EU Covid bailout boosts stocks

(21 July 2020)  Stocks remained buoyant to start the week after the European Union agreed to a massive $2 Trillion bailout package to combat the economic fallout of the Covid-19 pandemic. After their 30% plunge to the March 23 low, US stocks have climbed back to within just 3% of their February 19 high before the coronavirus crisis. 

While unemployment is still in double digits and many people are barely able to get by on reduced wages, many global markets have rallied on the huge injection of cash from the Federal Reserve and other central banks.  Corporate earnings have taken a hit, of course, but it is the future outlook that matters most for investors as the market tends to look forward by 6-12 months.  Obviously, optimism comes more easily when Fed Chair Jay Powell is busy buying up corporate debt in order push hedge funds and institutional investors into riskier assets like stocks.

In last week's post, I thought we might have seen more downside by now since we may still be vulnerable to the impact of the July 5 lunar eclipse.  The eclipse occurred at 19 degrees of sidereal Sagittarius and Mars (19 Pisces) exactly squared that point today.  Mars aspects to eclipse points tend to have bearish effects on market sentiment and often correlate with declines. 

We did see some late day weakness in US markets today (Tuesday), but so far this Mars aspect is shaping up as a disappointing false positive.  Due to the relatively slower motion of Mars, it is still possible we could see some negative fallout this week from this Mars aspect to the lunar eclipse point.  Nonetheless, the probability for some downside begins to diminish tomorrow (Wednesday). 

Looking further ahead, we can see that the horoscope of the New York Stock Exchange (NYSE) may become more vulnerable to declines as the influence of Jupiter wanes and the influence of Saturn intensifies in the coming weeks.  Last week, retrograde Jupiter (27 Sagittarius) formed an exact 120-degree aspect with Mars (27 Leo) in the NYSE chart.  The previous week it has formed a 90-degree square alignment with the Moon (28 Pisces).  Both were likely bullish influences that appeared to coincide with the ongoing rally in the stock market. 

Sentiment may be more likely to turn cautious in the near term as Jupiter moves past its aspect with Mars and Saturn (4 Capricorn) approaches a closer aspect with natal Jupiter (2 Libra).  However, it is worth noting that Saturn has already been in the midst of a T-square alignment with natal Saturn and Neptune in the NYSE chart during the month of July with few negative effects. 

There is some reason to think that the bearish influence of Saturn will become more manifest as it approaches 2 Capricorn where it will align with Jupiter (2 Libra) and Mercury (2 Taurus).  This alignment is closest in the month of August and the chart cast for 25 August illustrates how the aspects of Saturn and Mars are likely to coincide with some significant downside in US stocks. 

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Market forecast for week of 29 June 2020