrial Average last week was at 13,092 on Tuesday. Even as late as Thursday morning, the DJIA was still trading around 13,150. But by Friday, the market closed over 300 points higher, at 13,470. On Friday alone, it was up 225 points.

Gold and Silver also struggled into Thursday of last week. Ion the case of Gold, the February contract made a low last Monday at 792.50, and re-tested it at 797.70 on Thursday. By Friday, it was nearly $20.00 higher. March Silver fell to a new low for this primary cycle at 1382 on Monday. By Friday it was up to 1456. Even the Treasuries got into the act. A couple of weeks ago this column outlined a trading set up via historical financial astrology studies only. In this discussion, it was pointed out that transiting Jupiter would enter Capricorn on December 18, and immediately form an opposition to Pluto and conjunction to the Sun in the Federal Reserve Board horoscope December 18-23. In the past two cases on record of this transit, treasuries made a peak or secondary peak before commencing a decline. A top was anticipated in that time frame, and sure enough on Thursday, December 20, March T-Notes made secondary peak at 113/24, up two whole points from their trading cycle low of one week ago, and only about a half-point off their multi-year high of December 4. Now let’s see if history follows the same pattern as before, and interest rates start to rise for a few months and Treasuries start to decline in value.

Short-Term Geocosmics

Saturn’s influence is over as of Wednesday of last week, and now we commence a Jupiter period through this week. As outlined in last week’s column, “The following week will find the Sun and Jupiter conjunct, and both in a rare opposition to Mars during the same week. As indicated before, Jupiter has tendency to expand or exaggerate things whenever it is in force, especially with Mars. So, even with the holidays talking place then, we might see large price swings. These signatures indicate the potential for either euphoria or panic. And since Jupiter and Sun conjunct the Federal Reserve Board’s natal Sun (and opposite its natal Pluto), and since the stock market is clearly showing its displeasure with the FED by declining, we may see yet another surprise rate cut before the holiday season is over. That would make everyone euphoric and in the holiday mood. And wouldn’t Bernanke, the Sagittarian, be the perfect person to be cast in the role of Santa Clause – especially after what happened this week?” Well Bernanke didn't lower interest rates again, but Central Banks did inject plenty of liquidity into the system (which is just as welcomed), especially in Europe, and this led to the huge rally by the end of the week. It would not be surprising to see this rally continue now into next week as we come to the end of the year.

One area of human activity that might be cause for concern is that Mars will also be quite active next two weeks, with its oppositions to the Sun, Jupiter, and then Pluto. This could coincide with an increase in hostilities, and perhaps even a military confrontation.

Longer-Term Thoughts

Last week I reported on the delayed effect the Saturn-Neptune opposition that was in effect August 2006 through June 2007. I mentioned how unethical and deceptive activities in business and government that took place then would probably not be fully revealed until 1-2 years afterwards, and how in fact some of those revelations are just coming to the surface now. So perhaps it was not too surprising to see a front page story on Friday’s “Wall Street Journal” titled: Fraud Seen as a Driver in Wave of Foreclosures. There were a lot interesting facts in that report that pertain the Neptune effect, including the following quotes: “Suspicious Activity Reports shot up nearly 700% between 2000 and 2006;” In 2006, losses from fraud could total a record $4.5 billion, a 100% increase from the previous year.” Arthur Prieston, chairman of the Prieston Group which provides mortgage fraud insurance, states “We’ve created a culture where a great many people know how to take advantage of the system.” The whole article is based on the idea that “Fraud goes a long way toward explaining why mortgage defaults and foreclosures are rocking financial institutions” today. But note how much fraud has increased since the Saturn-Neptune opposition was in effect. My point is that the fraud perpetrated then is coming to light now, and will continue to do so in the next 1-2 years. And it is not only in business that these revelations will take place, but also in governments.

But there is a positive side to Saturn and Neptune too. Just as it can rule deceit and fraud, it can also open the pathway for greater honesty, and a desire to act with honor and virtue. Saturn and Neptune together pertain to the understanding of a greater law, a universal or spiritual awareness that provides an inner sense of right versus wrong. And with this understanding comes an even greater awareness that one is ultimately accountable for whatever actions they initiate in the mundane world. These actions commence a cycle whose consequences are entirely related to the intention that led to each action. And thus it is that those who sought to gain at the expense of others by behaving deceptively to others –especially during the Saturn-Neptune opposition period – now have to bear the consequences of those fraudulent actions. On the other hand, those who chose instead to behave with a sense of honor and virtue during that same period, are also now bearing the consequences of those decisions. The difference is this: those who violated these universal principles may now be suffering, outwardly or inwardly. If outwardly, their freedoms may be on the verge of being taken away. And those who chose right behavior during those times of temptation, are now able to find an inner peace, as well as a sense of gratitude, for all things and all people in their life. And it is especially at times like this, when we enter the end of the year and the most sacred of all periods for many cultures (the winter solstice), when it is so easy to concentrate on those things for which to be thankful – even little things, like treating respectfully those you live with, befriend, work with, or do business with. And knowing that by consciously choosing to behave in this fashion, you contribute to making this planet a better place in which to co-exist with other souls who inhabit this same planet, at this same incredible time in history, with you.

Happy solstice, and happy holidays.

Stock Market Comments For The week Beginning December 17, 2007

Written by Raymond Merriman from http://www.mmacycles.com

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The powerful rally that began in world equity markets within two trading days of the Uranus stationary direct point of November 24, reached its peak early last week as the 13-year Jupiter-Pluto conjunction unfolded on December 11. This was right into critical reversal zone as described in last week’s column, and in our recent subscription reports. It was also the day that the Federal Reserve Board did what we expected – it lowered the Fed Funds rate by a quarter point and tacked on a cut to the discount rate too. The Dow Jones Industrial Average promptly began a sell-off of nearly 300 points by the end of that day. Other world indices followed. Stock traders clearly were not impressed with only a quarter point cut, and showed their displeasure with Bernanke and company accordingly. In fact, it might be an indication of the street’s disappointment in Mr. Bernanke as of late. In the wording that followed, the FED seemed to indicate that the concern about inflation was moderating. The risks of inflation were now balanced against the risk of an economic slow-down. By Friday, that type of guidance by the FED proved about as useless as a stock tip from your neighborhood bar patrons. The CPI inflation report on Friday morning showed a much higher-than-expected rise of .8% for the month. Once again, the FED seemed to demonstrate that it is not interested in doing anything about preventing inflation, except to talk strong about it. All their actions in the past year have been pro-inflationary, or at least not anti-inflationary. It is clear their primary intent is to try to avoid a recession and continue fueling growth in the economy (and confidence in it), and hope that strong warnings and words alone will fight off inflation. But it appears the Street is getting wise to this game. I don’t think they like Bernanke and team much after this week.

As the stock markets promptly started to give back a big chunk of their gains, many indices now find prices testing their 25-day moving average already. This week thus begins a critical juncture for world indices. Will they complete a corrective decline this week and resume their new up trends started in late November? Or is the Jupiter-Pluto conjunction such a powerful reversal force that these indices will continue falling even harder, and even past their lows of last August and November?

Stocks indices weren’t the only markets to experience a pullback last week. All foreign currencies (vis-à-vis) the U.S. Dollar also declined. Most significant may be the fall in the Euro currency, which as explained in our recent newsletters, was due to make a top and begin a noteworthy decline into its 26-month cycle trough, due shortly. Silver also fell hard. After posting a multi-week high at 1497 on December 12, the March contract fell all the way down to 1389 the next two days, its lowest level in two months.

Short-Term Geocosmics

We just left one powerful geocosmic reversal zone of December 7 through December 11. And now we begin another that lasts much longer: December 18 through January 12. This reversal zone may be compromised a bit due to holiday markets. The volume is apt to be low during the central part of this reversal period, and in fact many days will find markets closed altogether. Still, some of the signatures have strong historical correspondence to primary or greater cycles in stocks and commodities, and deserve to be treated carefully. One of the more important signatures in this cluster happens this Wednesday as Saturn turns retrograde. Saturn stations, along with Venus and Uranus stations, have the highest correlation of all planetary stations to important reversals in U.S. stock indices, as reported in “The Ultimate Book on Stock Market Timing Volume 3: Geocosmic Correlations to Trading Cycles” (it makes a great holiday gift for that special trading friend). As demonstrated therein, Saturn retrograde has a 65% correlation to primary cycles within an orb of 11 trading days, and a 70% correlation to 4% or greater reversals within only 4 trading days. That’s the statistics. The astrological observation is that any financial markets that are declining into Saturn stations have a high probability of bottoming and turning right back up again within a couple of trading days. And as one can see, there are a number of financial markets that are declining right now, including precious metals, currencies, treasuries, and stocks. Yet as we know from our studies of astrology, Saturn and squares are not always bearish, nor are trines and Jupiter always bullish. And thus those markets that have been rising may peak out now too, like grains, which have been soaring again as of late. Wheat is again making new all-time highs, Soybeans are making new contract highs, and Corn is back at its ten-year high recorded last June.

The following week will find the Sun and Jupiter conjunct, and both in a rare opposition to Mars during the same week. As indicated before, Jupiter has tendency to expand or exaggerate things whenever it is in force, especially with Mars. So, even with the holidays talking place then, we might see large price swings. These signatures indicate the potential for either euphoria or panic. And since Jupiter and Sun conjunct the Federal Reserve Board’s natal Sun (and opposite its natal Pluto), and since the stock market is clearly showing its displeasure with the FED by declining, we may see yet another surprise rate cut before the holiday season is over. That would make everyone euphoric and in the holiday mood. And wouldn’t Bernanke, the Sagittarian, be the perfect person to be cast in the role of Santa Clause – especially after what happened this week?

Longer-Term Thoughts

The last two weeks have not been good for President George W. Bush. This station of Saturn is taking place right on his natal Mars. Mars is the planet of action, of wanting to something and do it now – especially if it involves combat. His progressed Mars is conjoining his natal Moon and Jupiter in Libra, a signature I reported in last year’s Forecast Book would indicate expanding military involvement, and not withdrawing forces as the special Baker-Hamilton Commission he appointed suggested. For the past several months the White House has warned the world, and especially Americans, about Iran’s nuclear ambitions, and the threat it was posing for the U.S. and Europe. And what happens now that the restrictive Saturn comes to sit right on his natal Mars? An intelligence report (NIE) comes out that states that in 2004, Iran stopped its nuclear development program that the White House was so concerned about. And it suggests that Mr. Bush may have known about this report as early as August 2007, and his Vice President knew about it even before Mr. Bush. Talk about being stopped right in the middle of your tracks…

There are a lot of questions that are being asked about this matter and other matters of the past couple of years. You may remember that the most significant long-term planetary aspect in effect this past year was the Saturn-Neptune opposition. And you may remember that this aspect has a historical correlation of leaders being questioned (“special investigations”) as to “what they knew and when they knew it,” as the public becomes increasingly suspicious of whether or not it is being told the truth. Think of Watergate in 1971-72, the last time this aspect unfolded. But it wasn’t until 1973-74 that the matter was raised to the public’s awareness and the consequences took effect. Or even the quarter cycles that occurred in 1989 when the father was president and promised not raise taxes, but did just that after being elected. Or Bill Clinton in 1998 (another quarter cycle of Saturn-Neptune) saying right on television that “I never had sex with that woman,” only to find out a few weeks later that wasn’t exactly true (depends on what the meaning of “is” is). What happened in 2006-2007 may not be fully known right now. But chances are it will be coming out within the next two years, and maybe even few months. The thing is, American don’t like to be lied to by their leaders. They don’t like to be duped into entering wars either without verifiable intelligence that supports the threat their leader tells them is present. Is Iran a threat? Is the leader of a country who claims that Israel needs to be wiped off the earth a potential threat? I tend to think so. But the credibility of those who oppose this leader is severely hampered when their own words are found to be wanting in accuracy. And when that happens, it is not surprising that one’s desire to do what he wishes is severely curtailed by his opponents. And that is not uncommon when transiting Saturn sits right on your natal Mars for a few weeks. The good news for Mr. Bush is that this aspect leaves in about a month. The bad news it will return again before his term is over. The consequence of what is being learnd now is not over.

The Sagittarius New Moon and Stock Market

by Kaye Shinker from http://www.astrologicalinvesting.com/html/newsletter.html

New Moon forecasts show general trends for the month, here is the overview of the month ahead.

Mars is retrograde from Nov 15-Jan 28, 2008 and all other planets are direct until Saturn goes retrograde on Dec 19th.

Of the past 10 times that Saturn has stationed and turned retrograde it has marked the low for the month in the Dow 8 times. Jupiter changes signs the same day and when Jupiter changes signs it usually signals a low followed quickly by an up market.

The general effect of Mars Rx is that folks tend to get tired quickly. The population is overworked and overstressed and vulnerable to 'bugs". Take your vitamins and drink your fruit juice. Tired folks will shop the internet sales and many will send gift cards. Sales in carry out food as well as bakery items will increase. Avoid new romances. A monastic lifestyle is, ok, boring, but OK till the end of January.

If you are starting a business during this week, it will be very powerful. Mars Rx tends to put a premium on the efficient use of energy. If your business idea will help people conserve electricity, sell labor saving devises, or offer items that help people relax and enjoy life, then you will have an extra edge on success.

All of the other planets are direct including Uranus and Neptune. The first big event astrologically speaking will take place Tuesday, December 11, when Jupiter and Pluto are conjunct the Galactic Center of the Milky Way. These planets will block some of the electro magnetic chatter emanating from this particular point in space. If you are looking for inspiration on any project, this is the day to take notes. Write in your notebook pages of everything that sneaks into your brain.

Of course be careful of day dreaming while operating vehicles! Even traders will be mesmerized and volume will slow.

This could be the week of the Santa Claus effect that everyone anticipates in December. CEO's will scoop up their bonus dollars and find gifts for everyone on their list. This, plus the European shoppers could put retail in the black.

Jupiter in Capricorn

Next, Jupiter moves into Capricorn on December 19th. 75% of the time it is a one day drop of 300-400 points in the Dow. However, changing signs will effect world markets, and Jupiter does not like to change signs. The change has been building since Thanksgiving and traders have begun to notice the change in emphasis on various market sectors. The Markets hate change and since no one has an idea of what to do they all stop trading. The Santa Claus effect is over after the 21st. I expect it will be a long holiday with half the world out on the 24th and 25th, and the Brits out on the 26th. I would expect traders to close their positions on the 21st. The same will be true for New Years. It could be a very skinny week in the markets.

However Snow White is kissed by Prince Charming and the 7 Dwarfs go back to work after the holidays Whistling Hi Ho, Hi Ho, the market goes up you know.

Reality check

Volume almost screeches to a halt. Everyone begins to check their bottom line. Dividend plays that looked safe are not. Reits are out, metals are in. Oil is over, and gems are desirable. Mutual funds are boring, individual funds are exciting. Senior citizens are a viable market, teens are too fickle.

Jupiter in Capricorn is all about managing your assets. Folks don't mind taking personal responsibility. Self directed asset management is in vogue. Sectors worthy of investigation and investments for the next six months are: metals, machinery, precision instruments, and eye care products.

The New Moon appears in the Ninth and many of you have scheduled a fantastic vacation. Others have found a collection of new books, others have added new CD's, DVD's and Video games to their collections. Self directed holidays are in order and escaping the snow seems to be an excellent idea.

Fortunately, Santa takes a deep breath and comes down the chimney and all of the children love their new safe toys. Dads unscramble the new electronic toys and mom surfs the net checking for a new sewing machine to let out all the seams in her New Year's Eve party outfits.

World wide peaceful coexistence is the rally cry. International trade agreements are discussed, and markets are confused as to how these treaties will increase their profits.

Labor is really in short supply and winter ailments are causing shortages even in the best staffed companies. Places that shut down through the holiday season will profit.

Hospitals and other institutions will have huge staffing problems. A few mysterious illnesses will invade their territory. Build up your own immune system and help others do the same. Communicate and research with your keyboard whenever possible.

Rumors might spread through Wall street suggesting that Santa Claus and Goldilocks ran off together, and the Grinch stole Christmas.

Stock Market Comments For The week Beginning December 10, 2007

Written by Raymond Merriman

This week’s a report is being issued before U.S. markets close, due to travel plans. Most world stock markets continued their powerful rally following our last critical reversal zone of November 24, +/- 3 trading days. This corresponded with Uranus changing directions, and within 2 days or less, most of these markets made their new cycle lows, and have rallied substantially in the past 7-10 trading sessions. In the Pacific Rim, for example, the Japanese Nikkei market has now rallied nearly 10%. After making a new yearly low of November 22 at 14,669, it traded as high as 16,107 on Friday, December 7. During this same two week-period, the Hang Seng of Hong Kong rallied from 25,861 to a high of 29,962, for a gain of nearly 16%. India’s Nifty soared from a low of 5394 on November 22 to a high of 6042 on December 7, for a gain of nearly 12%. Australia’s All Ordinaries index also rallied from a low of 6373 on November 22 to a high of 6727 on Friday of this past week. Similar strong gains were noted during this period of time in European and U.S. markets, which are still trading as this is being written. The Dow Jones Industrial Average, for instance, bottomed at 12,724 on November 27, and by early Friday (8 trading days later) was up nearly 1000 points to 13,650. Short-Term Geocosmics We are now in the middle of another potentially powerful geocosmic reversal zone. On Friday, December 7, the Sun formed a waning square Uranus. On Tuesday, December 11, Jupiter will make its 13-year conjunction to Pluto. As stated in last week’s column, “Jupiter and Pluto come together only every 13 years, and together they can coincide with a sense of urgency, even hysteria due to the nature of Jupiter (it exaggerates whatever it contacts). In this case, it contacts Pluto, ruler of debt and fear of the worst. The sub-prime mortgage tragedy is a perfect example of today’s Jupiter-Pluto crisis…. to read all the solicitations by the financial expects, you would think that this crisis will never end. The aspect soon comes to an end, and just as it has in the past, such crises will come to an end too.” In the past week, we have already begun to see the government forge a plan to deal with this crisis. Also starting this week, heliocentric Mercury (not geocentric) will starts its ingress of Sagittarius, December 8-19. Typically, at least the first 4-9 days of this ingress correspond with sharp moves in many markets, including precious metals. My observation is that about 65% of the time metals will be higher, 20% of the time sharply lower, and 15% of the time, just back and forth. It will be interesting to see what happens this time, for it is occurring during a Mars retrograde. But perhaps even more important than the signatures of this week will be the period of December 18-31 when transiting Jupiter, the Sun, and the Mars retrograde will ingress over the 0 Capricorn and 0 Cancer points. In the process, they will conjoin the Sun and Pluto opposition at 0-1 degrees of Capricorn-Cancer in the Federal Reserve Board chart (founded December 23, 1913). Theoretically, this will correspond to important movements in the interest-related markets, like Treasuries and currency rates. For more on this, see below. Longer-Term Thoughts Last week’s column stated the following: “But one thing to keep in mind: the market community is looking for the Federal Reserve to make another interest rate cut. I agree with this outlook, for after all, as Jupiter moves into Capricorn in mid-December, it will oppose the FRB Pluto and conjunct its natal Sun. This is a signature of accommodation, or lowering rates. We should have this gift in time for the holiday season. And so as long as that belief is out there, there is no reason for the stock market to go back down to the levels seen a week ago.” That statement has proved correct as the stock markets continued their torrid advance, following the November 24th episode of Uranus turning stationary direct. Stock indices around the world bottomed within 2 days before to two days after Uranus changed direction, as suggested And a FRB easing policy – lowering of interest rates - is something that shows up in the Treasury prices. As Treasury prices go up, interest rates come down, and vice-versa. The history of the only two times that this event has occurred since the first trade of the U.S. Treasury Bond market supports this astrological interpretation. The first occurrence of transiting Jupiter in conjunction to the FRB Sun-Pluto opposition took place January 19-24, 1984. On January 4, 15 days before the aspect occurred, T-Bonds made a significant low at 69/16 – its lowest level since August 1983. Between January 16 and February 2, T-Bonds topped out between 71/14-71/24, a new monthly high. It was the last high (low in interest rates) seen for quite awhile. By July 2, T-Bonds were near historic lows at 59/12. In other words, the FRB was accommodative, or at least not tightening, when Jupiter first went into Capricorn, as it conjoined the FRB Sun. This was reflected in the Treasury prices, which rallied during that period to important crests. But once it passed, Capricorn exerted its expected effect on T-Notes (and FED policy) as rates went up (or, as T-Bonds went down sharply). The second and only other occurrence of the 12-year cycle of Jupiter in Capricorn was its last passage of January 3-8, 1996. Once again, 2-3 weeks prior to this transit, T-Bonds were making a trading cycle low of 117/29 on December 19, 1995. Once again, T-Bonds rallied sharply right into the Jupiter transit of the FRB Sun-Pluto opposition, topping out at 122/08, on January 4. Price didn’t break down immediately (they still traded as high as 121 on February 13). But they did top out January 4, and once they started falling, they did not stop until July 8 of 1996. By that time they were all the way down to 105/28. Lest one believes that FRB easing should only show in shorter-term maturities, the same pattern was reflected in the 2-year notes as well. So here too, Jupiter entering Capricorn corresponded with a crest. After that, rates went up and T-Bonds fell sharply for nearly 6 months. Jupiter will conjoin the Sun-Pluto opposition December 19-23, 2007. Will a similar pattern happen again? Can the fact that the pattern was nearly identical in both prior cases, serve as useful trading or investment guide this time? Of course– as long as one knows how to use it as a guide. I would not bet against the street’s conventional wisdom that the FRB will lower interest rates this month. And if so, these studies suggest that this month may be the last chance to lock in these low rates of today for several months, for those thinking of re-financing. Previously I have stated that it is not the purpose of this free weekly column to make such predictions. The purpose of this column is to educate the reader on the astrological environment coming up. In making market forecasts, I – like most of you – use several tools. Astrology is one of the factors, and the least understood of the tools I use. Hence this free weekly column. But my forecasts and recommendations are reserved for subscribers of my reports, and they are based upon at least three other tools (cycles, technicals, and chart structure, and even fundamentals). It is very seldom that you get all of these studies pointing in the same direction, but when you do, it has a high probability of unfolding, and therefore warrants a forecast and a recommendation. Some (very few) readers may sometimes lament that market analysis is much about “… if the market does this, then expect that,” instead of “the market will do this and that.” The fact is that over 70% of the time, these studies are not complementing each other, and it is simply a case of waiting for “this or that” to unfold to get them in synch. No analyst can control that, and certainly an astrologer cannot. No one can, and experienced traders know this. 70% of the time the market is in congestion or giving mixed signals, according to different tools an analyst uses. Sometimes an analyst’s recommendation to stand aside and be patient until the majority of studies are in place is the best recommendation he/she can give to a trader. In the case of T-Bonds and other treasuries, you may be getting such a set up by the end of this month, the kind that warrants a firm recommendation. And we will keep subscribers posted on that per our daily, weekly, and monthly subscription reports. But for this free column, understand that it generally analyzes only the astrological factor, and therefore readers should not view these thoughts as recommendations, but rather as educational discussions. It is not a case of “You get what you pay for,” because an education in Financial Astrology can be a very valuable adjunct to one’s trading methodology, especially in terms of identifying high potential “reversal” zones in any market. In fact, nothing is better for that purpose, in my sincere opinion, which is based upon my own personal experience. By the way, I do not mind if readers send snippets of this free weekly report to their trader friends, as long as it is done in the spirit of good will and helpfulness, and proper credit is given.

Top Five Astro-Events for December 2007

1. The New Moon in Sagittarius takes place on December 9, and features the Jupiter-Pluto conjunction at the Midheaven over Washington D.C. and New York City. Look for the wealthiest plutocrats to be making news as they shape politics, business, and the publishing world with their considerable influence. Expect major mergers and acquisitions.

2. Jupiter and Pluto are conjunct on December 11 at 28 Sagittarius, but this combination is in effect all month. For many, Jupiter-Pluto brings an enhanced interest in the Big Picture and a feeling of faith, trust, and spiritual growth, while others go overboard with self-righteousness and smugness. Those with planets connected to this pairing may experience phenomenal personal growth.

3. Jupiter enters Capricorn on the 18th, marking the beginning of a new age of social conservatism centered on national and economic security. The 19th and 20th feature a Sun-Mercury-Pluto triple conjunction, inspiring power plays by authority figures as they overcome vulnerable opponents. Expect big moves, important transitions, and major geopolitical events, especially in business and politics.

4. The Full Moon (December 23) occurs as Mars opposes the Sun, Mercury and Jupiter from the 22nd through 26th. The strong Mars vibration over these five days can make some people edgy, moody, and hyper-defensive, while the more adventurous will enjoy plenty of playful competitiveness. Attack politics may make the holidays seem like a war zone.

5. Mars opposes Pluto on January 2, but this astro-event is so powerful that it will be in effect for the last ten days of December. Expect major transportation snarls, and for many, an internalized sense of rage. Sports events will likely be intensely competitive, and bring an unusual number of severe injuries. Violence in global hotspots is likely.

Sunspots, GDP, and the Stock Market

Sunspots, GDP, and the Stock Market

Theodore Modis*

Growth-Dynamics, Via Selva 8, Massagno, 6900 Lugano, Switzerland

Abstract

A correlation has been observed between the US GDP and the number of sunspots as well as between the Dow Jones Industrial Average and the number of sunspots. The data cover 80 years of history. The observed correlations permit forecasts for the GDP and for the stock market in America with a future horizon of 10 years. Both being above their long-term trend they are forecasted to go over a peak around Jun-2008.

Keywords: Sunspots; Stock market forecast; GDP forecast

1. Introduction

There have been many claims and counterclaims for the existence of a correlation between sunspot activity (as measured by the number of sunspots) and the economy or stock-market movements. Interestingly, opponents of this notion, like astronomers J. V. Wall and C. R. Jenkins, claim that this correlation is well-known but mainly as folklore because trying to substantiate it is very difficult — and trying to find an underlying physical cause even more so. But they admit that this correlation may after all exist because global temperature is now known to correlate with sunspot number and long-term weather trends may have physical, social and economic effects [1].

At the same time, proponents of this notion, like “guru” Michael Wells Mandeville, claim, “it is easy to see that both political and economic affairs are profoundly caught up and influenced by the ‘waves’ of sunspot energy.” But he also admits that there is zero correlation between daily price movements and average daily sunspot numbers and there is only a weak connection between long-term historical trends in the prices and average monthly or annual trends in the numbers of the sunspots [2].

The work reported here presents hard-to-dispute evidence for the existence of a correlation between stock-market movements as measured by the DJIA (Dow Jones Industrial Average) and sunspot activity, as well as between GDP growth and sunspot activity. No causality arguments are made and there is no attempt to understand the mechanisms behind the observed correlation. The author would be satisfied with as little explanation as the possibility that sunspot activity may influence the climate on earth, which in turn may influence the economy.

Still, given the correlation and the rather reliable forecasts for sunspot activity provided by NASA, the author ventures long-range forecasts for GDP growth and the stock market in the United States.

2. Sunspots and the DJIA

Extensive detailed monthly data are available for both the DJIA [3] and for the number of sunspots [4]. Moreover, NASA provides a rather reliable forecast for the next 11 years of the latter [5]. The raw data are shown in Fig 1. The lower time limit 1-Oct-1928 is the earliest monthly reporting of the DJIA [3]. The most recent data point is at the end of Mar-2007.

It is very difficult to search for evidence of correlation between the DJIA and sunspots in Figure 1. The endeavor becomes more realistic if one looks at deviations from the long-range trends. Long-range trends are traditionally extracted via moving averages. It this case it was reasonably expected (and subsequently observed) that an 11-year average wash out the ups and downs of the sunspot activity. On the DJIA data, the 11-year average outlined two well-defined S-shaped steps punctuated by the mid 1970s.

Fig. 1. Raw monthly data for the DJIA and the sunspot number. The dotted line is a forecast provided by NASA. The thin solid line is an 11-year moving average. The gray line shows two logistic fits, see text.

Logistic fits were fitted on the two S-shaped steps of the DJIA trend, one for the range Mar-1934 to Dec-1979 and another one for the range Jan-1973 to Sep-2001, also shown in Fig. 1. The edge limits of Mar-1934 and Sep-2001 were dictated by the 11-year average, which becomes uncertain toward the edges of the range. The decision to fit logistic curves on these two segments of the overall range was arbitrary because there is no reason to believe that the growth of DJIA follows a logistic. The decision is justified to some extent a posteriori by the goodness of the fits: the correlation coefficients were 0.9976 for the former and 0.9996 for the latter. The slope of the trend has been slowing down for some time and presently is at 1.2% per year.

Fig. 2 shows the percent deviations from the moving-average trends both for the DJIA and the number of sunspots. To minimize uncertainty the deviations are taken with respect to the fitted trends at the edges of the data range.

Fig. 2. Percent deviations with respect to the long-term trends as calculated via 11-year moving averages. The arrows point at the “significant” DJIA peaks. The last arrow is a forecast (Jun-2008), see text.

The fluctuations of the DJIA pattern are more irregular than those of the sunspots. The mathematically calculated correlation between the two patterns is not significant. But there is enough visual similarity between the two patterns to raise suspicion. Small arrows point out the tallest well-defined peaks of the DJIA pattern. They seem to regularly precede the peaks of the sunspot pattern. Table I gives the time difference between each arrow and the central time of following sunspot peak. The last arrow is positioned at the average distance ahead of the forecasted sunspot peaks.

Table I

All dates are in decimal fractions of a year.

DJIA peaks	Sunspot peaks	Delta
1937.17	1938.25	1.08
1946.33	1948.67	2.34
1956.25	1958.42	2.17
1966.00	1969.25	3.25
1976.50	1980.83	4.33
1987.58	1990.50	2.92
1999.92	2001.17	1.25
	Ave. delta	= 2.48
Forecast:
2008.44	2010.92

3. Sunspots and the GDP

The possibility that DJIA fluctuations may be synchronized with sunspot fluctuations prompted a search for a similar relationship between GDP and sunspots. Monthly data were not available for the GDP so Fig. 3 shows the yearly evolution of US GDP in constant dollars of 2000 up to the end of 2006 [6]. Once again the trend has been extracted via an 11-year moving overage, which gave a very good fit to a logistic, correlation coefficient 0.9996. Today the trend slope is 2.6% per year. The midpoint of this logistic is anticipated for mid-2028, at which time the US GDP will grow on the average at a maximum annual rate of 345 billion dollars of 2000.

Fig. 3. Yearly data for the long-term evolution of the US GDP in constant dollars of 2000. The light-gray line is a trend established by an 11-year moving average. The dark gray line is a logistic fit to the 11-year trend line.

As with the DJIA the data must be de-trended before any correlation can show up. Percent deviations with respect to the 11-year moving average are calculated for both GDP and sunspots. Once again, the fluctuations for the edge points are calculated with respect to the fitted S-curve of Fig. 3 so as to avoid any uncertainties stemming from incomplete averages. For the sake of direct comparison Fig. 4 extends over the same chronological period as

Fig. 2.

The correlation between GDP and sunspot fluctuations is again not demonstrable mathematically but visually it is more striking than that between DJIA and sunspots. Here again the GDP peaks precede the sunspot peaks in a rather orderly manner; only one significant fluctuation around 1973 is not synchronized with the sunspot “clock” (it may be accidental but it is interesting to note that the irregularities of both DJIA and GDP patterns around this time are associated with the most irregular sunspot cycle).

Fig. 4. Percent deviations with respect to the long-term trends as calculated via 11-year moving averages. The arrows point at the “significant” GDP peaks. The last arrow is a forecast (Jun-2008), see text.

The arrows in Fig. 4 point at the center of the upward excursions of the GDP pattern. The last arrow is positioned at the expected average distance ahead of the forecasted sunspot peak, see Table II.

Table II

All dates are in decimal fractions of a year.

DGP peaks	Sunspot peaks	Delta
1927.92	1928.92	1
1936.50	1938.92	2.42
1944.92	1948.33	3.38
1954.92	1958.92	4
1967.20	1969.92	2.72
1978.70	1980.92	2.22
1987.50	1990.10	2.6
1999.92	2001.92	2
	Ave. delta	= 2.54
Forecast: 2008.38	2010.92

4. DJIA and GDP

The fact that both the DJIA and the GDP seem to be correlated with the sunspots suggests that there should also be some correlation between DJIA and GDP. Such correlation would be much easier to justify because both these variables reflect the state of the economy in some way. Superimposing the DJIA and GDP curves from Figs. 2 and 4, and plotting only yearly points, we obtain Fig. 5.

Fig. 5. We see superimposed here the DJIA curve from Fig. 2 and the GDP curve from Fig. 4

Indeed the two patterns seem to overlap more than just accidentally. Nevertheless, once again the correlation coefficient mathematically calculated indicates no significant correlation (r = 0.5).

5. Forecasts

The correlations observed can be combined with the trends to produce long-range forecasts for the DJIA and the GDP. The present upward excursions of the DJIA and GDP should continue until Jun-2008. Considering the regularity of past upward excursions we can assume that the recent upward slopes will persist until the time of the climactic point indicated by the right-most arrow on Figs. 2 and 4. At that time — around Jun-2008 — the excursions will have reached 12.6% and 1.1% with respect to present levels for the DJIA and GDP respectively. But these excursions take place on top of the trends, established as 1.2% and 2.6% respectively. Therefore, the level forecasted for the DJIA in Jun-2008 is 13908, and that for the GDP is 11976.5 billion dollars of 2000.

From mid-2008 onward both the stock market and the GDP should move downward toward their long-range trends. Invoking again the regularity of past fluctuations it is assumed that the downward movements will follow slopes equal to the negative of the upward ones and for the same duration. The calculations yield a rock-bottom level of 7919 for the DJIA in early 2014, and 12900 billion 2000$ for the GDP in late 2012.

6. Conclusions

Science-based decision-making tools enjoy objectivity and are particularly useful in situations where human bias can play an important role. But defending the idea that stock-market growth correlates to GDP growth does not need scientific support; after all, they both reflect fundamental aspects of the same economy. On the contrary, one is surprised that the correlation between DJIA and GDP turns out to be scientifically insignificant. Are our scientific criteria too stringent in this case?

If one accepts that there must be some correlation between GDP growth and stock-market growth as displayed in Fig. 5, then one cannot use the lack of scientific proof as an argument against the existence of correlation between the stock market and sunspots (Fig.2), or between GDP and sunspots (Fig.4). On the other hand, if these correlations are real, than we can venture long-range forecasts for the DJIA and the GDP.

The forecasts thus obtained carry a considerable uncertainty stemming not only from the limited correlation with the sunspots. The NASA-issued forecast for the future cycle of sunspots also carries uncertainty, and more importantly, there is a significant uncertainty due to the assumption that the present upward excursions of the DJIA and the GDP will turn out to be symmetric.

But long-range stock-market forecasts, as much as they are sought after, remain scarce and speculative. The levels forecasted here for the DJIA of 13908 in mid 2008 and 7919 in early 2014, may be daring but they have been obtained with minimal speculation. As for the GDP forecasts, obtained in exactly the same manner, it is unlikely that they will provoke any vehement objections from economists.

7. References

[1] J. V. Wall and C. R. Jenkins, Practical Statistics for Astronomers, Cambridge Observing Handbooks for Research Astronomers, Cambridge, 2003.

[2] The Coming Economic Collapse of 2006: Trends, Predictions, & Prognostications for 2004-2006 and Beyond by Michael Wells Mandeville (Paperback - Jul 2003)

[3] The monthly DJIA data since 1-OCT-1928 have been obtained from the website of Yahoo Finance at http://finance.yahoo.com/q/hp?s=%5EDJI&a=09&b=1&c=1928&d=03&e=25&f=2007&g=m

[4] The monthly mean sunspot numbers have been obtained from the National Geophysical Data Center at Boulder, CO, see ftp://ftp.ngdc.noaa.gov/STP/SOLAR_DATA/SUNSPOT_NUMBERS/MONTHLY.

[5] The solar cycle prediction is provided by NASA at http://solarscience.msfc.nasa.gov/predict.shtml.

[6] The US GDP data have been obtained from U.S. Department of Commerce

Bureau of Economic Analysis at http://www.bea.gov/index.htm.

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* Theodore Modis is the founder of Growth Dynamics, an organization specializing in strategic forecasting and management consulting. http://www.growth-dynamics.com

Address reprint requests to: Theodore Modis, Via Selva 8, 6900 Massagno, Lugano,

Switzerland. E-mail: tmodis@compuserve.com.