March 29, 2024

Weekly Market Forecast for 14 May 2012

Stocks tumble on post-election political vaccum in Greece; Saturn enters Virgo

Stocks got sideswiped by the Greek election last week as the absence of any clear winner again pushed the Eurozone to the brink.  The Dow lost almost 2% closing at 12,820 while the S&P 500 finished at 1353.  Indian stocks suffered deeper losses as falling industrial output in April pushed more investors to the exits.  The Sensex declined 3% closing at 16,292 while the Nifty ended the week at 4928.  This bearish outcome was not unexpected as I thought that Saturn’s approaching entry into sidereal Virgo on 18 May would likely be a drag on sentiment.  The late week bounce never fully materialized although most markets did rise on Thursday’s bullish Moon-Sun-Jupiter alignment. Those tepid gains disappeared in Friday’s session, however.

Europe moved to back into the spotlight last week as election results in France and Greece underlined the unpopularity of austerity.  French President Sarkozy was defeated by the anti-austerity socialist Francois Hollande while the pro-austerity parties in Greece suffered a stinging defeat.  While Sarkozy’s defeat was widely expected, the Greek situation was more unexpected as that country now lacks a working government.  Thus far, attempts to create a new coalition government have failed and there is now talk of fresh elections in mid-June.  A rejection of the EU austerity package could lead to a default, which would then have a knock-on effect on European and US banks.

The fact that all this turmoil is occurring now is not too surprising given the dominance of Saturn, the planet of pessimism and caution.  As I have mentioned previously, the month of May was likely to see some significant market moves because of a multi-planet alignment that centered around Saturn.  As we know, whenever Saturn is geometrically aligned with other planets, it greatly increases the probability of negative sentiment and market declines in most risk assets. At the moment, Saturn is especially strong because it is about to change signs, from sidereal Libra to Virgo.  It is worth noting that when Saturn changed signs and entered Libra back in mid-November 2011 the market also suffered a significant decline.  What is interesting here is that the sign change takes place at the same time that Saturn forms a very tight aspect with Venus, Jupiter and the Sun.  Venus stands out from this list because it is turning retrograde on Tuesday 15 May.  Although it is normally a bullish influence, its slow velocity and extended aspect with bearish Saturn appears to be intensifying pessimism.  Again, history is not without precedent.  The March 2009 low occurred right around a similar Venus-Saturn aspect and just three days after Venus turned retrograde.  Clearly, such reversals in planetary direction are important influences on the market, especially when they occur while forming a close aspect to another planet.


Transits for Tuesday 15 May 2012 10.33 a.m. New York

 

This week shapes up to be another potentially tumultuous one as the Venus-Saturn aspect will makes its closest approach.  Venus actually begins its retrograde cycle at 10.33 a.m. EDT on Tuesday so we could see some shift occur around that day.  The Sun joins the alignment as it enters Taurus on Monday, while Jupiter is due to enter Taurus on Thursday.  The combined effects of all these planets changing signs is unclear to me, although they would appear to amplify the available energy for the prevailing direction of the market.  As the solar system’s most bullish planet, Jupiter’s entry into sidereal Taurus (the bull!) is perhaps most noteworthy and suggests that there is at least some possibility for upside this week. But Saturn still looks like it should have the final say here as it does not change signs until the end of the week.  With a potentially destabilizing solar eclipse due Sunday the 20th, there is perhaps that much less reason to expect a swift or orderly rebound this week.


These weekly forecasts are posted each Saturday, usually by 1800 GMT


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