The Shanghai Stock Exchange is one of the worst performing exchange this year as investors grow nervous that the pre-Olympic boom may not be sustainable and inflation threatens to choke off the economy.  Once over 6000, the Shanghai Composite Index is now a little above 2300.  What went wrong here?

Using the horoscope for the inception of the SSE Composite (July 15 1991, 9.30 am), this chart has been running Venus-Mercury dasha since August 2007, right near the market high.  Judging from its poor 2008 performance, one would assume there is something defective in the natal Mercury of this chart.  Mercury (23 Cancer) is in the 12th house in Cancer, which is often unhelpful and yet it is not near the equal cusp which is more commonly associated with hardship.  It is also in a very tight conjunction with Jupiter (23 Cancer) in its sign of exaltation.  Not exactly a textbook case for a bear market bhukti lord.  I think one potential source of volatility with the Mercury is the near exact square it forms with Pluto (23 Libra).   Squares with outer planets are almost never helpful so this may be one reason for the poor performance of the SSE during the Mercury bhukti so far.  Of course, it continues until 2010 so one has to be cautious in making definitive evaluations of periods that have not yet finished.

Another source of difficulty have been a number of really tough transits to this chart.  This chart has 11 Leo rising — the exact degree of the Saturn-Ketu conjunction in October 2007 just at the same time as the market top.  The timing correlation with the price is extremely close, within just days of the partile conjunction.   Of course, both malefic planets were in the proximity of the ascendant and the powerful Moon-Venus conjunction that straddles it in the weeks leading up to the top.   This complexity of planetary motion makes reading the market more nuanced since one cannot simply interpret the presence of a malefic on a natal point or planet as negative.  It requires consideration of other factors for the effects to become manifest.  The Shanghai index continued dropping as transiting Ketu made conjunctions with Venus (8 Leo)  and Mars (6 Leo) over the next 3 months.  In December Saturn stationed just a degree from the natal Moon at 13 Leo and then retrograded back over the Ascendant over the winter as the SSE fell another 10%.  When Saturn stationed next in April it was less than a degree from natal Venus which corresponded with more declines under 4000.  Interestingly, Saturn’s direct motion near the natal Venus in late April coincided with a short lived rally in May.

Now transiting Saturn is free and clear of the first house planets but the recent declines below 3000 are largely the result of transiting Ketu stationing very near the Mercury-Jupiter conjunction in the 12th house.   It will be hard to this market to make many gains in the next month while Ketu is still there.  There’s a chance that Mercury’s transit of Virgo may create some up days, but I think the overall trend in the market is still down for the rest of the year.  The SSE will probably bottom out under 2000, maybe 1500.