WallStreetWeather.net Forecast For Week Of June 22, 2009 (Summer Solstice/New Moon Edition)

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Summary Of Last Week’s Influences:
Last week’s Forecast discussed how Jupiter’s pronounced energies Monday through Wednesday would likely result in larger market moves in either direction. Jupiter prefers to operate under the auspices that the glass is half full, but Jupiter appearing to turn retrograde from Earth’s vantage point can affect financial markets by reversing the trend, as planetary retrograde periods create a shift in perception.

As I’ve written many times, Jupiter is the principle of expansion. Contrary to my daily prognostications last week, Jupiter turning retrograde Monday expanded the impact of comments made by Treasury Secretary Geithner at last weekend’s conference of G8 finance ministers when he remarked that economic conditions have a “way to go” before the U.S. can begin to pull in liquidity. Then the IMF called the Administration’s economic assumptions “optimistic,” believing the U.S. economy will stagnate between now and the second quarter of 2010 when the recovery should strengthen. (I think the IMF is a bit ahead of themselves; push the forecast back to Q42010-Q12011 for a sustainable recovery.) Jupiter emphasizes foreign relations, and the dollar got a boost after Russia’s finance minister made positive remarks about the dollar’s solid status as the world’s reserve currency following the G8 meeting.

With Jupiter conjoining Neptune, the commodities bubble has been rebuilding itself as bulls wanted to get in on the economic recovery early and bears sought to protect themselves from the inflation created by the growing mountain of U.S. debt and the Fed monetizing it. “Commodities reverse on resurgence in the U.S. dollar which rekindled worries about the U.S. economy,” was how The Wall Street Journal described Monday’s pullback. (Italics mine.)

The glass half full looked too empty Tuesday after a Morgan Stanley strategist said “the rally may now be over”, and Goldman’s chief economist said the correction could go on for a few weeks as financial markets may weaken on concerns about government intervention.

On Wednesday some of the original TARPed banks – Bank of New York Mellon (BK), Goldman Sachs (GS), JPMorgan Chase (JPM), Morgan Stanley (MS), and State Street Corp. (STT) repaid the Treasury. (The banks still want to buy back the government’s warrants.)

The indices became choppy/mixed late in the week, trying to figure out whether to stay with the market or take profits before they get eroded.

Summary Of This Week’s Influences:
I view the phase we’re in now akin to the intermission during a multi-act play or being in the calmer eye of the hurricane. Act I saw the fall of several major financial institutions and the government’s ad hoc efforts to stop the bleeding. Things have seemed fairly calm compared to the tumultuous turmoil of last autumn.

While financial markets have made an impressive recovery, none of the government’s programs in place effectively deal with fixing the root of the problem. Now we are preparing to enter the second act or as anyone who has experienced a hurricane will tell you, the worst part of the storm occurs after the calm of the eye passes over. Beyond the next wave of problems in credit cards, credit derivatives, and consumer and commercial real estate, reforms that rebuild our economic structures cannot be postponed any longer. While it was a major mistake for President Obama to retain the Bush Administration’s economic players, policies, and programs, the President recognizes that it is his mission to overcome what he calls the “it is never the right time” mentality for making sweeping reforms that might be initially painful but can help the nation break free of these boom/bust cycles that even NEC Director Larry Summers has acknowledged have become an all too frequent event. President Obama has made reforming healthcare and financial regulation the key drivers to putting the economy back on a path to sustainable long term growth.

The cardinal (action-oriented) signs* mark the seasonal turning points of the year. Summer began in the northern hemisphere today when the Sun entered Cancer (until July 22). What makes this Summer Solstice time more powerful is that the New Moon in Cancer occurs on Monday (3:35 PM EDT), making the next month a time to begin to make major changes.** Cancer and its ruler the Moon rules consumers and domestic security as the Moon and Cancer represents the need for physical and emotional security. So it’s only natural that these energies rule the most emotionally charged areas of our lives: food, family, and the “American Dream” of home ownership. And nowhere in the world are these issues more emotionally charged than in America, born with the Sun (self-identity), Mercury (communication), Venus (money and values), and Jupiter (abundance; philosophy) in Cancer.

Two planetary pair ups dominate at this time: Venus and Mars conjoin in Taurus, the sign of banking and finance, and the Sun in Cancer opposes Pluto in Capricorn.

Venus conjoins Mars today, and tomorrow the two planets harmoniously interact with Saturn in Virgo. With these planets in the practical earth element, this is a fantastic time to take action to build or rebuild a solid and secure financial foundation. Banks should not wait for Congress to pass regulatory reform; they should be getting back to basic banking now. In the future banks will operate more like utilities by enriching their shareholders with stable earnings and juicy dividends, replacing growth based on financial alchemy and stock buybacks that only enriched their top executives.

On a personal level, the Sun/Moon and Venus/Mars conjoining at the same time not only help to balance expressing the male and female energies within ourselves, but particularly in an intimate relationship. You and your partner will be in sync regarding what you value and enjoy the simple pleasures of each other’s company.

The Sun opposing Pluto provides the determination and willpower to restructure government regulatory rules in order to create a balanced financial system that serves the needs of consumers and businesses. This influence is reinforced as Pluto is opposing the USA’s natal Venus in Cancer and challenging the USA’s Libra Midheaven (the Administration; USA’s global reputation). The Sun/Pluto can bring more mergers and acquisitions due to financial constraints. At the same time there could be legal challenges to mergers and bankruptcy proceedings. Look for the Sun opposite Pluto to expose more of the secrets of the shadow banking system. The Sun opposite Pluto will wield its greatest influence at the Federal Reserve.

Speaking of the Federal Reserve, the Fed will release its statement on monetary policy at 2:15 PM on Wednesday. The Fed statement could be more defensive of its extreme monetary easing, communicating that the economy is not ready for a withdrawal of its excess liquidity anytime soon.

The House Oversight and Reform Committee issued a second subpoena on the Fed for more documents related to the Fed’s role in ensuring Bank of America completed its acquisition of Merrill Lynch. At 10:00 AM on Thursday it will be Fed Chairman Bernanke’s turn to testify.

Take all those scattered thoughts and pieces of paper and structure them into a coherent plan on Friday as Mercury in Gemini challenges Saturn in Virgo.

The energies of Uranus in Pisces are more pronounced from Friday through July 6 as the planet turns retrograde July 1. Uranus tends to create volatility through sharp and unexpected swings that go higher or lower quicker than anyone anticipated. With Uranus in the house representing speculation and Neptune the planetary ruler of this house in the Cancer New Moon chart, the market will probably make large moves in both directions over the next month as it shifts from periods of euphoria to panic. And it’s those Cancer themes discussed above that will most likely be the source of the wildest market moves.

Monday, June 22, 2009
Positive trend bias.

Tuesday, June 23, 2009
Negative trend bias.

Wednesday, June 24, 2009
Indices negative but interspersed with choppy/mixed conditions. Could see improvement approaching the final hour.

Thursday, June 25, 2009
Negative conditions improve to choppy/mixed to moderately up in afternoon.

Friday, June 26, 2009
Anecdotal reports of economic contraction keeps market lower.

*The cardinal signs are Aries (spring), Cancer (summer), Libra (fall), and Capricorn (winter).
**The first of two New Moons in Cancer. (The second is a Solar Eclipse on July 21.)

No disclosures.

USA: July 4, 1776 5:10 PM Philadelphia, PA

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