Summary Of Last Week’s Influences:
“Forecasting is very difficult and I make no promises in any particular direction.” – Federal Reserve Chairman Ben Bernanke testifying before the House Budget Committee on June 9
Although the market does not like uncertainty, it is usually comforted by the Fed Chairman’s words. Monday the Dow surpassed the May 6 “flash crash” intraday low to close at 9816.49, its lowest level since November 4. So in a Monday evening interview Bernanke said his “best guess” is for the economy to continue to recover “but it won’t feel terrific.” Wall Street focused on the recovery part which was credited for the market’s late day turnaround Tuesday.
The markets were also soothed during Bernanke’s testimony Wednesday, the day Mercury squared Neptune. Like an addict who on the one hand knows they need to get over their addiction but believe it can be postponed to some later date, Bernanke soothed the market by saying the government needs to get a grip on the deficit – but just not yet.
Like the person who needs to reduce their weight but continues to consume all the wrong foods before dieting, Bernanke wants the government to spend before cutting back at some future and undefined (Neptune) time. So the market didn’t like it Wednesday afternoon when German Chancellor Angela Merkel appeared to be channeling the energies of Saturn square Pluto when she said that now was the time to withdraw stimulus as lessons from the debt crisis must be learned.
China’s progressed* Mars conjoins Saturn in Virgo now which describes the labor strikes and wage increases occurring at several factories. Taiwanese electronics company Hon Hai which employees about 800,000 workers in China will raise wages again at its Foxconn factory town in the wake of more suicides and labor unrest. The CEO of Hon Hai whose company supplies iPads and iPhones for Apple and manufactures for other companies such as Hewlett-Packard (HPQ) and Dell, remarked last week: “This is a watershed. You can no longer rely on China’s cheap labor.”
More strikes have taken place at three different Honda plants in China. Many of the workers on strike at the Honda key lock plant returned to work with the promise of higher wages and the threat of being replaced if they did not end their strike. As noted in a previous post, the June 26 Lunar Eclipse in Capricorn opposes China’s natal Uranus in Cancer which is likely to spark more strikes and lead to rioting as the public is ready to stand up to the government and the corporations that exploit them.
While the wage increases are not high enough to cause the cost of manufacturing in China to increase for now, it will be in the future (although it does feed into China’s inflation rate which is now above 3%). As I described in my post on Uranus in Aries, companies and consumers will not be willing to wait for merchandise to arrive from Asia. What comes around goes around, and a manufacturing renaissance will be getting underway in the USA.
Summary Of This Week’s Influences:
Just in time for the mega volatility and downward dive I am expecting in the stock market in late July/August when Mars, Jupiter, Saturn, Uranus, and Pluto all form stressful alignments to each other at the beginning of cardinal (action-oriented) signs, the exchanges are implementing the SEC’s new circuit breaker rules.
Hoping to prevent another May 6 flash crash, the SEC has begun a pilot program running through December 10 that triggers circuit breakers for 5 minutes if an individual stock in the S&P500 has a 10% up or down move within a 5 minute period. However, circuit breakers won’t be triggered if the move occurs before 9:45 AM and after 3:35 PM which is weird since the period going into the close tends can be one of the most volatile times of the day.
Even though ETFs were most affected by the flash crash, they will not (at least initially) be covered under the circuit breaker rules. As a hypothetical example, if Apple (AAPL) stock plummets and is halted, a trader could short the Nasdaq 100 (QQQQ) as Apple currently comprises almost 18% of this ETF. Or a trader could do the same thing with a futures contract. And since high frequency traders see prices in advance of other participants, and have the firepower to react quicker, they will have calculated and anticipated potential circuit breakers in advance of the general market. Hence the high frequency traders will exit positions in advance of circuit breakers affecting the general market.
Although the combination of Jupiter and Uranus together in Aries has the potential to create many fast and furious flash crashes that could start and finish in the blink of an eye, I think it is highly unlikely the new circuit breaker system will face its first test this week.
Venus moves into Leo early Monday morning until July 10 which can increase the desire to speculate. In the enthusiastic fire element, Venus in Leo is more prone to spend discretionary money on self adornment, entertainment, and entertaining. Venus harmonizing with Uranus Monday and Jupiter early Tuesday morning tends to be a positive influence on the market.
The Moon represents the mood of the market. Mondays are ruled by the Moon, and the Moon in its home sign Cancer could put the focus on equities connected to consumers. The Moon in Leo Tuesday and Wednesday could boost the appetite for risk.
Mars is action, Virgo is financially discriminating, Pluto rules insurance, and Capricorn represents government regulations. So as Mars in Virgo harmonizes with Pluto in Capricorn Tuesday, the House and Senate conference committee will take up these specific issues in the financial regulatory reform legislation.
Leo represents leaders as it is ruled by the Sun. As Venus conjoins his natal Mercury in Leo, President Obama will address the nation Tuesday at 8 PM EDT regarding the BP disaster which he described in an interview with Politico “echoes 9/11” because "I think this disaster is going to shape how we think about the environment and energy for many years to come.” The President raises issues in the interview that I described in the Gemini New Moon post, including transitioning from an oil-based economy. What he doesn’t mention is the need for every American to do what they can to help facilitate the transition.
The key leaders in the BP drama will be in Washington this week. Wednesday BP Chairman Carl-Henric Svanberg goes to the White House. On Thursday when the Moon moves into Virgo, putting more emphasis on the financial and environmental costs of the disaster, BP CEO Tony Hayward will testify at 10 AM EDT before the House Subcommittee on Oversight & Investigations hearing on oil spill. Venus forming a stressful aspect to Pluto Thursday reflects the enormous price tag BP will be hit with from the US government for the company’s negligence.
This week looks to have a positive bias that could be interspersed with choppy/mixed to negative conditions intraday, especially later in the week. Next week becomes much more active with the Summer Solstice beginning the week and the Lunar Eclipse in Capricorn ending the week that is likely to usher in a very volatile and highly active summer.
Monday, June 14, 2010
Tuesday, June 15, 2010
Positive trend bias but could weaken going into the close.
Wednesday, June 16, 2010
Positive trend bias.
Thursday, June 17, 2010
Negative trend bias, but could improve in the afternoon to become choppy/mixed, seesawing between negative and mixed to slightly positive.
Friday, June 18, 2010
(Quadruple Options Expiration). Negative trend bias, but could improve to choppy/mixed conditions in the late morning before turning down.
*A mathematical calculation that moves the planets forward in time as a method of prediction.
People’s Republic of China: October 1, 1949 3:15 PM Peking, China