WallStreetWeather.net Forecast For Week Of February 1, 2010

Summary Of Last Week’s Influences:
“As January goes, so goes the market” is what’s known as the “January barometer.” With the three major indices closing January in the red, the January barometer would suggest that 2010 will be a negative year for the stock market.

As outlined in a prior Forecast, 2010 does not have the optimistic euphoria of Jupiter conjoining Neptune that dominated the year from the spring forward. And the ultra accommodative monetary policies and government stimulus that drove the outsize gains are slowly ending or will be tightened.

The January 15 Solar Eclipse in Saturn-ruled Capricorn at the same time Saturn stationed retrograde and Mercury turned direct in Capricorn so close to Saturn in Libra exactly squaring Pluto in Capricorn for the second time while Mars retrograde in speculative Leo opposed the Sun and Venus in Aquarius last week, reversed the market’s upward momentum.

As the FT’s John Authers wrote yesterday, “After months when every risk appeared to be an opportunity, markets have suddenly started to treat interesting opportunities as risks.” In an earlier column last week, Authers noted the irony that China is driving a lot of the current concerns. Authers quoted Morgan Stanley’s Teun Draaisma who observes that history’s biggest “relief rallies” during a bear market have averaged about a 70% gain followed by a 25% correction. We’ve made the 70% gain, but are not yet near the minimum 10% drop that defines a market correction.

Saturn’s fear over the sovereign debt (Pluto) of other nations has strengthened the U.S. dollar. The Jan 15 Solar Eclipse conjoined the Euro chart’s Venus (currency) and squared its Saturn in Aries, putting pressure on its value over concerns about Greece’s debt and commitment to budget tightening. Like the U.S., Greece’s natal Venus is in Moon-ruled Cancer and is being impacted by the Saturn/Pluto square. Compounding the problem is that Venus in Cancer squares the Moon and Pluto in Venus-ruled Libra in Greece’s chart.

Crude oil experienced its biggest monthly decline since December 2008. Jupiter in Pisces reflects an abundance of oil and natural gas. Thanks to Saturn in Libra, sugar has been the only commodity that continues to gain due to severe supply constraints and increased global demand.

President Obama and the Democrats are still struggling to pass healthcare reform. The Senate confirmed Ben Bernanke to a second term as Fed Chairman but not without a lot of arm twisting. Toyota spend $1 billion in 2008 in the U.S. advertising “Toyota quality” which would have been better spent building vehicles that don’t unexpectedly surge out of control. Saturn, Pluto, and Mars brought Toyota’s massive problem front and center in the spotlight last week. In my next post I will explain how these influences are affecting three key charts for Toyota.

Summary Of This Week’s Influences:
The energies of Saturn in Libra and Pluto in Capricorn continue to dominate economic events this week. Congress and the Administration will continue to bicker about reaching an agreement on ways to rein in spending to lower the ever growing mountain of government debt.

Virgo is the bookkeeper and the efficiency expert ruled by dualistic Mercury. With the Moon (sentiment) in Virgo on Monday, the government will release the President’s budget for the FY2011 beginning in October which seeks to “freeze” spending. (Saturn and Capricorn represent cold and harsh weather conditions.) The Moon in Virgo harmonizing with Mercury in Capricorn Monday can help decipher the fine print and determine if the numbers add up.

Defense Secretary Gates will hold a news conference to discuss the Pentagon’s budget and long term national security vision. Mars represents military matters, and Mars in Leo exactly conjoins Gates’ Pluto Monday. Saturn and Pluto have been impacting Gates’ natal Mercury, Sun, and Neptune in Venus-ruled Libra while Pluto is harmonizing with natal Venus in Virgo. As an article in yesterday’s Wall Street Journal points out, Gates is determined to transform (Pluto) the structure (Saturn) of the military “to focus on smaller-scale guerilla warfare,” believing that the conventional strategy of being prepared to fight two major wars simultaneously “was outdated and overly focused on conventional warfare.”

With Mars conjoining natal Uranus in Gemini (which exactly conjoins the USA Uranus) and with Venus in Virgo squaring natal Uranus, Gates is attuned to the need for a flexible military that is equipped with the latest and most efficient technology. Gates is requesting more unmanned drones and helicopters. He also wants defense contractors to build more fuel efficient armored vehicles and aircraft to lower energy costs and the number of convoys needed to get supplies into remote and landlocked areas such as Afghanistan.

With the Pentagon’s progressed* Sun in Libra conjoining Gates’ Libra lineup, it appears that Robert Gates is the right person at the right time to lead this effort. Defense contractors and their friends in Congress will balk, but in the end it looks like Gates will have successfully negotiated to get much of what he wants.

According to the FT, At 6 foot 7 inches tall Paul Volcker “is too big to fail.” Like Gates, Volcker was also born with Venus in Virgo (along with the Sun, Mercury, and Mars). The former Federal Reserve Chairman and Chairman of President Obama’s Economic Advisory Board has an op-ed piece in today’s New York Times on “How to Reform Our Financial System.” Volcker will testify at 10:00 AM Tuesday before the Senate Banking Committee on what President Obama has dubbed the “Volcker Rule.”

Saturn is fear. If we allow our deepest fears to get the better of us they become our reality. The Bush Administration’s obsession with moral hazard ended up creating what they claimed they most feared: failures and takeovers that have created banks that are now too big to fail. Now the Obama Administration and other governments propose to create a “resolution authority” that would take control of any financial institution the government believes would pose a systemic risk to the financial system to facilitate an orderly liquidation or merger.

The UK (we have a pattern of copying them on these issues since the financial crisis) has proposed these systemically important financial institutions have a living will in place to provide guidance to the resolution authority. Institutions designated too big to fail would have to pay a tax that would go to a fund to cover the costs in the event of a failure of a systemically important financial institution.

While this is all sooo Saturn/Pluto, there is a simpler solution. Saturn/Pluto reflects it is time to return to a structure of plain vanilla banking. Enact the “Volcker Rule,” impose higher capital requirements, make banks get their funding through deposit taking, and establish the Consumer Financial Protection Agency to separate consumer regulations from commercial banking regulations.

Paul Volcker’s Mars opposes his Jupiter and Uranus in Aries. Transiting Uranus, Saturn, and Pluto are impacting these natal planets. Later this year and in 2011, Jupiter and Uranus will return to where they were when Volcker was born. A Jupiter return occurs about every 12 years; a Uranus return happens once in a lifetime (around age 84). Both occurring simultaneously is a liberating influence that allows Volcker to be free to speak his mind and be more assertive and influential in helping to take the financial system back to the future.

Consensus estimates call for a gain of 13,000 jobs in the January employment report to be released on Friday. I think there will be a gain but the prior month(s) revision could be what the market is more fixated on. Last week’s Employment Cost Index reflected that wages grew more slowly in 2009 than since the government began tracking data in 1982 when Saturn was last in Libra. Wages by people employed in the private sector rose 1.5% in 2009 while consumer prices increased 2.8%, resulting in a loss of real wages of 1.3%. Inflation will really overheat midyear when Jupiter conjoins Uranus in Aries.

The Last Quarter Moon in Pluto-ruled Scorpio occurs Friday at 6:48 PM EST. Mercury is the chart ruler and resides in the sector representing the stock market. Mercury is conjoining the January 15 Solar Eclipse now as the G7 finance ministers meet Friday and Saturday in Canada. Events that occurred then will be back in the news now. With Saturn in the sector representing the economy and the banking system and Mercury ruling this area of the chart, and Saturn ruling the sector representing the stock market with Pluto here, the market is focused on sovereign debt and tighter financial regulations. The public is concerned about their investments, particularly retirement accounts. There could be some surprising new developments related to credit conditions.

The indices have closed at or near session lows for the last 6 out of 7 consecutive sessions. This week appears to have a similar pattern.

Monday, February 1, 2010
The strong influence of Saturn square Pluto and the Moon in Virgo’s aspect to Mercury in Saturn-ruled Capricorn brings news that is viewed negatively by the market. (Indices strongest around midday.)

Tuesday, February 2, 2010
Choppy/mixed to moderately positive, but weakens to close negative.

Wednesday, February 3, 2010
The indices could have a hard time deciding which direction to go today. Negative early, then becomes choppy/mixed before turning positive. Loses momentum going into the close.

Thursday, February 4, 2010
Positive early then becomes choppy/mixed to moderately up, then weakens in the afternoon.

Friday, February 5, 2010
Volatile with large moves that swing from bullish to bearish.

*A mathematical calculation that moves the planets forward in time as a method of prediction.

The Euro: January 1, 1999 12:00 AM CET Frankfurt, Germany
Greece: July 24, 1974 4:00 AM EET, Athens, Greece
Robert M. Gates: September 25, 1943 time unknown Wichita, KS
Defense Dept: July 26, 1947 12:15 PM EDT Washington, DC
Paul Volcker: September 5, 1927 time unknown Cape May, NJ

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