Tuesday, April 8, 2008

Stock MArket Comments for the Week Beginning April 7, 2008

Written by Raymond Merriman

Review and Preview

After ending a corrective decline last Monday, March 31, many of the world stock indices commenced one of their strongest rallies in a long time over the following two days. In some indices, the rally continued right into the end of the week. This behavior fits with well our Financial Astrology bias stated in last week’s column as follows: “One key may lie in the important Venus-Uranus conjunction of this past Friday, March 28. If that indeed acts as a reversal signature, it could lead to a rally, as the U.S. stock market has declined into it.” Later on, this same column ended with, “Another reason why stocks may reverse right here is because Jupiter is making its first of three sextiles to Uranus on March 28, the same day that Venus forms a conjunction to Uranus.” Bingo! After bottoming at 12,177 on Monday, the DJIA soared to close the week at 12,608, a gain of 391 points from the prior week’s close. The NASDAQ Composite had its low the prior Friday as Venus formed its conjunction to Uranus. That is noteworthy in the study of Financial Astrology because aspects to Uranus are relevant to technology companies. The NASDAQ is heavily weighted in tech stocks. For the week, this index was up 109 points.

In Europe, the pattern was similar. These markets ended their corrective decline on Monday, and all soared sharply higher the next two days, with the London FTSE and Netherlands AEX continuing their rallies right into the close on Friday, just like the NASDAQ Composite. But the German DAX and Swiss SMI indices topped out on Wednesday and then went sideways, just like the DJIA.

In the Pacific Rim and Far East, it was mostly similar to Europe and the U.S.A. Both the Australian All Ordinaries and Hong Kong’s Hang Seng index were up all week, with a huge gap up day in the middle of the week. Japan’s Nikkei ended a modest corrective decline on Monday at 12,430, and then soared nearly 1000 points to its weekly high on Thursday. But in India, the NIFTY index was a little different. It topped out under the Venus-Uranus conjunction of the prior week, and then spent most of this past week trending down.

Precious metals and grains ended their sharp declines on Tuesday, and then promptly started impressive rallies right into the end of the week. During this rally, Corn prices soared to an all-time high. Of interest here is the fact that farmers announced they were increasing their plantings of Soybeans by 18% and Wheat by 6%, while decreasing their planting intentions of Corn. This is exactly in line with our forecasts made in this year’s Forecast Book as well as our past few issues of the “MMA Cycles Report.” As anticipated, this announcement caused Soybeans to fall sharply, down to $11.35/bushel in the July contract. Just a month ago it was trading above 15.80. Wheat also fell, but Corn soared. As stated in Wednesday’s Wall Street Journal, “Stocks of corn before the new harvest could fall to a decades-long low of 636 million bushels, compared with 1.4 billion bushels currently. If corn usage remains unchanged and if yields are the same as last year, he (Terry Roggensack of the Hightower Report) says ‘we’ll run out of corn.’”

Short-Term Geocosmics

There are three signatures of importance this week. On April 6, Venus will ingress into Aries and form a waxing square to Pluto. On April 10, the Sun will form a waxing square to Jupiter. The Venus transit through Aries will last the entire month (April 30), and suggests new proposals (Aries) that could affect the value of currencies and treasuries (Venus and Pluto). We saw some of that last week when Treasury Secretary Paulsen introduced his idea of sweeping changes in the banking world, including increased powers for the Federal Reserve Board. This idea of increasing the powers of the FRB is in direct contradiction with my understanding of Pluto moving into Capricorn, and its relationship to the Sun-Pluto opposition in the FRB chart. For an astrological view of this transit over the next three years to the Federal Reserve Board, and its implications concerning lessening of powers (not increase), please check the article that appears on our website at http://www.mmacycles.com/articles/articles/pluto-in-capricorn/. Not surprisingly, the investment community reacted as if Paulsen’s plan was “dead in the water” already.

The two aspects – Venus square Pluto and Sun square Jupiter - are rather powerful signatures. Both have a nearly 80% correlation to 4% or greater price reversals within four trading days, according to our studies reported in “The Ultimate Book on Stock Market Timing, Volume 3: Geocosmic Correlations to Trading Cycles.” This week could be a little bit wild, especially since Jupiter alone represents the principle of exaggeration. A quick 200-400 point down day in the DJIA is within the realm of possibility sometime this week. However, that does not negate the possibility that a new 4-year cycle is in force. That won’t be negated until the DJIA falls back below the 11,634 low of January 22.

Longer-Term Thoughts

The Labor Department’s employment report of Friday, April 4, showed a decrease of 80,000 jobs last month, the biggest monthly decline in several years. Of course this immediately prompted further proclamations that the U.S. economy is already in the midst of recession, a claim that spurred the dramatic sell off in world-wide equities just two-three weeks ago. Our column of the past two weeks alluded to this reminder, as it stated, “With Pluto turning retrograde April 2, followed by Venus in a square aspect to Pluto on April 8 (should be April 6-7), we have to be aware that the forecasts of a great and miraculous recovery may also be pre-mature.”

But what about a recession? Are we in a full-fledged recession? Will it be a deep one, or is this just mild and temporary? What does Financial Astrology say? For this year, and especially the next two months, the long-term geocosmic signatures are favorable, according to principles of modern-day astrology. That is, there are important trine (120 degree) relationships in effect between Jupiter and Saturn, as well as Saturn and Pluto. And, as mentioned last week, Jupiter has also now begun its first of three favorable sextile (60 degree) aspects that will last into November. Modern-day astrology, applied to the field of market timing, hypothesizes that such favorable aspects are ultimately favorable for the economy and equity markets.

However, we also discussed the idea that traditional astrology might have another viewpoint. Here, it is not planets in aspect that are so important, but rather planets in signs that are more important. In this regard we note that both Jupiter and Saturn are in earth signs (Capricorn and Virgo respectively), and earth signs have more a contracting quality. Thus the economy and stock markets might not perform so well with these placements. In my opinion, I think it is a combination of both these principles at work. The planet-sign relationships may coincide with the constriction we have experienced in regards to economic growth and stock market behavior so far. But the favorable aspects have also limited the amount of downside activity too. The economy and stock markets may not be so bullish right now, but they aren’t falling hard either. For the amount of fear witnessed in the world investment community in March, these economies and equity markets have held up pretty well. The fear was great, but the fear has yet to materialize into anything near the degree to which many analysts predicted.

Yet it is interesting to note the similarity between the last instance of the 29-year cycle of Saturn in Virgo, to this current time. (Virgo, by the way, represents "the work force," and Saturn represents "contraction"). The last time Saturn was in Virgo occurred from November 1977 through September 1980. You may remember in the United States, this was a time of sharply rising prices (inflation), when precious metals soared to historic highs. But it led to an economic recession and sluggish stock prices. They called it “stagflation.” And here we are again, with Saturn in Virgo, September 2007 through October 2009. Commodity prices are soaring, and Gold recently passed $1000/oz for the first time ever. Yet the economy and stock markets are struggling, and the ‘R’ word is being bandied about loosely. Back then, President Jimmy Carter forbid the use of the ‘R’ word, preferring instead to refer to the economy as “bananas.” I wonder what words today’s administration will use to address the state of the economy. Maybe peanuts?

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