WallStreetWeather.net Forecast For Week Of August 24, 2009

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Summary Of Last Week’s Influences:
Mercury describes what investors are thinking and how they react to news. Mercury conjoining Saturn in Virgo Monday sparked a global selloff on fears of economic contraction. The Shanghai Composite dropped 5.8%, its biggest one day decline since November 18 on concerns the stock market had formed a bubble fueled by bank lending. This was reflected by the opposition between the Sun in Leo (stock market) opposing Neptune in Aquarius (bubbles). U.S. indices fell less severely, but Monday’s Moon in Cancer reflected investors concerned about consumers keeping a tight rein on spending. Cancer and the Moon rule the home. Lowe’s (LOW) reported reduced profits and announced the company will curtail its 2010 expansion plans as consumers refrain from spending on large scale remodeling projects.

Mercury is a dualistic energy, and Mercury opposite Uranus in Pisces Friday reflected two news events occurring simultaneously that helped propel the stock market’s rocket ride to close at a 2009 high, returning the indices to their late October/November 2008 levels.

July existing home sales increased 7.2%, the fourth consecutive monthly increase. The gain marked the first multi-month increase in five years. Investors chose to ignore the rest of the report showing house prices continued to decline with the median home price down 15% year/year to $178,400. 31% of July home sales were for foreclosed properties.

Wall St. was also thrilled after Federal Reserve Chairman Bernanke said in a speech at the Fed’s annual gathering in Jackson Hole that “the prospects for a return to growth in the near term appear good.” But other central bankers attending such as ECB president Jean-Claude Trichet, were “a little bit uneasy” about Bernanke’s optimism and confidence that an “extraordinarily deep and protracted” global recession had been prevented by the “speedy and forceful actions” by the Fed and other central banks.

According to The Wall Street Journal’sHeard on the Street” column, Bernanke joked about his “forecasting abilities” at the confab’s kickoff dinner Thursday night. When told the astronomy club would be hosting a night of stargazing for attendees, Bernanke asked Kansas City Fed president Thomas Hoenig: “Do you know if they do astrology? It couldn’t hurt.” That’s an understatement! Understanding planetary cycles could have prevented a housing bubble, a credit crisis, and saved billions in taxpayer funded bailouts that could have went to more productive uses such as clean energy, infrastructure and healthcare reform. Astronomers are probably not amused, wondering how the Fed Chairman could be so insensitive even in jest to equate astronomy with astrology! ;-)

Mercury’s alignments to Saturn and Uranus activate the push/pull dynamic of caution/fear and economic contraction (Saturn) vs. getting invested in the market ahead of the economic rebound (Uranus). While Saturn represents fundamentals and tends to be a bearish influence, Uranus represents extremes in either direction, depending on how the market views the future at any given time. Rapid acceleration in one direction can just as quickly turn and go in the opposite extreme.

Summary Of This Week’s Influences:
(See my post on “Stock Market Turbulence During The Leo New Moon Cycle: August 20-September 18, 2009” for more info.)

Whether it’s the stock market, home sales, or motor vehicles, all have been boosted by government subsidies and/or special lending programs by the Fed, Treasury, and FDIC. So the question is can the stock market and the economy continue to grow without government assistance? Apparently the government and Wall St. believe it cannot.

The “Cash For Clunkers” program officially ends Monday at 8 PM, the last full day Mars will be in Mercury-ruled Gemini (motor vehicles). Venus (money) and Mars (action) together in Gemini from July 11 to 31 represented the peak of the popularity of the program and Congress allocating an additional $2 billion. Now auto manufacturers are increasing production just in time for Mercury retrograde (September 7-29) which is not a good time to buy a car unless you absolutely have to.

Mars will move into Cancer Tuesday afternoon until October 16. Cancer rules household appliances, and now the government is preparing a cash for clunkers type rebate program to get consumers to buy household appliances, furnaces and air conditioners for their homes that are Energy Star rated. (Consumers can keep their clunker appliances.) Federal money will be distributed to the states to decide how they will implement the program.

The $8,000 credit to first time home buyers expires November 30, but a bipartisan bill sponsored by Sens. Dodd & Isakson proposes to increase the credit to $15,000 and extend the credit to all homebuyers.

Funny how no one seems to have a problem with all these government subsidies and government ownership of certain businesses yet when it comes to healthcare reform, opponents are even against the government imposing consumer regulations prohibiting health insurance companies from rejecting people altogether as well as rejecting claims and rescinding policies of those who do have health insurance.

Events this week could begin to shakeup the bulls’ confidence that nothing can get in the way of the market continuing on its upward trajectory.

Monday, August 24, 2009
Negative.

Tuesday, August 25, 2009
Negative.

Wednesday, August 26, 2009
Negative; volatility increases.

Thursday, August 27, 2009
Choppy/mixed to positive trend bias.

Friday, August 28, 2009
Positive.

No disclosure.

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