WallStreetWeather.net Forecast For Week Of December 27, 2009

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WallStreetWeather.net Forecast For Week Of December 27, 2009
The major indices reached new 2009 highs last Thursday, correlating to the historical tendency of the stock market to move up during the last two weeks of December.

Aquarius and its ruler Uranus represent extremes. The influence of Saturn opposite Uranus from Fall 2008 through Winter 2009, helped drive the Dow and the S&P down to decade lows. Jupiter is sometimes described as Santa Claus, and the influence of Jupiter conjoining Neptune in Aquarius from the Spring took global markets to the opposite extreme thanks to zero interest rates, government-backed loans, and global government stimulus measures.

To match the energies of optimistic Jupiter conjoining with Neptune the planet of dreams and illusion, there seems to be an attitude of party now and deal with the problems later.

Welcome to 2010. As Dennis K. Berman explains in an article in last Monday’s Wall Street Journal:

“Lots of worries hang over the coming year: the direction of the U.S. dollar, the Federal Reserve’s inflation-fighting, sovereign-debt downgrades and relations with China. None will top the biggest Wall Street story of 2010: the most significant financial regulation in 75 years.”

Timothy Ryan, the CEO of the Securities Industry and Financial Markets Association says “This is the rerun of the 1930s.” And he’s right. It is a rerun as Mercury is retrograde in Capricorn and Mars is retrograde in Leo at the same time and place they were in December 1930 to January 1931.* From June 1930 to July 1931, Jupiter (expansion), Saturn (contraction) Uranus (extremes/shocks), and Pluto (bankruptcy/transformation) were in cardinal (action-oriented) signs. Jupiter and Pluto were in Capricorn’s opposite sign Cancer. (Cancer rules food and describes the bread lines.)

During 2010, these same planets are or will be moving into cardinal signs. Uranus moves into Aries May 27 for the first time since its last transit from April 1927 to March 1935. Jupiter will follow June 6 and conjoin Uranus June 8. Just like the early 1930s, Jupiter and Uranus will oppose Saturn at the same time these three planets square Pluto. This configuration will be at its strongest in July and August 2010.

This does not mean that we will experience another Great Depression, but it is an overdue wakeup call for major reforms to take place as these planets converge over the USA Venus (banking system). Already the financial reform bill that passed the House on December 11 has so severely weakened proposed derivatives regulations that it will exempt nearly half of the $600 trillion in outstanding derivatives transactions from clearing requirements. This is despite the fact that the opaque world of derivatives trading precipitated the financial crisis and brought down AIG.

If Congress does not end up passing legislation requiring all parties involved in a derivatives trade to post margin or collateral, it is setting Wall St. up for another financial crisis. And in the event of another crisis, the House bill allows regulators and the Treasury to guarantee the debt of a “solvent” institution. This precipitates the volatile complete lack of moral hazard in institutions even bigger than the old “too big to fail.”

The influence of Jupiter conjoining Neptune brought us out of the crisis and back into a false sense of security and complacency. 2010 could bring many ups and downs in the market throughout the year. January and February is likely to inject a dose of reality to the market. Things perk up in the spring and as I wrote in a previous post, by June we could really have an inflation problem if the Fed doesn’t start tightening. Jupiter conjoining Neptune gave the illusion that there’s no inflation even in asset prices.

As Jupiter made its final conjunction to Neptune last Monday, Chicago Fed president Charles Evans hinted on CNBC that the Fed keeping rates low “for an extended period of time” could last for another three to four FOMC meetings which would mean the Fed would start tightening at its June 23 meeting. The Sun in Cancer will square Uranus in Aries June 21 and Jupiter in Aries that day. (The Moon enters Jupiter ruled Sagittarius at 2:10 PM EDT.) All three planets will impact the Fed’s natal Sun/Pluto opposition indicating a change in monetary policy to prevent economic expansion from causing inflation to spiral out of control.

The bottom line is that 2010 is not going to be the easy year for the market that 2009 turned out to be. Instead there will probably be periods of turbulence followed by a sharp rally and then more turbulence and volatility followed by the Sun shining again. ETFs might not especially perform as well between June and August when Jupiter and Uranus are in Aries, as one stock is likely to outperform while the rest of the stocks in the ETF will underperform. As Main St. begins to improve, it will become more challenging for Wall St.

Just as the Fed and the government’s extraordinary measures kept the market in full bull mode even during the late summer to early autumn gap between the Jupiter/Neptune alignment, the stock market has a propensity to be up during the last two weeks of December.

Instead of doing a daily forecast for this abbreviated week, I will do what I should have done last week and briefly describe the planetary influences and their tendencies.

Venus has now moved into Capricorn and Mercury is retrograde in Capricorn until January 15. Venus shifting into Saturn-ruled Capricorn until January 18 creates a more cautious outlook about financial matters. Mercury turning retrograde can reverse the market’s trend, but the strong end of year factor could delay this effect until January (Saturn/Capricorn represent delays).

Venus conjoins Pluto in Capricorn on Monday (the first time since the 18th century) and Saturn in Libra early Tuesday. The focus is on banking with the Moon (sentiment) in Taurus, and the debt (Pluto) held by banks and sovereign nations. An announcement related to a merger or talk of a potential takeover is possible.

With the Moon in Mercury-ruled Gemini Tuesday and Wednesday, the influence of Mercury retrograde could cause some choppiness and weakness. Tuesday’s Consumer confidence number could come in lower than expected. Thursday’s Blue Moon Lunar Eclipse in Cancer should see the indices finish up on the last day of 2009.

I want to wish all Wall Street Weather readers a happy, healthy, and prosperous 2010 regardless of what the markets do!

*The two were also retrograde simultaneously in the same signs in January to early February 1963 but Mercury began its retrograde cycle then in Aquarius.

Related Post:
The December 21, 2009 Winter Solstice

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