WallStreetWeather.net Forecast For Week Of September 12, 2010

Summary Of Last Week’s Influences:
The period when Mercury the planet of communication, commerce, and movement appears from Earth’s vantage point to move retrograde in the sky can correspond to market reversals or lackluster trading.

Since Mercury went retrograde in number crunching Virgo August 20 as Saturn (fear) made its final square to Pluto (debt), the obsessive fear that the economy was entering a double dip recession began receding after the release of weak yet better than expected economic data which caused markets to reverse course. The Dow gained about 250 points during Mercury retrograde and stands at 10,462.77. The bond bubble kept inflating as the yield on the 10 year note continued to decline to 2.48% by August 31. The yield reversed course the next day - two days before the Sun conjoined Mercury (September 3), the midpoint of the cycle which can also mark a time that markets can reverse course.

During this Mercury retrograde cycle, the major indices followed a pattern of being negative early in the week and improving as the week progressed. The Labor Day holiday delayed Monday’s planetary influences into Tuesday, as sentiment turned negative after a front page story in Tuesday’s Wall Street Journal renewed worries that the results of the stress tests conducted on major European banks that was announced July 23 understated banks’ holdings of sovereign debt. I explained before the stress test results were announced why I thought they would disappoint. Despite criticism that day that regulators were not vigorous enough in conducting the tests, Jupiter turning retrograde and squaring Pluto manifested as market optimism that the sovereign debt on banks books was not as great as feared.

The European bank stress tests are an example how Mercury retrograde periods can bring renewed scrutiny over past results and information. Likewise, events and information that occur when Mercury is retrograde are susceptible to a rethink after Mercury begins moving forward again.

Summary Of This Week’s Influences:
The Federal Reserve’s extremely accommodative monetary policy and to a lesser degree the SEC’s circuit breakers are helping to provide a floor under the market. Yet many planetary events this week can correspond to large market moves that increase volatility and reversals in reaction to events relating to the planetary energies prominent now. The Moon (sentiment) in Jupiter-ruled Sagittarius Monday until late Wednesday afternoon emphasizes issues that have a global impact.

As Mercury changes from retrograde to direct motion this evening, many news events are likely to bring new developments or reversals of opinion concerning past issues. This is already happening as central bankers and bank regulators from 27 countries that comprise the Basel Committee on Banking Supervision have just reached an agreement that substantially raises global bank capital requirements after failing to reach complete agreement at the conclusion of their meeting on July 26.

Banks will have until the end of 2015 to maintain at least 7% common equity (excluding preferred shares and bonds) at all times. During good times banks will have to have an additional capital cushion of up to 2.5% (depending upon country) to help absorb losses during a downturn. There will be a gradual phase in until the end of 2018 for banks to maintain at least a 3% capital ratio on total assets (including derivatives and off balance sheet vehicles).

Congress returns from summer recess Monday. Reflecting the reversal in thinking that often happens once Mercury reverses direction, House Minority Leader John Boehner indicated today that if it became necessary, he would vote for legislation proposed by President Obama and Democratic leaders to extend the Bush tax cuts except for people earning $250,000+.

Taxes are ruled by Pluto, the planetary energy of transformation. Pluto in Capricorn, the sign of government and big business, moves direct early Tuesday after being retrograde since April 6. Pluto’s energies are pronounced September 10-17 and together with Mercury turning direct in Virgo (facts and figures), thoughts return with a vengeance to Pluto themes: debt, deficits, leverage, bonds, mortgages, bankruptcy, opaque financial instruments, insurance, M&A, legacies, and nuclear issues.

The most overly used word that emerged from the historic midsummer lineup of Jupiter, Saturn, Uranus, and Pluto forming challenging alignments to one another is “uncertainty.” Although this word relates more to the energies of Uranus the planetary energy of the unexpected (especially after Fed Chairman Bernanke made it into a double Uranus by adding “unusual” in front of it), I view it as “code” for something deeper: death. As the mythological lord of the underworld, death is Pluto’s domain. Jupiter, Saturn, Uranus – they all have and will be squaring Pluto from 2009-2015.

Pluto in Capricorn the sign representing the status quo and what is exclusionary reflects the tremendous resistance that powerful and wealthy special interests (the plutocrats) have in keeping their so-called “free market” system alive, even if it means being in a state of suspended animation and kept alive on life support. The vested interests refuse to let the mortgage market die and rebirth into a new form, refuse to allow banks to write down real estate collateral to its true utilitarian purpose, and refuse to lend at interest rates that will surely lead to a negative carry in the not too distant future.

This lethargic behavior is being promoted by the Federal Reserve directly, the Republicans who have grown weary to direct investment in infrastructure, and Democrats who are promoting endless subsidies to state and local governments. All three are refusing to let old ideologies die. With Pluto, you can delay death to a point, but you cannot escape it. Delaying only serves to prolong the pain and make the inevitable even harder than it ever needed to be.

Adding emphasis to Pluto’s energies is that Mars, the planet of action, enters Scorpio Tuesday evening until October 28. Mars was the ruler of Scorpio before Pluto was discovered in 1930. Mars in Scorpio prefers covert action. Mars is traveling together with Venus in Scorpio over the next few weeks which could reveal some interesting financial secrets, especially after Venus turns retrograde October 8.

The First Quarter Moon Wednesday at 1:50 AM EDT is a time of intense action. The Moon in Sagittarius will square Jupiter and Uranus which are aligned in Pisces (exact Saturday). This can bring shocks that increase market volatility leading up to the Autumnal Equinox/Full Moon next week. The Quarter Moon in Sagittarius reflects the hypocritical “free market” philosophies and dogmatic religious beliefs that serve to advance the plutocrats agenda. Sagittarius tends to be frank and transparent. Combined with the strong Pluto energies, more information on groups such as FreedomWorks that backs the Tea Party movement and Conservatives for Patients Rights run by Medicare fraudster and Florida Republican gubernatorial nominee Rick Scott could be revealed now.

Wednesday marks the second anniversary since Lehman Brothers filed for bankruptcy after failing to obtain a financial backstop from the Federal Reserve. (Fed Chairman Bernanke marked the first anniversary of Lehman’s passing by stating “the recession is very likely over.” If the recession is over, why is Fed policy more accommodative than ever?!)

The Harvest Full Moon in Pisces conjoined Uranus then, opposing the USA’s natal Neptune in Virgo which squares the USA Mars in Gemini. The First Quarter Moon in Sagittarius exactly squares that Full Moon which could reignite some of the themes in play then. Sagittarius and Jupiter relate to foreign relations and matters pertaining to international trade, the courts, higher education, and publishing.

Pisces and its planetary ruler Neptune represent the world of illusion, propaganda, fraud and deceit. Transits that impact the USA’s natal Mars/Neptune square highlight the enormous amount of energy the US puts into perpetuating its illusions at home and abroad. Matters related to the military, oil, drugs and chemicals, credit, financial bubbles, and the “American Dream” of homeownership that became a nightmare when the E-Z credit dissolved, are in focus now. The House Financial Services subcommittee on capital markets will hold a hearing Wednesday at 9:30 AM on “The Future of Housing Finance: A Progress Update on the GSEs.” (Fannie & Freddie were taken under government conservatorship the day Pluto turned direct on September 8, 2008.

Jupiter conjoins Uranus for the second time Saturday. Their first alignment occurred on June 8 at the beginning of fast acting Aries. Now the two planets are conjoined in Pisces Saturday and during the final alignment January 4. Jupiter conjoining Uranus in Pisces can represent R&D breakthroughs, particularly in biotechnology and that have been elusive. With Pluto prominent now, these advances could be related to diseases such as AIDS and cancer. The alignment in Pisces could also relate to fraudulent activity connected to hospitals, charities, or prisons. A scandal could suddenly emerge involving a CEO connected to one of these industries (which could also encompass the music and film industries), or it could relate to shocking news concerning a prominent executive’s addictive behavior.

The combination of energies involving Jupiter, Uranus and Neptune can increase inflation.

Monday, September 13, 2010
The combination of Mercury direct and Pluto about to turn direct could reverse market sentiment to negative. Mars in its final day in Venus-ruled Libra (money/banking/values) forming challenging alignments to Jupiter and Uranus the wild card today can increase volatility and the size of the market moves.

Tuesday, September 14, 2010
Pluto turning direct today could reverse the market in the opposite direction of yesterday.

Wednesday, September 15, 2010
Negative.

Thursday, September 16, 2010
Positive.

Friday, September 17, 2010
(Options expiration) Choppy/mixed to positive.

2 comments:

Alan said...

It seems that the Jupiter-Uranus conjunction has created a case of breakout-fever over the past two weeks. Sagittarius moon only fuels the fire. The steep trend line and very shallow pullbacks in the SP500 are a change in recent behavior. Some of it may be due to M&A speculation, but markets around the world are breaking the downtrend as well. Should I expect the exuberance to continue after the Jupiter-Uranus conjunction, or should the energy wane next week? I was speculating the end of this ~4 month cycle coming just before retrograde venus starts the next one, which could mean serious downside in the coming weeks.

WALL STREET WEATHER said...

Alan,

Jupiter/Uranus can bring large moves in either extreme. In the Weekly Forecast for the Week Of September 19, I explain why the relationships formed by the Sun and Moon to Jupiter and Uranus will keep these energies active and why this and other shifts occurring this week could begin to start reversing market sentiment.

You are right that the market is being fueled by M&A speculation (together with stock buybacks) – all courtesy of the Federal Reserve. I think this is really a bearish signal as “growth” by these measures signals these companies are unable to grow organically (and so far are unwilling to use their cash to expand their businesses which would require expanding their workforce). As I pointed out in the August 22 Weekly Forecast, increased M&A activity is a job killer not a job creator.

And as you’ve stated, the tendency for markets to decline into Venus turning retrograde on October 8 is another factor supporting a reversal.

Deborah