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.

Stock Market Comments For The Week Beginning December 3, 2007

Written by Raymond Merriman

Review and Preview Financial Astrology works - again. It’s not like we weren’t forewarned about the importance of Uranus - a powerful Level 1 signature - turning direct last Saturday, and its tendency to correlate with sudden, unexpected reversals within a couple of trading days. Last week’s column stated the following: “If you are a Financial or Mundane Astrologer, you have to at least appreciate the correspondence between today’s planetary signatures and its correspondence to a sense of panic and urgency on the part of the global investment community… The probability is greater that you are close to seeing the end of these moves for now. And the hysteria is completely consistent with the fact that we are presently in between three major signatures that pertain to exactly this type of collective over-reaction.” Uranus turned direct on Saturday, November 24. Within two trading days, all the major equity markets of the world were in a free-fall and to say that panic and doomsday scenarios were gripping the headlines would be truly underestimating the fear that was present less than one week ago. But today, November 30, all these same equity markets are soaring strongly for 3-5 straight days up, and the tune being sung is completely different. Confidence is returning in a big way, which is the nature of Jupiter in Sagittarius. By the way, that 13-month transit comes to an end in December. Oh sure, there may be some spillover into early Capricorn. But slowly and surely, the speculative and wild days of Jupiter and Sagittarius will give way to the more rational and sobering months of Jupiter in Capricorn. In Europe, the AEX of Netherlands and the Swiss stock Index bottomed the prior week on November 21 at 480 and 8080 respectively. By Friday, November 30, they were up to 509 and 8849 respectively. That’s a 10% move in the Swiss index, after it was at its lowest level in over a year just one week ago. The German DAX was in the midst of testing its August lows just last Tuesday at 7444. By Friday, three days later, it was up to 7894. The FTSE of England was down to 6026 a week ago. On Friday, it was back up to 6455. Similar impressive gains were noted in Japan, which dropped well below its August lows at the end of the prior week, falling all the way down to 14,670. But on Friday, November 30, it was up over 1000 points from that low, touching 15,751. India’s Nifty Index fell to a new monthly low of 5394 on November 22, but by November 30, it was up as high as 5782. The Hand Seng bottomed at 25,861 on the same November 22 date, but on Friday was back up to 28,792. And in Australia, the All Ordinaries bottomed at 6373 on November 22, only to rise sharply to 6608 on Friday, November 30. In the United States, both the Dow Jones Industrial Average and the NASDAQ Composite completed their re-tests of the August lows on Monday at 12,724 and 2539 respectively. On Friday, they rallied as high as 13,467 and 2696 respectively, one of their sharpest one week rallies in quite some time. Equally big moves were noted in Crude Oil and Gold. After posting its all-time high at 99.29 on November 21, Crude Oil was down to 88.45 on Friday, a loss of nearly 11%. Gold looked like it was going to quickly soar to a new high when it jumped from 776 the prior week to 832 on Monday. But by Friday, it was back down to 782 intraday. And even the Euro started to fall. From its all-time high of 1.4966 one week ago, it was testing the 1.4600 level by Friday, it’s steepest drop in quite some time. All of this is indeed consistent with then nature of Uranus changing directions, one of the strongest correlations related to reversal in financial markets as demonstrated in the statistical studies published in some of our market timing books. Short-Term Geocosmics Uranus retrograde correlates with sudden and unexpected changes, and so do other planetary signatures involving Uranus. On Friday, December 7, the Sun will square Uranus. It happens on the day when the Employment and Payroll reports come out, which typically leads to very large price swings anyway. This time will probably not disappoint, if one is looking for volatility. Not only that but early the following week, Jupiter will make its 13-year conjunction to Pluto. As stated in last week’s column, “In the study of Financial Astrology, time bands that highlight combinations of Mars, Jupiter and Uranus can coincide with extreme price moves, corresponding with a sense of hysteria, panic, or over-confidence. The nature of Uranus is to be more irrational. Markets can move well above resistance zones, or below support zones, and thus there is a sense of a “break-out.” 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. The extent of those losses is just coming to light. But to read all the solicitations by the financial expects who somehow get a hold of your email address, 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.” Bottom line: this powerful rally off the Uranus stationary direct could come crashing right into then next powerful zone of the Sun-Uranus square, along with Jupiter-Pluto conjunct, late this week and early the next. 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. How thoughtful our fearless fire sign leaders are. 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. Of course with Uranus, logical reasons for the market to perform a certain way may be defied. It will oftentimes do what is not expected. So basically I am saying to expect an interest rate cut, but also expect market volatility as long as Uranus is activated, which should be the case for another two weeks. Longer-Term Thoughts Let’s get some perspective here. This may have little to do with astrology, except that next year will be an election year, and we will of course spend a good amount of this column analyzing candidates for the high office. So let’s review what certain markets did under Bush Sr., then Bill Clinton, and then Bush Jr., and maybe you will see a pattern – and a glimpse of what might happen under a Hillary Clinton presidency. Like father like son… like husband like wife, perhaps. When George H. Bush, Sr. came into office in January 1989, the U.S. Dollar was strong, and continued to a high of 106.52 against a basket of foreign currencies into June 1989. But then the famous mantra “Bring the Dollar down so American corporations can compete,” took hold, and Treasury Secretary Baker did just that. By September 1992, just two months before the next election, the Dollar had been devalued to a historic low of 78.43, a loss of nearly 30% in three years. Bill Clinton then defeated Bush Sr., and from that historic low, the Dollar began rising, reaching a peak of 121.29 just after leaving office, in July 2001. That was a Dollar appreciation of over 50%. George W. Bush, Jr. assumed presidency in January 2001. After the initial rise in the Dollar to July 2001, the greenback commenced a descent that continues to this day. This month, the Dollar has fallen to a new historic low of 74.65, a devaluation of nearly 40% under Bush Jr. leadership. What do you think will happen to the Dollar if Mrs. Clinton becomes President? The price of Crude Oil had fallen to 12.28 in October 1988, one month before the election that would place Texan George H. Bush Sr. into the White House. Exactly two years later, in October 1990, Crude Oil soared to a new all-time high of 41.15, an increase of 235%, as Iraq invaded Kuwait, and thus started the Persian Gold conflict. It came down afterwards, but not below 20.00 before Bill Clinton assumed office in January 1992. Under his watch, Crude made lower and lower highs, and continued falling to a low of 10.35 in December 1998. Then Clinton started in on the Balkan conflict, and crude rolled back up to 37.80 in September 2000 before starting a sharp decline again. Crude Oil continued falling as George W. Bush Jr. took office in January 2001, with Crude oil around 25.00. It fell to a low of 16.70 in November 2001 (yes, even after 9-11). But then began one of the greatest bull markets in financial history, and Crude has soared and soared, to a record high of 99.29 about a week ago. What do you think will happen to the price of Crude Oil if a Texan is not elected president in 2008? Or if a Clinton is elected? Like father like son. Like husband like wife. One thing is almost certain: once the Bushes are gone, the markets will reverse trends in many markets, especially currencies. Is that good or bad? It’s good for us, because we can anticipate the trading-investment opportunities that will arise. It will be interesting to see if Clinton replaces Bush – again - as happened in 1992, and whether or not we are seeing the foundation of the two-family dynasty taking over the governance of the U.S.A. Those things tend to happen during the time band in which Uranus conjoins Neptune, followed by the two planets entering into mutual reception (1993-2011). Fortunately (?) it comes to an end by the 2012 election.

Stock market Comments for the Week Beginning October 29, 2007

Review and Preview

Written by Raymond Merriman

In typical Mercury retrograde fashion, equity markets around the world gave mixed messages last week. Some were down hard early last week and then recovered. Some were down hard Monday, made another plunge Wednesday and Thursday, and then recovered. Still others were strong all week and closed at new all-time highs. But Financial Astrologers – as well as traders – will be equally challenged in the weeks to come, because we about to enter yet another large time band in which an abundance of geocosmic signatures unfold close in time to one another. This promises to be yet another important turning point in both the world of financial markets as well as in geopolitical developments.

Following the all-time and multi-year highs of October 11, (right on our last three-star critical reversal date), most equity markets of the world continued their sharp sell-off into Monday, October 22. Cyclical lows on that day were noted in all the European and American markets, plus the Asian and Pacific Rim markets with the exception of the Japanese Nikkei stock index, which continued lower into Thursday, October 25. Many of these markets made a secondary low on Wednesday or Thursday, before turning up sharply to end the week higher. This fits well with last week’s comments, stating, “Perhaps we can relieve some of this concern by reminding readers that Mercury is retrograde, October 11 through November 1. It is typically a time of mixed messages from political leaders an economic data and it oftentimes results in such large price swings and fake outs, especially right around the 9th calendar day and 9th trading day, which is this weekend through the middle of next week. We also note that the all-time highs of the stock market occurred with the new moon in Libra. When the lunation in Libra coincides with a high, stock prices can fall sharply into the full moon two weeks later. The full moon occurs this Friday, October 26.” The lows of all world markets were in by Thursday, October 25, which was right between the 9th calendar day of Mercury retrograde and the full moon.

In other markets, Crude Oil and the Euro currency continued their torrid advance to new all-time highs. Gold also advanced strongly to its highest levels since the all-time highs of January 1980. There seems to be no end in sight to these “blow-offs.” But soon Mars will turn retrograde, so those in Europe looking to take advantage of the big spread between the Euro currency and the Dollar should consider locking in prices soon. It will be like getting a big discount on U.S. goods – like the annual Forecast Book or any MMA newsletters (OK, I am biased, but you get the idea). But, it does seem like the U.S. and its goods are now for sale. Yet the 26-month cycle low in these currencies is coming up soon, and with it I suspect a 10% rally in the Dollar, within four months of this coming January. The reversal could start at any time, and Mars turning retrograde (November 14, +/- 2 weeks) is a good place to look for that to start.

Short-Term Geocosmics

Financial astrologers will be focusing their attention on several planetary changes of directions in the next few weeks. The astrology of the stock and financial markets is apt to be explosive not only as a result of all these planetary changes of direction, but also because they form so many hard mathematical aspects to one another between October 25 and November 30. There are no more than 6 calendar days separating any two consecutive geocosmic signatures during this period, making it an extremely vulnerable period to unexpected market swings.

But the retrograde and direct shifting of planets is indicative of surprises in mundane events as well as economic data reports. For instance, in this coming week, Neptune turns direct on Wednesday (October 31) and Mercury follows with the same pattern the next day, November 1. That means a Mercury-Neptune theme will be strong in the world for a few days surrounding these days. Since Mercury relates to mental processes and the disbursement of information (like news), and Neptune’s nature is to hide, retreat, or camouflage, we might anticipate a lot if misinformation to be released. It can be a very confusing time for investors. It is interesting that the FED will make an interest rate announcement around this time. This is a period that highlights rumors, where the intention behind these rumors (or misinformation) is not clear. In fact, the intention may be to intentionally distort or deceive, in order to hide another agenda or reality altogether. Neptune also rules oil, gases, chemicals, pharmaceuticals, and fluids of all kinds. It can correspond to changes in the crude oil market, oil spills, floods, or the advent of new viruses and diseases requiring new forms of treatment. Or possibly there is a problem with an existing form of treatment that is hushed.

But the big geocosmic event coming up is Mars retrograde on November 14, which just happens to be right near the middle of this geocosmic cluster. Not only that, but it occurs at 12 degrees of Cancer, right near the natal Sun of George W. Bush and the United States. Mars, as long-time readers know, is the planet of war and aggression. But when it is activated near a retrograde phase, it can lead to serious and unexpected problems for the aggressor. It is usually a very critical error in judgment to initiate aggressive and/or military activities around this time. And yet the ‘urge” to do so is great, for certain parties feel their warnings have been ignored, and thus frustration can grow to untenable levels, leading to ill-advised and even regrettable actions. Such developments could turn financial markets right around.

Longer-Term Thoughts

Speaking of Mars retrograde themes, we note the headlines in Friday’s “Wall Street Journal,” stating “The White House imposed sweeping new sanctions against Iran.” The article goes on to state, “The moves are aimed at inducing change in Iran, but they raise concerns the administration is laying the groundwork for military action….” And in response to this decision Russian President (Putin) said, “I think running around like a lunatic – with a razor and waving a red banner – isn’t the best way to solve this kind of problem. (Sanctions) worsen the situation, leading it to a dead end.” Does it sound like Mars about to turn retrograde? And does the White House stance that this decision is not a forerunner to military action sound like Mercury and Neptune going stationary this week? Who or what can you believe under these signatures? Nothing. And oftentimes the words will be in direct opposition to the intention.

Which brings us finally to Charlie Rangel, Chairman of the House Ways and Means committee, who just this week released his “Mother of all tax reforms” package. But consistent with Mercury and Neptune changing directions together, what Mr. Rangel is actually proposing is quite possibly the largest tax increase in history, according to Republican critics. On the bright side, the proposal does offer to cut corporate taxes from 35% to 30.5%, which helps make U.S. businesses more competitive in the world. Currently the U.S. “… now finds itself with nearly the highest (corporate tax) rate in the developed world,” according to WSJ. On the other hand, Rangel wants to add a 4% tax surcharge to anyone making more than $200,000/year, raise the capital gains tax to 19.6% from 15%, and initiate higher taxes on small businesses. “Add it all up, and you get new taxes of $1 trillion or more,” according to the WSJ. If the Wall Street editors are reading this right, then the tax package will become the “Mother of all tax increases.”

Yet all of this fits in perfectly well with the history of the Saturn – Pluto cycle, as discussed several times in our past columns. That is, from the conjunction to opposition (1982-2001), federal deficits are reduced as are taxes and interest rates, and the economy and stock markets soar. But from opposition to conjunction (2002-2020), the opposite happens. That is, federal deficits increase, interest rates and taxes go up, and the economy and stock markets stagnate. So far, taxes have not gone up and the stock markets have not stagnated, the one rather positive aspect of the Bush presidency. But all that could change as the third and final passage of the Saturn oppositions to planets beyond its orbit take place in this decade. That will be the Saturn-Uranus opposition of 2008-2010. After that, all the Saturn cycles to planets beyond its orbit will be in their waning phase through 2020. Expect economies and stock markets throughout the world to struggle for a good part of that period. But also expect some fantastic opportunities to be also available to those who are smart investors. Just follow the youth. They lead the way to future opportunities when Saturn and Uranus are in their 45-year opposition aspect, just like they did in the early 1920’s and the mid-1960’s.

Stock Market Comments ForThe Week Beginning October 22, 2007

Written by Raymond Merriman

Review and Preview It was a very significant week after all, particularly on Friday as the Dow Jones Industrial Average fell a whopping 375 points. A look at many of the world’s equity indices will show that the critical reversal date of October 11 was indeed a major reversal from an important crest. That represented the all-time high not only in the Dow Jones Industrial Average, but also the S&P nearby futures, Brazil’s Bovespa, and multi-year highs in the Netherlands AEX, German DAX, London FTSE, and NASDAQ Composite. In Argentina, it was a double top to the all-time highs of last July. All-time highs also spilled over into this week in the Pacific Rim and Asian markets, notable the Hang Seng of Hong Kong, Australia’s All Ordinaries, and India’s Nifty Index. However, by the end of this week, many of the European and American markets suffered sharp losses. The losses were heaviest in the American markets, which continued to sell off after the Asian and European markets closed. Other markets were also prominent last week. Crude Oil continued its climb to a new record high on Friday by surpassing the $90.00/barrel mark intraday. Just one week ago, as the third and final passage of the square between Jupiter and Uranus took place, Crude Oil was putting in a major cycle trough at 78.35, It’s been almost vertical in price since then. Gold also continued soaring. It tested 775.00 on Friday, the highest level since the all-time highs of early 1980. However Silver did not fare so well. After trading above $14.00/ounce on Monday’s “Sagittarius Factor,” and testing 14,.00 again on Friday, it sold off over 50 cents intraday to close down for the week. The high on Monday was far below its high of even last year, so we have a developing case of “intermarket bearish divergence.” The Euro currency also soared to a new all-time high on Thursday, while the Dollar plunged to a new multi-decade low. Short-Term Geocosmics As stated in last week’s column, “The major planetary cluster in effect was centered on October 11 of last week. It involved the third and final waning square of Jupiter-Uranus (October 9), the Libra new moon and Mercury retrograde station on October 11, and the third and final conjunction of Venus and Saturn on October 13. I would expect that this week’s activity would be a reaction to those signatures that peaked last week (or early this week).” Indeed it was in the equity markets, and perhaps Silver as well. Last week’s column also stated, “For this week, we note the following geocosmic signatures. The “Sagittarius Factor” (Moon in Sagittarius will take place on Monday and Tuesday, coinciding with Venus sextile to Mars on Tuesday. The Sagittarius Factor has a tendency to produce sharp price swings in some financial and commodity markets, like currencies, T-Notes, and Silver.” We already pointed out the correlation to the multi-month high in Silver on Monday. But it should also be noted that T-Notes put in their primary cycle trough on Monday at 108/06. By Friday’s close, they were at 110/18, one of the sharpest gains in many moons. However, such a big run up in Treasuries, accompanied by a large sell-off in stocks, is a sign that the market is worried. Perhaps we can relieve some of this concern by reminding readers that Mercury is retrograde, October 11 through November 1. It is typically a time of mixed messages from political leaders an economic data, and it oftentimes results in such large price swings and fake outs, especially right around the 9th calendar day and 9th trading day, which is this weekend through the middle of next week. We also note that the all-time highs of the stock market occurred with the new moon in Libra, When the lunation in Libra coincides with a high, stock prices can fall sharply into the full moon two weeks later. The full moon occurs this Friday, October 26. I would suspect that if stocks continue down into the end of this week, it might be too much for Bernanke and Paulsen to bear. They may be moved to intervene again. But how? If they lower interest rates again, the Dollar could crash. Perhaps they have finally reached a point where they are in a corner. But I doubt. Jupiter is still in Sagittarius, a fire sign, and that tends to benefit our two fire sign saviors. They will think of something, for as stated before, they just aren’t going to allow a recession or crash to happen on their watch if at all possible. The thing is, we may not hear about what they orchestrate behind the scenes in the next two weeks if the market does continue lower, because this week we also enter the season of Scorpio – sign of secrets and behind-the-scenes activities. I expect this decline to end very soon. As stated in last week’s column, “This is a new moon week, and it happens on the day Mercury turns retrograde…. between October 8-27, Saturn and the South Node of the Moon will be conjunct. It’s possible that worry becomes heavy, and if prices do continue to decline into the following week, they may continue to do so for several more days. But in all likelihood, these signatures suggest that many declining markets will find a bottom by the end of this month, however sharp the decline is.” We also note that transiting Venus will translate the Jupiter-Uranus square of October 9, from October 25-29. I would expect that to be close to the end of this sharp sell-off, unless prices do fall below the lows of August 16-17. Longer-Term Thoughts There were a couple of news items on the front page of Friday’s “Wall Street Journal” which pertain to longer-term geocosmic signatures. The first was headline that stated: “The Senate Intelligence Panel approved a compromise with the White House that would extend some of the president’s expanded surveillance powers for six year’s.” This relates to the forthcoming ingress of Pluto in Capricorn, 2008-2023. In the words of Dr. Geoffrey Stone, law professor at the University of Chicago, “When civil liberties are at stake, there is a regular cycle: fear, repression, and repentance.” Pluto in Capricorn pertains to all of these themes. The second item, right below the first, stated “France’s biggest strike in 12 years crippled the nation’s public transport system. The walkout came as President Sarkozy said that he and his wife had divorced.” Talk about a bad day! You wake up the day of your divorce and your country’s public transportation work force walks off the job. This is a classical Saturn in Virgo event. Virgo rules the work force. Saturn is stoppage, and Mercury retrograde refers to problems in communications and transportation systems. It couldn’t be more apropos. Since Saturn is involved, and Mr. Sarkozy is president (Saturn role), chances are he will receive the brunt of the blame for this. Or maybe his ex-wife will, for reasons that I better not speculate upon in this column. But more to the point: Saturn is just beginning its two-year stint in Virgo, and this is the time that the common man – the workers of the world – gain power. They have the power to bring economies to their knees by simply refusing to work if they are not treated better. It is also why I think a Democrat will be the next president of the United States, unless the Republicans can find someone who represents the needs of the middle and working class, and somehow convinces the electorate that this gap between the “haves” and “have nots” can be brought more into line. Otherwise the middle class is in danger of disappearing. Saturn in Virgo is their last stand, and I think they take this primary concern to the election booth on election day. If not, then we have the darker side of Saturn in opposition to Uranus (revolt and revolution) to look forward to in 2009-2010. The question is only what form the revolt will take? Peaceful or violent? Uranus and Neptune in mutual reception suggests peaceful, which further suggests to me that a very dramatic leadership change is taking place in the November 2008 elections in the U.S.A.

Stock Market Comments for the Week Beginning October 15, 2007

Stock Market Comments for the Week Beginning October 15, 2007

Written by Raymond Merriman

Review and Preview Many equity and commodity markets rallied into late last week as the center of geocosmic cluster unfolded Thursday, October 11. The U.S. stock markets all made new all-time or multi-year highs last Thursday, as did Gold and Crude Oil. New all-time highs were also registered in India’s Nifty index, Australia’s All Ordinaries, and Hong Kong’s Hang Seng. Japan and all European indices rallied smartly into Thursday as well, but did not attain new all-timer highs. Short-Term Geocosmics The major planetary cluster in effect was centered on October 11 of last week. It involved the third and final waning square of Jupiter-Uranus (October 9), the Libra new moon and Mercury retrograde station on October 11, and the third and final conjunction of Venus and Saturn on October 13. I would expect that this week’s activity would be a reaction to those signatures that peaked last week (or early this week). For this week, we note the following geocosmic signatures. The “Sagittarius Factor” (Moon in Sagittarius will take place on Monday and Tuesday, coinciding with Venus sextile to Mars on Tuesday. This is followed by the ingress of both the Sun and Mercury over 0 degrees of Scorpio on October 23, the next week. The Sagittarius Factor has a tendency to produce sharp price swings in some financial and commodity markets, like currencies, T-Notes, and Silver. The Venus-Mars sextile also has a rather reliable correlation to reversals in many financial and commodity markets within an orb of just a couple of days. It is likely going to be related to the October 11 critical reversal date in this instance, +/- 3 trading days. The ingresses of Sun and Mercury – involving Scorpio – can coincide with a change of sentiment regarding interest rate or debt matters. The concern might about an increased in debt, either national or in regards to the level of personal debt. Perhaps a report comes out about an increase in foreclosures, bankruptcies, and business failures. Perhaps there is more spillover about the sub-prime fiasco of the last few years. Keep in mind that Mercury is now retrograde through November 1. This is typically a time when technical studies become most unreliable. Support and resistance either do not hold, or fail to be reached as expected. Buy and sell signals are more like “fake-outs,” and markets flip-flop in very short spans of time (compared to usual). Usually we give very few recommendations to position traders during this period. It is better to be a very short-term trader, even day trader, ort stay out of the markets altogether and let others enjoy the confusion of contradictory messages and announcements from economic and political leaders. Also, we will repeat comments from last week’s column. “Everyone knows about the “October effect,” when stock markets seem to incur a powerful sell-off. Well, the new and full moons of the Libra Sun have the highest correlation to highs from which those declines begin, or lows from which the declines end. This is a new moon week, and it happens on the day Mercury turns retrograde…. between October 8-27, Saturn and the South Node of the Moon will be conjunct. It’s possible that worry becomes heavy, and if prices do continue to decline into the following week, they may continue to do so for several more days. But in all likelihood, these signatures suggest that many declining markets will find a bottom by the end of this month, however sharp the decline is.” Longer-Term Thoughts Last week we discussed the importance of Pluto’s transit into Capricorn, a 15-year journey that will begin January 26, 2008. But before that happens, we will experience a shorter-term signature that also has the potential to be a very powerful correlate to mundane and/or market phenomenon. This is the 13-year Jupiter-Pluto conjunction, which takes place nearby to the Galactic Center (26 Sagittarius) on December 12. The nature of Pluto was cove red in detail last week. It pertains to matters of life and death, the termination of cycles related to the planets and their ruling signs that are involved. In this case it is Jupiter in Sagittarius. Jupiter also rules Sagittarius. The principle of Jupiter is to expend and enlarge, exaggerate and inflate. Sagittarius is also rules the domain of foreign affairs, publishing, philosophy, education, and law. Pluto rules the domain of debt and taxes. So at first glance, it seems that debt is on the increase, along with plans to in crease taxes in many areas, in the mistaken belief that this will be a long-term solution to the debt crisis. It is only short-term, with more dire consequences long-term to the growth of the economy. It is interesting to note that the last time this signature occurred was in late 1994, when Orange County California defaulted on its municipal bonds that were due. But we may also find many social programs ending, or being reformed, especially those that pertain to law and education. Religious matters are apt to come to the forefront too, not only because Jupiter and Sagittarius relate to religion, but because the Galactic Center refers to the quest to understand the origin of all things. Debates are likely to arise again between the creationists and proponents of evolution, on the origin of life itself. Event the issue about the existence of God may be stirred again. It is noteworthy that as Pluto has crossed this Galactic Center point over the past 1-2 years, there has been a sizeable increase in atheism, which is certainly a threat to organized religion. So within three months of this transit, we may see major reformations taking place in religion and religious attitudes pervading society. We may also see major changes of trends in financial markets that are affected by debt (Treasuries, currencies). Crude Oil is also connected to this Jupiter-Pluto 13-year cycle. Perhaps the all-time high is achieved during this time band, and the expected 60-90% decline in crude oil prices begins. Previously we have also associated this possibility with the transit of Uranus in Pisces. That too continues in effect from 2003 through 2010. Pisces rules crude oil. When Uranus is in a sign of a sector, that sector oftentimes makes new all-time highs around the time it is in the middle degrees of that sign, and then drops substantially before leaving that sign.

Stock Market Astrology Forecast Week of October 8

Stock Market Astrology Forecast Week of October 8

Note: Due to European lecture tour, this column may not be available until Sunday for the next week as well

Review and Preview

This week’s column is being written from the DAV (German Astrological) Congress, taking place in Karlsruhe, Germany. There are approximately 500 professional astrologers and students of astrology convening here this weekend, as we approach the final waning square of Jupiter-Uranus, Mercury turning retrograde, and the third and final conjunction of this season between Venus and Saturn—but this time in Virgo, instead of Leo as in the first two instances.

As we enter this powerful geocosmic week, we note that the previous week ended with the Dow Jones Industrial Average making yet another new all-time high. It was matched with a new high in the NASDAQ and S&P cash market too (but not the nearby S&P futures). New all-time highs were also noted in Asia and the Pacific Rim last week, notably India’s Nifty Index, the Hang Seng of Hong Kong, and Australia’s All Ordinaries. The Japanese Nikkei also closed above 17,000 for the first time since the lows of August 17, but it is still well off its yearly high of 18,300.

The same rally last week did not produce any new all-time or even yearly highs in any of the Euro indices we track. From this we can conclude that the underlying fundamentals in Europe are not as strong or as optimistic about the future as they are in other parts of the world. Perhaps this is because of the soaring value of the euro currency, which made yet another new all-time high against the dollar early last week. This strong Euro may be causing investors to worry about potential loss of global market share by European companies. In Japan, by contrast, the Dollar started to rally nicely against the Yen last week, testing the 1.1700 area, well above its 1.1158 low of August 17.

So what are we to make of the Dollar in the next week? Will it reverse its rally against the Yen, or its decline against the Euro? And regardless of which, it appears to be not so good for stock indices, for each of them, are rallying into this powerful geocosmic week coming up.

Short-Term Geocosmics

A planetary cluster forming this week is very tight, and each of the signatures involved have the possibility of coinciding with a reversal in all financial and commodity markets.

It could be the first one to unfold that causes the reversal. This would be the third and final passage of the Jupiter-Uranus waning square of 2007, occurring this Tuesday, October 9. Although this 14-year signature has a very strong and consistent correlation to primary and greater cycles in the past, the first two passages of this year did not produce changes until at least three weeks later. In the first instance (January 22), the market was rising, and kept on rising into late February. Then it suddenly broke down as the transiting Sun translated this signature with its conjunction to Uranus. The second instance was May 10-11. Again the stock market was soaring to new all-time highs. But it continued making new all time highs into the first days of June—and then it once again broke down sharply, as the Sun began its translation again over this signature. This time it was the Sun forming a T-square to the Jupiter-Uranus square. There won’t be any translations this time of the Sun to the two planets involved in this signature until early December through December 21. And by that time, Jupiter will already be in the next sign of Capricorn, so we can’t count on it to produce as much.

However, this week also finds Mercury turning retrograde on Thursday, which is also the day of the New Moon in Libra. Both of these geocosmic events have important historical associations with reversals in many markets. But the New Moon in Libra is especially important in stock markets. Everyone knows about the “October effect,” when stock markets seem to incur a powerful sell-off. In many cases that sell off only lasts a couple days, maybe 2 – 10 days. But these declines have been very sharp in many cases. Well, the New and Full Moons of the Libra Sun have the highest correlation to highs from which those declines begin, or lows from which the declines end. This is a New Moon week, and it happens on the day Mercury turns retrograde. That too is a geocosmic indicator of a reversal in the area of one’s focus. What was important to the market until then is no longer most important. Something else begins to worry the market more. It may be a political, or business, decision. With Saturn in Virgo (Mercury’s sign of rulership), it may have something to do with new fears of worker strikes that disrupt transportation and communications. Then two days later (October 13), Venus will make its last contact to Saturn. This is generally a time of worry about money—values are decreasing again, somewhere. And there is fear it will continue. But this signature suggests that maybe not. If prices are already falling into this time, they can find a bottom and start to rebound again. But if they haven’t started to fall much, this could be the deciding factor that pushes prices down well into October, for between October 8-27, Saturn and the South Node of the Moon will be conjunct. It’s possible that worry becomes heavy, and if prices do continue to decline into the following week, they may continue to do so for several more days. But in all likelihood, these signatures suggest that many declining markets will find a bottom by the end of this month, however sharp the decline is.

Longer-Term Thoughts

Pluto in Capricorn. A new era begins January 26, 2008, according to the astrological calendar. I call this period “The Good, The Bad, Even Worse, and then Redemption.” In every historical case of financial markets (dating back to the mid-1700s), the stock market made an all-time high, followed by one of the worst devastating crashes to historic lows, before recovering again. All while Pluto was in a cardinal sign—and it was in that order: new highs, declines of at least 50% of its value, and then recovery. And so I look for these new all-time highs to continue into 2008, maybe even into as late as 2011. Then a devastating decline of 50-90%, due sometime between 2011 and 2016 as Uranus square Pluto. Perhaps there is a secondary low—a double bottom—within 10 months of the Saturn-Pluto conjunction of January 2020. And then a recovery (redemption) for many years afterward.

So what causes this? That’s not my job (smile). My job is to identify turning points in the markets, in collective psychology, in the mundane direction of world politics by means of my understanding of astrology.

Perhaps it pertains to the massive change of direction that I suspect will take place in American (U.S.) politics, starting with the next election. For one thing, I think there is reason to suspect the party in office will not return. Not unless they can convince the American middle class and common worker that they can provide best for them. With Saturn in Virgo, I think the working class will determine the next president. It will not be determined on the basis of national security, as was the case when Saturn was in Cancer (2004), even though that card is surely to be played again while Saturn is still in a hard aspect to a further out planet (Uranus in this case).

Secondly, let’s be hypothetical and assume that a Democrat is the next president. And let’s take it one step further and assume it is Hillary Clinton (for the moment, she leads). Everyone thinks she will be a president like her husband, Bill—who Alan Greenspan referred to as the best president the Republicans have elected in the last several years. But Hillary Clinton as president is no Bill Clinton as president. I believe she will be a lot more like Jimmy Carter—a hard-nosed worker who wanted to do as much as possible for the “common man,” the middle class, and for world peace. Never mind that Hillary Clinton may be supported by more corporate monies and/or special interests groups than any candidate in history. The question is what will she do as president? As a Scorpio, you know she will make changes. She will fire people who have been in certain positions for a long time. She will bring to an end various departments that she sees as no longer relevant to her goals (which are our goals, right? I mean, she will take a poll on everything to justify her actions). And if there is a financial (or currency) crisis, one of those areas affected may be the Federal Reserve Board, which will find transiting Pluto moving over its Sun, and in opposition to its natal Pluto (0-1 of Capricorn and Cancer respectively, 2008-2010). When Pluto is involved, things to which it pertains come to an end. They are oftentimes terminated, or at least transformed significantly from their present incarnation. In the case of an entity’s Sun, it means its leader. In the case of its own natal Pluto, it may be the end of the entity itself—at least as it has been known to be. And it is interesting that at the same time Pluto hits this Sun-Pluto opposition in the natal chart of the Federal Reserve Board (born Dec 23, 1913), the transit of Uranus will square FED Chairman Bernanke’s Sun (21 Sagittarius), square his natal Jupiter (21 Gemini), and conjunct his natal Moon (around 21 Pisces). By the end of 2008 and into 2009, Saturn will go through 21 Virgo, thus completing the grand square to the FED chair’s chart. His birth data and its source were provided in previous columns.

If you are looking for a reason why the markets may collapse in the not-so-distant future, I would look in this direction, for these are the key players in the cosmic drama that is unfolding 2008-2010.

Announcements

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Disclaimer and statement of purpose: The purpose of this column is not to predict the future movement of various financial markets. However, that is the purpose of the MMA (Merriman Market Analyst) subscription services. This column is not a subscription service. It is a free service, except in those cases where a fee may be assessed to cover the cost of translating this column from English into a non-English language. This weekly report is written with the intent to educate the reader on the relationship between astrological factors and collective human activities as they are happening. In this regard, this report will oftentimes report what happened in various stock and financial markets throughout the world in the past week, and discuss that movement in light of the geocosmic signatures that were in effect. It will then identify the geocosmic factors that will be in effect in the next week, or even month, or even years, and the author’s understanding of how these signatures will likely affect human activity in the times to come. The author (Merriman) will do this from a perspective of a cycle’s analyst looking at the military, political, economic, and even financial markets of the world. It is possible that some forecasts will be made based on these factors. However, the primary goal is to both educate and alert the reader as to the psychological climate we are in, from an astrological perspective. The hope is that it will help the reader understand these psychological dynamics that underlie (or coincide with) the news events and hence financial markets of the day.

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