WallStreetWeather.net Forecast For October 10, 2010

Summary Of Last Week’s Influences:
On Friday the Dow closed over 11,000 for the first time since May 3 and is now 22% below its record closing high reached exactly three years ago.

The mantra is that the lower the dollar and Treasury yields go, the higher the market goes. And what really got the market excited was the Bank of Japan “front running” the Fed by announcing Tuesday it would hold short term interest rates between 0 and 0.10% until price stability is in sight together with its plan to purchase about $60 billion in private debt and equities.

The question is did the market move higher because the market believed Friday’s employment report increased the market’s belief the Fed will embark on QE2, or were Republicans/Tea Party “patriots” and their free market donors celebrating a decline in September of government jobs and a gain in private sector employment?

Summary Of This Week’s Influences:
Venus turning retrograde October 8 until November 18 brings a revaluation of asset prices. This is why when Venus turns retrograde every 18 months there is greater potential for markets to reverse direction at some point during the retrograde period.

With financial markets trading in tandem, Venus retrograde increases the potential that one or more asset classes could reverse their trend. Venus in Scorpio indicates revaluing all forms of debt, making bonds and mortgage instruments particularly vulnerable to a reversal as yields may actually increase.

Although reversals can occur within the Venus retrograde cycle particularly around mid cycle when the Sun conjoins Venus (October 28), and/or when Venus turns direct (November 18), most of the time if a reversal is going to occur it will happen around the time Venus turns retrograde.

After plunging to multiyear intraday lows when Venus last turned retrograde on March 6, 2009 followed by multiyear closing lows on March 9, the indices reversed to begin a rally that is now reapproaching its April 26, 2010 highs. During the prior Venus retrograde, the Dow reached 14,000 on July 19, 2007 before declining into the Venus retrograde station on July 27. It then reversed course only to decline again into the conjunction of the Sun and Venus on August 17, before climbing to its all time high on October 9, 2007.

Venus in Scorpio describes being (or believing) you are being bankrolled with someone else’s money. Since Venus turned retrograde conjoining the Federal Reserve’s natal Moon in Scorpio in the sector of the Fed’s chart representing speculation, market sentiment is certain monetary policy will protect investors (the Bernanke Put). Venus will have retrograded back into its home sign Libra by the time Venus turns direct on November 18, squaring the Fed’s natal Neptune in Cancer. Banking on the Fed to do what the market expects could prove to be a mirage. Questions could arise at this time about financial arrangements that prove to be deceptive. Good PR for the Fed might be in short supply.

The federal government, U.S. Treasury market and banks will be closed Monday for the Columbus Day holiday. With no economic reports or earnings of note, the Moon in Sagittarius reflects the market will be focused on global issues.

The Sun in Libra squares the July 11 Solar Eclipse Tuesday, shedding additional light on developments that occurred then. Quarterly earnings season then helped boost the indices up from their 2010 lows of July 2. Earnings season gets underway this week with reports from Intel (INTC) Tuesday, JPMorgan Chase (JPM) Wednesday, Google (GOOG) Thursday and General Electric (GE) Friday. To keep stock prices moving higher now the market is going to need to hear positive future guidance together with confidence about the economy. Low rates for an “extended period” are increasing investors’ demand for dividends.

A lack of planetary alignments this week puts greater emphasis on the Moon which reflects the ever changing moods of the market. With the Moon in Jupiter-ruled Sagittarius Monday and Tuesday, the market is prone to outsized reactions which do not always reflect Sagittarius’ optimism. The Moon in Saturn-ruled Capricorn Wednesday until mid-morning Friday keeps the market focused on what is emanating from the government and the regulators. The Minutes from the Fed’s September 21 meeting will be released Tuesday, and Fed Chairman Bernanke will be giving a speech before the market opens Friday on an appropriate topic for Venus retrograde: “Revisiting Monetary Policy in a Low Rate Environment.”

Capricorn rules the elderly who are likely to face a second year of no COLA increases for Social Security unless Friday’s CPI comes in higher than it was in the third quarter of 2008 when high commodity prices were causing price spikes in food and energy prices. With the Fed doing everything possible to reflate a bubble in commodities by weakening the dollar, inflation might not be too far behind. The Moon in Uranus-ruled Aquarius Friday could bring increased volatility and an intraday reversal for options expiration.

Monday, October 11, 2010
Negative trend bias.

Tuesday, October 12, 2010
Positive conditions become choppy and turn negative.

Wednesday, October 13, 2010

Thursday, October 14, 2010

Friday, October 15, 2010
Market weakens as day progresses; closes negative.

Related Post: “2010 Autumnal Equinox/Harvest Moon: The Regulators Are Running The Show Now

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