WallStreetWeather.net Forecast For Week Of November 1, 2009: “Bankers Full Moon Apocalypse Edition”
Summary Of Last Week’s Influences:
The closure of the San Francisco-Oakland Bay bridge Tuesday after a crossbar and two steel tie rods installed over Labor Day weekend snapped and fell into westbound lanes during rush hour, should serve as a warning that there are no quick fixes to old and decaying infrastructure. Just as the government conveniently neglects to factor in the real world cost of living in its inflation calculations, the Labor Day repair crew conveniently overlooked how real world factors such as weather and traffic on the bridge would affect the repair.
Bridges provide a connection. Libra rules bridges as this sign seeks to bring together two people or entities. As Saturn entered Libra last week, financial markets woke up to the reality that the bridge of economic recovery is not strong enough to support enough traffic to push equities to a higher level. Gluskin Sheff Chief Economist & Strategist David Rosenberg pointed out on October 29 that markets hadn't sold off on higher volume since the multiyear lows of late February/early March. Rosenberg elaborates that of the 95 up days since the March low, 62% of those up days occurred on light volume.
Returning to my analogy, the quick fix to the bridge supported light traffic coming from hedge funds, flash trader buying, and short covering that exaggerated the market’s moves which created the illusion that the government sponsored rally was built on a more solid and sturdy economic structure.
In last week’s Forecast I wrote that “financial markets will begin to make larger and more volatile moves this week.” The Dow made triple digit moves every day but Tuesday. Just in time for Halloween, the Volatility Index’s (VIX) “fear factor” rose almost 25% Friday, closing above 30 for the first time since July.
During Halloween time, it is believed that the veil separating the living and the dead dissolves. Neptune represents beliefs and illusions. Neptune creates conditions that obscure visibility, creating the illusion that certain boundaries or barriers no longer exist. Neptune rules addictions, and Wall St. is addicted to the Fed’s zero interest rates, excess liquidity and government stimulus that have fueled the rally.
Neptune’s energies are pronounced October 29 through November 10 as the planet appears from Earth’s vantage point to be stationary in the sky as it changes direction from being retrograde since May 29 to direct motion November 4. Neptune rules Pisces, symbolized by two fish swimming in opposite directions. Neptune’s energies were even more pronounced last Thursday and Friday when the Moon was in Pisces. The Moon represents market sentiment, consumers, and real estate. Sentiment was bullish Thursday after third quarter GDP came in better than expected, but turned bearish Friday when consumer spending and sentiment failed to meet market expectations. Suddenly 3Q GDP wasn’t as strong as it appeared to be as most of the gain came from the expired “cash for clunkers” and the first time homebuyer program that is set to expire November 30 if Congress fails to pass an extension.
Halloween marks the time of the year when the Sun is in Pluto-ruled Scorpio. Pluto rules death. This is the time of the year when nature appears to decay and die. This too is an illusion as nothing really dies; it is just in the process of being transformed to be reborn into new life in the Spring.
And now that Saturn is in Libra forming a challenging alignment to Pluto in Capricorn, Wall St. is facing the cold and harsh reality that an imbalanced rally that is decoupled from the rest of the economy has no foundation to move higher until much needed major structural and time consuming repairs have been implemented to balance and bridge the wide gap between Wall St. and Main St.
Pluto is known as the wealthy and powerful lord of the underworld. As the days become shorter and darkness descends, it is time to investigate and uncover the secrets of Pluto’s domain. The trick is not to be afraid of what might be uncovered, but to deal with it now before it becomes even more difficult and painful.
When Pluto in Capricorn first opposed the USA Venus (banking) on March 9, the market began its rapid ascent from the market’s perceived financial armageddon of the S&P at 666. The plutocrats running the government (Capricorn) created an environment to spark a rally with the intent that the gains would help banks to quickly recapitalize. The conjunction of expansive and optimistic Jupiter with Neptune in Aquarius this year helped propel the market from one extreme to the other.
As Saturn shifted into Libra last week, the market once again became fearful about financial issues that never disappeared but were merely obscured by Neptune’s veil of illusion. Commercial real estate woes are back in the spotlight, and concerns about whether banks have enough capital were increased when Calyon Securities analyst Mike Mayo said he expects Citigroup (C) will have to write down $10 billion in deferred tax (Pluto) assets in Q4 for fear Citi’s losses are so big that time (Saturn) will run out before Citi will be able to take advantage.
Just as retail investors began putting more money into mutual funds than they took out in the prior week, institutional investors appear to be heading toward the exit.
Summary Of This Week’s Influences:
Monday’s Full Moon in Venus-ruled Taurus (2:14 PM EST) illuminates the banking system and the amount of loan losses on and off bank’s balance sheets. Mars in speculative Leo challenging the Taurus Moon and the Sun and Mercury conjoined in Scorpio indicates that the market will swiftly react to the latest information uncovered about the banks. These energies are especially strong in the USA as the Taurus Full Moon chart is in its “home” sector of the chart representing the financial system.
The Sun in Scorpio is at home in the chart sector representing shared resources, debt, taxes, and bankruptcy. Commercial lender CIT filed for Chapter 11 bankruptcy this afternoon, with Carl Icahn providing debtor in possession financing. Icahn's loan moves ahead of the $2.33 billion CIT received from the government after the Federal Reserve gave emergency approval for CIT to become a bank holding company in order to qualify for TARP. In its December 22, 2008 emergency approval, the Fed described CIT as “well capitalized under applicable federal guidelines.”
This Full Moon has the potential to begin financial apocalypse, as the pronounced energies of Neptune rule the Full Moon chart in the USA,* lifting the veil to reveal the financial system is not as solid as it appears.
McClatchy owned newspapers reported today that for five months during 2006-7 Goldman Sachs (GS) was selling $40+ billion of “triple-A” rated MBS to pension funds and institutional investors at the same time it was secretly betting against these securities by purchasing CDS to hedge against a housing downturn.
Neptune rules fraud. The combination of Saturn, Neptune, and Pluto with Mars in Leo has stepped up taking action to clamp down on insider trading on Wall St. We’re quickly finding out that year after year of gains only means some have an edge on acquiring and acting on insider information rather than being the smartest guys in the room.
Neptune rules oil. Neptune stationary periods tend to correlate to large moves in crude oil, and oil has tended to drop on demand concerns during Neptune's station. Inflation, asset bubbles and credit issues tend to be a concern in one form or another when Neptune’s energy is pronounced.
Neptune has been going back and forth over the NYSE’s natal Pluto in Aquarius since March 2008 when the government arranged for Bear Stearns to be dissolved into JPMorgan Chase (JPM). During Neptune’s second pass, crude oil hit a record high in July 2008 and banking analyst Richard Bove asked, “Who Is Next?” Neptune rules communism, and by the third pass to the NYSE Pluto in early 2009, even the most ardent free marketers were sounding like communists by calling for bank nationalization.
Neptune will turn direct conjoining the NYSE Pluto for the final time on Wednesday. One hour and five minutes later, the FOMC Announcement will be released. I think there will be two changes in the statement and at least one of these will catch the market off guard at this juncture. The Fed will describe how it has been working behind the scenes so it is ready to act to remove excess liquidity from the system. The second change will rework the sentence about economic conditions warranting low rates; the “extended period” will likely be removed.
The combination of all the planetary influences I have described will continue to create large market moves and volatile conditions. Although the overall trend this week is negative, it could still be interspersed with brief upward moves as the market would prefer to operate in denial under a veil of illusion even though the strong influence of Saturn and Pluto is bringing out Neptune’s other tendency for panic that spreads like a contagion.
Monday, November 2, 2009
Tuesday, November 3, 2009
Positive then becomes choppy/mixed to negative by early afternoon.
Wednesday, November 4, 2009
Thursday, November 5, 2009
Negative trend bias.
Friday, November 6, 2009
Improving conditions as the day progresses.
*as well as the November 16 Scorpio New Moon chart.
Posted 11/01/2009 08:53:00 PM