WallStreetWeather.net Forecast For Week Of September 21, 2009

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Summary Of Last Week’s Influences:
The stock market celebrated the one year anniversary of the week of Lehman Brothers collapse and the ensuing financial panic on Wall Street by closing at 2009 highs on Friday. So far Mercury retrograde has not reversed the market’s upward trend. Once again, the Fed’s ultra loose monetary policy is recreating asset price inflation in the stock market as investors chase yield in riskier investments.

Taking Q&A after giving a repeat of his Jackson Hole speech Tuesday, Fed Chairman Bernanke said the recession was “from a technical perspective very likely over at this point,” adding that employment will take longer to recover.

Bernanke’s comments came on the day Saturn opposed Uranus for the third time. Saturn reflects the government sponsored bull market that Uranus has taken from the unexpected multiyear lows of early March to levels higher than imagined. Despite encouraging signs of economic improvement, the stock market is priced for economic perfection which is just not possible when Wall Street and the consumer are living in parallel universes.

Uranus represents extremes, and just as the market was overdone on the downside, the market has went to the opposite extreme. If the bulls really stood behind their conviction, then why have long term out of the money Puts on the indices and most stocks gotten so pricy? These Puts were cheap a couple of years ago when the market was on its way to reaching record highs.

On the geopolitical front, Mercury retrograde challenging Pluto late last week brought a reversal of the Bush Administration’s plan to place 10 ballistic missile interceptors in Poland and radar in the Czech Republic. In the new plan existing weapons would be used, equipping the Navy’s ship-based missile defense system with Aegis radars and antimissile interceptors. These enhanced naval vessels would then be deployed to effectively intercept Iranian short and medium range missiles to protect Israel and other U.S. allies. The Pentagon will not only save millions of dollars, but having a ship-based defense system provides the portability that a fixed land based system does not.

Summary Of This Week’s Influences:
Venus (money/banking) moves into Virgo today until October 14. Venus together with Mercury in Virgo (until October 9) takes a critical look at valuations and financial arrangements such as the compensation practices at the nation’s largest banks. Venus in Virgo tends to be more risk averse than Venus in Leo (August 26-September 20).

Due to Mercury being retrograde, Mercury in Virgo will repeat its conjunction to Saturn early Tuesday morning and oppose Uranus Wednesday morning. Mercury conjoining Saturn tends to be a bearish influence as investors take a more cautious view. Mercury first conjoined Saturn on August 17 (indices closed down 2%+ that day), and will make its final conjunction to Saturn October 8.

Mercury opposing Uranus for the second time on Wednesday tends toward the opposite extreme. Mercury opposed Uranus on August 21, a day the indices made fresh 2009 highs. (Mercury will oppose Uranus for the third time at the October 4 Harvest Moon.)

Fall officially begins at 5:19 PM EDT Tuesday when the Sun enters Libra until October 23. With the New Moon in Virgo last Friday conjoining Mercury retrograde and Saturn so close to the time of the Autumnal Equinox, new action will be taken on established issues such as financial regulatory reform and healthcare. Both the House Financial Services Committee and the Senate Banking Committee will be holding hearings this week to address the Administration’s financial regulatory reform proposal, systemic risk issues, and an examination of TARP one year later.

The Sun in Venus-ruled Libra challenging Pluto in Capricorn Wednesday accentuates these themes, shining the light on the financial regulators themselves and their lack of changing the practices that got us into the crisis at the banks they regulate. Pluto represents what is kept hidden, and if the Federal Reserve was truly operating with greater transparency as Chairman Bernanke claims, why would the House be holding a hearing this week on H.R. 1207 The Federal Reserve Transparency Act of 2009 (S.604: The Federal Reserve Sunshine Act)?

The FOMC will conclude its two day meeting on monetary policy Wednesday while all of these planetary alignments are taking place. While the FOMC announcement always attracts attention, there could be something profound emanating from Wednesday’s announcement. It could reverse currency markets and affect foreign purchasers of Treasuries.

Pluto rules mortgages. As Saturn enters Libra October 29 and challenges Pluto (exact November 15), the Fed will have to contract the amount of mortgage securities it purchases confirming the scheduled wind down at year end.

The Sun represents leaders, and Libra represents diplomacy. Each year when the Sun enters Libra, the world’s leaders gather at the U.N. General Assembly. President Obama will be playing diplomatic host this week. On Tuesday the President will hold a joint meeting with Palestinian Authority President Abbas and Israeli PM Netanyahu to restart peace talks between the two sides.

The Sun challenging Pluto describes that peace talks between Israel and the West Bank Palestinians will likely be unsuccessful because of the missing parties from Gaza and Lebanon. It’s fruitless to pretend that those who are distasteful don’t get an equal seat at the negotiating table. Pluto rules nuclear issues, and on Wednesday when the alignment will be exact, President Obama will chair a summit-level meeting of the U.N. Security Council on a resolution on nuclear nonproliferation and disarmament.

Then at the end of the week the President will host the G20 in Pittsburgh. Even though financial overhaul measures to prevent global systemic risk as well as climate change is the focus of the agenda, most leaders seem primarily focused on bankers’ compensation.

With Mercury having shifted back into its home sign Virgo for the remainder of the retrograde cycle, market volatility could increase.

Monday, September 21, 2009
Negative.

Tuesday, September 22, 2009
Negative.

Wednesday, September 23, 2009
The Sun challenging Pluto could bring merger news today. The Sun/Pluto and Mercury opposite Uranus tends to be a positive influence, but this influence could weaken and reverse in the afternoon.

Thursday, September 24, 2009
Choppy/mixed to negative trend bias.

Friday, September 25, 2009
Negative, then choppy/mixed to improving conditions that could reverse in afternoon.

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