WallStreetWeather.net Forecast For Week Of June 12, 2011

Summary Of Last Week’s Influences:
The “risk reduction trade” certainly reflected the pronounced energies of Saturn appearing motionless in the sky as it turned direct June 12 after being retrograde since January 26. Tuesday’s gains reversed going into the close after Fed Chairman Ben Bernanke remarked in a speech that “U.S. economic growth so far this year looks to have been somewhat slower than expected.” Fears of a global economic slowdown have increased risk aversion and a “flight to quality” as investors sold corporate and junk bonds to purchase safe haven U.S. Treasuries.

Although the Dow and S&P500 closed lower for the sixth consecutive week, the two indices are only about 6.8% below their April 29 closing highs and remain slightly positive for the year. (The Nasdaq is fractionally lower for 2011.) The Dow’s close Friday below the 12,000 level for the first time since mid March is only 6.7% below its April 29 closing high of 12,810.54. The market is not even in a correction, yet the cries for the Fed to embark on QE3 have already started even though QE2 is not over until the end of June!

Financials were one of the worst performing sectors as Jupiter transited Taurus for the first time since 2000, proving that Jupiter’s expansive energies can showcase what has been overdone. The banks were the first stocks to recover from the crisis but now the market has become more concerned that fears of a stalled recovery could make it more difficult for banks to reduce the enormous amount of troubled loans on their books. Saturn represents rules and regulations. The Fed is proposing that the nation’s biggest banks be required to hold additional capital beyond the 7% required in the Basel III agreement which takes effect in 2019. Although Saturn signifies delays, banks weren’t able to delay a decrease in the amount of “swipe fees” fees banks collect from merchants each time a customer uses their debit card to make a transaction. (Currently the fee is 44 cents which the Fed had initially proposed to reduce to 12 cents; now the Fed is working on finalizing an amount that will likely be a bit higher than 12 cents.)

Summary Of This Week’s Influences:
The Sun conjoining Mercury in Gemini and Saturn turning direct Sunday evening can increase the chance of news coming from a leader or government regulator that could reverse market sentiment. Additionally, the Moon in Scorpio could bring news of an actual or potential merger announcement.

The Moon in Jupiter-ruled Sagittarius Tuesday and Wednesday reflects that inflation has expanded beyond food and energy costs which could show up in Tuesday’s Producer Price Index and Wednesday’s CPI. Wednesday’s Full Moon in Sagittarius is a Total Lunar Eclipse which can correspond to large moves and an increase in volatility as Sagittarius relates to anything that is overdone in either direction.

The Moon in Saturn-ruled Capricorn Thursday and Friday is not necessarily dour, but upward moves tend to be more more moderate. Mercury enters Capricorn’s opposite sign Cancer Thursday afternoon until July 2 which could strengthen the U.S. dollar.

Monday, June 13, 2011
Positive bias as market could be mixed to down intraday.

Tuesday, June 14, 2011
Negative.

Wednesday, June 15, 2011
Negative conditions improve as day progresses; reverses to positive.

Thursday, June 16, 2011
Positive.

Friday, June 17, 2011 (Quadruple Options Expiration)
Positive but could weaken going into the close.

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