Stocks dive on inflation fears

(13 May 2021) Inflation fears have hit financial markets this week as April's annual rate of 4.2% was the highest in 13 years.  Most commodities like oil, copper and oil have enjoyed sharp price increases in 2021, but this huge CPI number now forces investors to consider the risks of possible Fed tightening sooner than expected.  Inflation is bad enough for markets, but premature Fed tightening would be worse as it would mean less liquidity and faster tapering of the Fed's QE asset purchases. 

This week's decline is not unexpected given the difficult planetary alignments. As I have noted previously, the month of May looked much less bullish for stocks than April due to the prominence of Saturn.  This week Saturn has come under the double afflictions of Rahu (North Lunar Node) and Mars.  Saturn is a bearish planet, of course, and this double dose of negativity translated sharp falls across many markets.  The S&P 500 was down more than 4% from its high last week, although today did see an oversold bounce as dip buyers stepped in at key support.

With Mars due to exactly aspect Saturn tomorrow (Friday), it is quite possible we could see further downside in the coming days.  While Mars will be separating from its aspect with Saturn next week, there remains further downside risk in May as Saturn is due to turn retrograde on May 23.

Direct and retrograde stations can coincide with significant events since the planet becomes more powerful as it appears to stop and reverse its direction in the sky from our vantage point on Earth.  At the same time, it is important to remember than not every period around the time of Saturn retrograde stations -- they happen once a year -- coincides with stock market declines.  As always, other factors must confirm.  Nonetheless, by itself, the Saturn station is an underlying bearish influence that should not be ignored. 

And we should also note with the start of Saturn's four-month retrograde cycle, it is due to again form a tense square aspect with Uranus on June 14.  Readers will recall that the late February sell-off began on the first Saturn-Uranus square aspect on February 16.  This second Saturn-Uranus square could therefore see significant volatility returning some time around that June 14 date. 

It is shaping up to be an eventful summer.

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