WallStreetWeather.net Forecast For Week Of August 31, 2009

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Summary Of Last Week’s Influences:
While events last week didn’t start to shake up the bulls’ confidence as much as I thought, the major indices did show signs that this rally is growing a bit weary. Although the indices closed at their 2009 highs Thursday and the DJIA and the S&P500 reached intraday 2009 highs on Friday, they failed to maintain it. Last Monday’s Moon in indecisive Libra kicked off a week of mostly choppy trading.

Planetary influences aside, when I hear pundits saying that the market is going to keep on going without turning back, it reminds of all that Dow 36,000 nonsense in the previous bubble. Last week the Investors Intelligence Advisors Sentiment Index reported bearish sentiment fell to 19.8% for the first time since October 2007 when the Dow and S&P reached record highs. Average S&P short interest in mid August is the lowest in eight months and overall market volume has been very low.

Returning to planetary influences, the peak of new daily highs on the NYSE peaked on August 3. Much of the excitement has been predicated on the growth play in China, yet the Shanghai Composite peaked on August 4. Both of these indicators topped out just before the August 5 Lunar Eclipse. As I wrote in a previous post, eclipses are harbingers of change and their influence is not immediately felt in the market.

Thankfully Mars opposing Pluto last Wednesday did not create any big geopolitical events, at least that we’re aware of now. (With the Moon in Pluto-ruled secretive Scorpio, something that happened then might be revealed at a later date.) Pluto rules lending, and on Wednesday for the first time since May 1993, three month US$ Libor became cheaper to borrow than Japanese yen. Mercury challenging Mars and then both planets challenging Pluto reflected a “change in direction in currencies and interest rates.”

“News about the Fed and its Chairman” also occurred as President Obama nominated Ben Bernanke to a second term. The Fed fired back on Wednesday against a Judge’s ruling to turn over documents to Bloomberg relating to the Fed’s bailouts last year under the Freedom of Information Act. Now the Judge has granted the Fed a stay in releasing the documents, giving the Fed until September 30 to file an appeal against the Judge’s decision. House Financial Services Committee Chairman Barney Frank said “I want to restrict the powers of the Federal Reserve in a number of ways.” Transits of Saturn, Uranus and Pluto between this autumn and 2010 are likely to limit (Saturn) the Fed’s powers, bring overdue reforms and openness (Uranus), and transform (Pluto) its purpose. And Chairman Frank has said “the House will probably approve legislation in October” that will allow the GAO to audit the Fed.

Mars is action and Pluto is secret dealings and private funds. On Wednesday the FDIC voted to allow private equity firms to buy into failed banks as a consortium providing they hold the purchase for at least three years and maintain Tier 1 common equity equivalent to at least 10% of the bank’s overall assets. However, each individual private equity firm cannot own more than 24.9% of a bank without being deemed a bank holding company and having to act as a source of strength for that bank.

Goldman Sachs (GS) on Wednesday was subpoenaed for information about its weekly “trading huddles” by Massachusetts’s chief financial regulator after a Monday front page Wall Street Journal article described how research staff only gave short term stock tips to traders and the firm’s best clients which at times contradicted with Goldman’s long term recommendations provided to all clients. The SEC and FINRA are going to ask Goldman for more information on its huddles. With Mercury in Venus-ruled Libra and Venus in Leo (stock market) until September 17, there will be a lot more news (Mercury) about questionable trading arrangements and practices, especially September 7 to 17 while Mercury is retrograde in Libra.

Summary Of This Week’s Influences:
This week will likely mark the end of the summer rally as Mercury and Pluto from Earth’s vantage point will appear to change direction next week. Planets reversing direction tend to correlate to at least temporary market reversals.

Choppy/mixed conditions are likely to prevail this week with an increase in volatility to the downside. The Moon (sentiment) will be traveling through Saturn-ruled Capricorn Monday and Uranus-ruled Aquarius Tuesday until midday Thursday, emotionally expressing the Saturn/Uranus opposition of September 15.

As I wrote in a previous post, September 15 will be the third opposition of Saturn and Uranus. Saturn represents the caution and growing concern that fundamentals have fallen too far behind the stock market’s rocket ride fueled by future projections (Uranus).

Saturn in Virgo represents all the efficiencies companies have squeezed out to still make a profit or at least to keep the red ink from spreading. A major part of this cost containment has been to reduce (Saturn) the workforce (Virgo) and increase the productivity of the remaining workers.

Workers will be at the forefront of the market’s mind this week when the August employment report is released Friday morning. With the Full Moon in Pisces occurring Friday at 12:03 PM, the market could have an overblown reaction to the number. Although I think the reaction will be to the downside, the market has a tendency to peak out at or prior to the Full Moon before turning negative.

Virgo represents healthcare in general and Pisces rules drugs and hospitals, so the Full Moon will accentuate the highly charged emotions that have been stirred up over healthcare reform. Friday marks the first deadline for health insurers to submit data to the House Energy & Commerce Committee on health insurance company employees compensated $500,000+, along with details of corporate retreats.

Monday, August 31, 2009
Market becomes more cautious about taking another leg higher. Negative trend bias, but could see improving conditions in afternoon.

Tuesday, September 1, 2009
Negative early; improving conditions as morning progresses. Reverses in afternoon, but could show improvement toward the close.

Wednesday, September 2, 2009
Moderately positive in the morning, then becomes choppy/mixed before turning negative in afternoon.

Thursday, September 3, 2009
Choppy/mixed to positive trend bias weakens and turns negative in afternoon.

Friday, September 4, 2009
Downturn accelerates as the day progresses.

No disclosure.

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