Markets recover post-Brexit but for how long?

(5 July 2016) Financial markets recovered their footing last week in the wake of the Brexit vote in the UK last month.  The strong rebound was the result of the promise of more central bank intervention from both the Bank of England and the European Central Bank.  In addition, some investors took solace in the possibility that the UK may not ultimately leave the EU given a long and complex negotiation process that may take several years and yet another referendum or vote in Parliament.

US stocks jumped 3% on the week with the Dow closing at 17,949 which was just a bit below its June 23rd close.  Similar gains were also seen in Europe with the London FTSE 100 regaining all of its post-Brexit decline and then some.  Indian stocks also registered strong gains of more than 3% as the Sensex closed Friday at 27,144.  Most stocks have been moving lower so far this week as markets have become concerned about the solvency of Italian banks.  The British Pound is also headed lower again this week as the ongoing political uncertainty in the UK weighs on sentiment.

In last week's market forecast, I thought we might have got more downside after Monday's decline, perhaps for another day or two.  As it happened, however, Monday was the post-Brexit low for most global markets as the rebound began in earnest on Tuesday.  As expected, the second half of the week was positive as the Venus-Jupiter-Pluto Rahu alignment kicked in.   Venus and Jupiter are bullish planets and when they are aligned with other planets, stocks tend to rise.

But is this strong post-Brexit recovery the 'all clear' signal so that stocks can resume their upward climb in this seemingly unstoppable 7-year bull market?  Well, one thing we have learned in recent years is that central banks are capable of keeping stocks afloat no matter how bad the real economy may be.  If QE bond-buying doesn't work, they will try negative interest rates.  And if negative rates aren't producing the desired result, then they will find something else, including perhaps "helicopter money".  Hubristic central banks can never admit admit defeat and are committed to printing money and monetary debasement by any means necessary. 

From an astrological perspective, I believe the re-entry of Mars into sidereal Scorpio next week could coincide with more declines in stocks in the coming weeks.  Due to its retrograde cycle occurring in Scorpio, Mars has spent an unusually long time in the sign of Scorpio.  Near the end of its retrograde cycle, Mars actually left Scorpio and back-doored its way into Libra for a few weeks starting on 18th June.  Mars then stationed in the last degree of Libra (29 degrees) on 29-30th June, and is now moving forward again.  On 11th July, it will again enter Scorpio where it will remain until 17th September. 

In my view, when Mars transits Scorpio, stocks tend to come under increased stress and decline.  While Mars is said to become stronger through its traditional "rulership" of Scorpio, its transit through this sign often creates too much intensity which can manifest as a collective unease and anxiety.  Back in February, I posted some financial astrology research on previous transits of Mars through Scorpio for the years 1999 to 2014 which showed a fairly clear negative price correlation with this transit. 

But what happened during this first phase of the Mars transit of Scorpio in 2016?  Stocks actually rose as the Dow climbed from 16,600 to 17,700 -- a gain of 6%.  So does this put a dagger into the Mars-in-Scorpio-is-bearish thesis?  Not exactly.  In my previous research, there was still a fairly wide variation in outcomes from previous transits of Mars through Scorpio although it leaned negative overall.  I noted that no simple one or two-factor model could ever be 100% correct.  It was merely a probabilistic outcome that seemed to hold over the previous twenty years.  So far in 2016, it seems the outcome is at the far bullish end of that spectrum of outcomes.

But again the question remains why would stocks have risen during this time of supposedly increased tension of Mars in Scorpio?  One possible explanation would be to look at the role of other variables.  One-factor models (Mars through Scorpio) will only be probabilistic at best and even then only marginally so over many data points.  But what if we included other variables?  What if we looked at the condition of the modern ruler of Scorpio, which is Pluto?  In Vedic astrology (and in traditional Western astrology) Mars rules Scorpio and is said to exhibit its natural qualities most freely.  But modern Western astrology posits that Scorpio is also ruled by Pluto, whereas Mars only rules Aries.  Therefore, in order to assess the effects of the current Mars transit of Scorpio, we could look at the condition of Pluto. 

As we can see from the chart below, Pluto has been under the beneficial aspect of Jupiter for the past several months due to its retrograde cycle in Leo. Jupiter symbolizes expansion and optimism, and its ongoing aspect with Pluto since the beginning of 2016 may well have created a positive feedback loop for Mars and hence for markets as a whole.  To assess the effects of Mars, we can look at its ruler, Pluto. This is standard practice in astrological interpretation.   If the condition of the ruler Pluto is positive, then that positive energy could flow to Mars.  When I wrote the initial research post, I wanted to keep it as simple as possible in order to see if there was a measurable effect of this single factor (Mars in Scorpio).  I did not even consider expanding the equation beyond it.  In retrospect, I should have at least included some mention of it as an addendum.

When Mars first entered Scorpio on 20th February, Jupiter (26 Leo) closely aspected Pluto (22 Sagittarius).  Rahu (North Lunar Node) was conjunct Jupiter also, although I would take Rahu as acting mostly as an amplifier for Jupiter's benefic influence here.  Arguably, the Jupiter-Rahu conjunction has been one key factor in the rise in gold prices in the first half of 2016.   Generally speaking, the closer the aspect to exact, the stronger the positive Jupiter influence.  Most importantly, Jupiter was retrograde so the aspect was tightening right through to almost May when Jupiter stationed at 20 Leo.  This ongoing Jupiter influence on Pluto is one plausible reason why stocks rose while Mars was in Scorpio from February to June. 

So what is happening to Pluto now that Mars is about to re-enter Scorpio next Monday on 11th July?  Jupiter (24 Leo) is still closely aspecting Pluto (22 Sagittarius) so it is conceivable that there could be more gains in store for the stock market during the time of this transit.   And yet Jupiter is now moving forward and therefore separating from its aspect with Pluto. 

I would think that would indicate a weakening of Jupiter's bullish influence on Pluto and hence upon Mars also.  Jupiter will eventually leave the sign of Leo on 11th August so its aspect on Pluto will be well and truly over by then.  It is quite possible that without this Jupiter influence on Pluto, the negativity of the Mars transit of Scorpio could increase.  There is an argument that this bullish influence on Pluto/Mars could diminish as we move from July to August and then into September. This would allow the more bearish side of Mars in Scorpio to manifest, all other things being equal.

So next week's re-entry of Mars into Scorpio could well coincide with different market outcomes then its previous transit of Scorpio.  It's still only a probabilistic prediction since only now we have two variables in play instead of one.  As we know, astrology does not readily lend itself to these kinds of simplified analysis since there are literally dozens of variables are typically involved in forecasting.  And yet experience tells us that there are times when a very few number of factors will outweigh all the others.  Let's see what this second transit of Mars through Scorpio has in store for the rest of the summer.

Weekly Market Forecast

While this week has begun on a bearish note, I would think some upside is likely on Wednesday or Thursday given the Sun-Mercury conjunction and the Venus-Uranus alignment.  Friday is more open-ended, however, as the Moon is aspected by bearish Saturn.  There would therefore appear to be added downside risk on Friday, especially in European and US trading when the aspect is closest. 

And then early next week, we get that re-entry of Mars into Scorpio.   Mars is often bearish in its effect whenever it changes signs.  The fact that it is entering Scorpio may put even more pressure on bullish investors.

For more details and analysis on market trends for this week, this month and this year, please check out my weekly MVA Investor Newsletter.  The newsletter is published every Saturday and includes extended discussion of US and Indian stock markets, as well as gold, oil and major currencies.

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