WallStreetWeather.net Forecast For Week Of June 15, 2009

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Summary Of Last Week’s Influences:
Financial markets have a tendency to overreact to news when Mercury interacts with Jupiter. On Wednesday the market’s early bullishness was reversed after crude oil inventories were lower than expected. And the downward acceleration gained momentum after the 1:00 PM 10 year auction grew a “long tail” that forced the government to pay buyers a higher than expected interest rate.

Wednesday’s 10 year yield just under 4% propelled the interest rate on the 30 year fixed mortgage to 5.79% from just under 5% two weeks ago, injecting fear in the market that higher gas prices and mortgage rates will dampen any signs of economic recovery.

That sentiment reversed on Thursday as the market took a “glass half full” attitude. Or what I would equate to a lake coated with thin ice. It might look solid, but once you step on it you quickly realize it is not as solid as it initially appeared to be. Initial jobless claims were lower than expected, but continuing unemployment claims set their 19th straight record (6.816M). May Retail Sales were up 0.5%, but the increase was mostly attributed to higher gas prices.

These extreme swings in sentiment where the market views higher Treasury yields and rising commodity prices as a sign that economic conditions are improving only to be viewed a short time later as stoking inflation from too much government debt eroding the economy, can be attributed to Jupiter and Neptune conjoining in Aquarius, the sign of extremes.

Summary Of This Week’s Influences:
Jupiter’s influence will be particularly pronounced now through Wednesday as from Earth’s vantage point it appears to turn retrograde on Monday until October 13. Issues relating to ethics and trust, foreign matters, legal issues, higher education, philosophical and religious beliefs, sports, and publishing are highlighted now. The retrograde period is a good time to review and reconsider matters relating to these issues.

Speaking of publishing, Dow Jones (NWS), the publisher of Barron’s and The Wall Street Journal has two articles this weekend that articulate the influence of the Jupiter/Neptune conjunction on the markets.

Jupiter expands and Neptune inflates to form bubbles. Yesterday’s WSJ (“Stocks in the Black on Gusher of Cash”) calls the stock market’s rapid rebound since March and the rise in crude oil (Neptune) the “bailout bubble” as central bank liquidity and government stimulus spending has created a “global cash wave.” And when the bubble bursts, there will be an “ocean of liquidity” to mop up. Neptune rules the oceans, and Aquarius likes to make “waves” (which is what its symbol resembles). Aquarius and its planetary ruler Uranus relate to sharp and sudden market moves that go higher or lower than expected. And Uranus in Neptune-ruled Pisces reinforces the rollercoaster ride of bubbles that dissolve into thin air.

To quote the Barron’s cover story, markets move “Too Far, Too Fast” in “a pandemic of bullishness that is sweeping stock markets here and elsewhere around the world.” (Neptune rules contagions and Jupiter represents the global marketplace.) Jupiter’s optimism combined with Neptune’s hope provides the rocket fuel for forward-looking Aquarius to propel the market rapidly upward. As Barron’s panelist Scott Black observed, “investors are chasing any glimmer of hope”, fearing they will be left behind if they wait for fundamentals to support their belief.

Jupiter and Neptune first conjoined on May 27, two days before Neptune turned retrograde. The stock market was the focus at that time and leading up to the planetary pair’s next exact conjunction on July 10. Then the focus shifts to foreign matters and the Jupiter themes outlined above. Enthusiasm wanes as these energies begin to separate, and other planetary influences gain prominence. Barron’s panelist Felix Zulauf believes that this “first rally is just about done. The market might climb into July, but it will correct in the fall, with stocks retracing maybe 50% of the recent advance.”

Zulauf’s comments that “the financials are done, perhaps for a couple of years,” echoes the current and recent cycles of Mercury, Venus, and Mars in the banking sign Taurus challenging the Jupiter/Neptune alignment. Mars in Taurus challenging Jupiter/Neptune on July 6 is likely to spark a selloff on credit concerns and inflationary fears.

I will be writing more about these upcoming planetary cycles, but must give them a brief mention since Zulauf (whether consciously or unconsciously) neatly sums them up. Saturn will enter Libra the sign of balance on October 29. Pluto rules debt and Capricorn is ruled by Saturn, the planetary energy of structure and economic contraction. Capricorn rules government. Saturn in Libra will first exactly challenge Pluto in Capricorn (2008-2024) on November 15. Here’s how Zulauf sums that up:

“A long-term imbalance remains between overspending in the U.S., and over-producing in China. The financial crisis was the start of a move to greater balance that implies lower growth for both sides. The deleveraging process…has only started. It will run for several years. We are shifting debt from the private sector to the government sector which will lever up. These structural forces will continue to be a major restrictive factor in the world economy.”

Looking ahead, Zulauf says: The real danger comes from mid-2010 through 2011. This won’t be a conventional business-cycle expansion, but a bumpy road.” In July 2010, Jupiter and Uranus in Aries, Saturn in Libra, and Pluto in Capricorn will form a cross shaped pattern. In these action-oriented (cardinal) signs, many dynamic changes will occur. This is a crisis point, but a crisis is really a dangerous (and exciting!) opportunity that will bring rapid scientific and technological advancements (unconventional Uranus in pioneering Aries). Just as a mother soon forgets the pain of childbirth upon holding and gazing into the face of the fruits of her labor, the more we are willing to clean up the mess now and go through the labor pains, letting go of the old structures that no longer serve us, the better we’ll be prepared to enage in all the new and exciting developments ahead.

But first we’ve got to get back to this week! Jupiter stationary through Wednesday is likely to bring bigger market moves at least intraday. On Monday the Last Quarter Moon in Pisces will reinforce the Jupiter/Neptune alignment as Pisces is ruled by both of these planets. Jupiter can make big moves in either direction as hype can turn to hysteria, but the largest planet in our solar system really prefers to be jovial.

When Jupiter went retrograde last year, former St. Louis Fed president William Poole said: “If the Fed is unwilling to reverse its excessively expansionary policy in the coming quarters, which is my take on likely policy, the Fed almost guarantees higher inflation.” Tuesday’s PPI and Wednesday’s CPI is likely to show greater inflationary pressures.

The Sun rules speculation; it will be interesting if we have a “wild Wednesday” as the Sun in dualistic Gemini will harmonize with Jupiter/Neptune while challenging Uranus in Pisces. The former are a more bullish influence, but Uranus is the wild card that likes to shake things up as its motto is “expect the unexpected.”

Monday, June 15, 2009
Positive trend bias.

Tuesday, June 16, 2009
Negative to choppy/mixed; improving conditions as day progresses.

Wednesday, June 17, 2009
Up early, then could hit some turbulence before resurging going into the close.

Thursday, June 18, 2009
Mildly up early, then choppy/mixed to negative.

Friday, June 19, 2009 (Quadruple Options Expiration)
Indices open mixed to moderately up before spending most of the day in negative territory.

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