WallStreetWeather.net Forecast For Week Of October 18, 2009

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Summary Of Last Week’s Influences:
Jupiter represents the global marketplace. As this expansive and optimistic planetary energy turned direct last week, most major global indices made new 52 week highs. Crude oil closed at $78.53, a new high for the year, up 120% from its March low. Gold reached a record high in dollar terms Tuesday, and topped $1,070 intraday Wednesday. Both of these commodities were driven higher as the dollar continued to decline.

Baseball caps with “Dow 10,000 2.0” were donned by floor traders on the NYSE when the magic moment occurred Wednesday. With Jupiter in technologically oriented Aquarius, the “2.0” was the right fit. Another way to view it is that the Dow has had a “lost decade” since its 1.0 break through the 10,000 level occurred on March 29, 1999. While Wall St. has viewed the last seven months as nothing but a rocket ride fueled by the Fed and the U.S. Treasury, as a New York Times editorial observed, no champagne corks were being popped on Main St.

Jupiter began moving forward Thursday. The indices reached new highs even though the parallel universes of Wall St. and Main St. began to converge as consumer-related credit losses impacted third quarter earnings from Bank of America (BAC) and Citigroup (C). Despite Wednesday’s stellar earnings from JPMorgan Chase (JPM), the consumer banking side showed disappointment with an additional $2 billion being added to reserves.

The Dow closed at 9,995.91 Friday, affected by disappointing earnings reports and a lower than expected reading in the October Michigan Consumer Sentiment Index. Jupiter conjoining hopeful Neptune for most of this year reflects consumers are more confident about current than future conditions. Jupiter expands and Neptune rules inflation. Consumer inflation expectations are higher than the Fed and most of Wall St. Saturn moving into Libra October 29 and challenging Pluto in Capricorn (exact November 15), reflects consumers underlying concerns about balancing their finances and their debt load.

That a hedge fund masquerading in Halloween costume as a bank fails to grasp why the public and some politicians are not ecstatic about their projected record compensation payouts shows how out of balance the financial system has once again become. With Goldman Sachs (GS) earning 80% of its profits from trading, there’s no pretense of any commercial or consumer banking activities.

Of course Goldman should be raking it in since their gains have largely come courtesy of the Federal Reserve and U.S. taxpayers. With Bear Stearns and Lehman Brothers gone, less competition equals higher profits for the remaining Wall St. banks. Zero interest rates, FDIC guaranteed loans, and “too big to fail status” have resulted in higher earnings.

Wall St, the Fed, and the government have failed to grasp the fact that you cannot solve a problem by recreating what got you into the mess in the first place! Saturn in Libra challenging Pluto in Capricorn over the next several months is about adjusting the scales back toward equilibrium before they break from being so strongly tilted to one side. If the financial system is as strong as the markets reflect, then Wall St. should welcome the Fed and government turning off the corporate welfare spigot.

Summary Of This Week’s Influences:
The week begins with the Libra New Moon that occurred at 1:33 AM EDT today. In the USA the emphasis is on all forms of communication, contractual agreements, and domestic travel and transportation. There’s a lot of chatter and movement within the local environment. Media outlets are working overtime to be the first to break major stories about each other as there could be new alliances and media M&A. Topics of media focus will be news about the military strategies the Administration is currently working on behind the scenes, as well as disclosures of previously secret military information.

All of these things are Mercury’s domain. Mercury in Libra harmonizes with Jupiter Tuesday and Neptune Saturday. With Mercury in Venus ruled Libra, earnings and economic news could be favorable enough to justify the market moving higher. However, Saturn in the area of the economy challenging Pluto in the area of the chart representing the stock market will start wielding its influence over the next month, as new information is reported on the government’s action regarding Wall St’s trading practices and entanglements.

The more sobering reality of Saturn and Pluto could force Wall St. to recognize that a glass half full is also a glass half empty and overly optimistic expectations need to be tempered by fundamental facts. The Dow climbing almost 55% from the March low back up to 10,000 was the easy part. Retracing the journey back up to “Dow 14,164.53 2.0” will be much, much harder.

Monday, October 19, 2009
Improving conditions in late morning to early afternoon; could weaken again in the last hour.

Tuesday, October 20, 2009
Strongest in the morning, then weakens in early afternoon; improves into the close.

Wednesday, October 21, 2009
Negative.

Thursday, October 22, 2009
Improving conditions as day progresses but predominantly mixed to negative conditions.

Friday, October 23, 2009
Negative trend bias.

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