(15 January 2018) After a banner year in 2017 which saw US stocks gain more than 20%, the financial outlook for 2018 looks decidedly more difficult.  The stock market is a forward-looking discounting mechanism as investors have bid up stocks in anticipation of higher growth from the pro-business policies of the Trump administration.  Tax cuts and reduced regulation are key reasons why markets are expecting corporate earnings and GDP to enjoy more robust growth in 2018.  While the promised infrastructure program may well give an additional boost to the market, many analysts are suggesting that the outsized gains of 2017 cannot be repeated in 2018.  But just what can investors reasonably expect? 

The astrological indications tend to concur with a view of diminished expectations.  The Trump rally in stocks can be analyzed in various ways but I find the simplest way is to look at the key financial horoscopes.  If we look at the chart of most widely cited stock average in the world, the Dow Jones Industrial Average (DJIA), we can see the reasons for why 2017 was such a bullish year and why 2018 may be more problematic.  (N.B.  I am using an estimated time of 5 p.m. based on the historical evidence; the precise time is less important for my analysis in any event.)

The dominant transits in 2017 were largely positive.  Bullish Jupiter made significant aspects several times throughout the year.  In early 2017, it stationed retrograde at 29 Virgo and thus aligned very closely with both Venus (1 Taurus) and Mercury (1 Gemini) within just two degrees for the first three months of the year.   The bullish Jupiter influence was reinforced by the transit of Uranus from 0 to 4 degrees of Aries from March through to the end of the year.  Uranus is also a bullish planet when it forms close alignments with benefic planets like Mercury and Venus as was the case in 2017.  In a sense, the timing was near-perfect as the Jupiter alignment made the first quarter of 2017 positive and then handed off the bullish baton to Uranus for the second quarter and indeed the rest of the year.

Jupiter again re-entered the picture by September, as it entered sidereal Libra which is the 1st house in the Dow chart.  This is a classic indication of rising confidence and optimism.  Not surprisingly, stocks extended their gains in the fourth quarter of 2017.  Jupiter exactly conjoined the Ascendant at 21 Libra in December. 

But market outcomes are determined not only by assessing the impact of favourable transits but also by taking into account unfavourable transits involving malefic planets.  As in traditional Western astrology, Vedic astrology holds that Saturn and the Lunar Nodes, Rahu and Ketu, are generally malefic influences.  This is not always the case as exceptions abound but they are more negative in their transit effects than other planets. 

Also, the outer planets Uranus, Neptune and Pluto can exert a malefic influence if they form hard aspects (90,180 degrees) to important points in the chart.  They become more bullish when they form soft aspects.  This may well have been the case in 2017 as slow-moving Neptune formed a "soft" trine 120 degree aspect with the Ascendant for most of the year.

As it happened, we did have some negative Saturn aspects in 2017 but they were largely offset by the simultaneous presence of other planets.  Bearish Saturn (1 Sagittarius) opposed Mercury (1 Gemini) on three separate occasions during the year but some of the negative influence was likely mitigated by the presence of Uranus near the same degree (1 Aries).  If Uranus had not created a three-planet alignment, then the Saturn-Mercury opposition likely would have produced more downside.   I wonder if the presence of Uranus may also have blunted the often negative effect of the nodal semi-return when Tr Rahu conjoined Ketu in May and June.  Uranus was fairly close to a 120 degree alignment with the nodes at that time.  And of course, we should not forget that the ongoing Jupiter and Neptune influences also created a moderating effect on the negative Saturn or nodal transits. 

2018 Forecast

But 2018 looks less positive.  On the plus side, Jupiter will continue to transit the 1st house for the first 9 months of the year.  While this is a clear positive influence on market sentiment, it may not be as positive as it was last year because of the relative lack of close aspects with important points in the chart.  It will conjoin natal Uranus (29 Libra) in March so that may highlight a bullish time.  And its conjunction with the Ascendant and Saturn (21 Libra) from June to August also hints at a significant up trend during the summer. 

But the key difference this year is that the malefic aspects look like they will pack a bigger punch.  For its part, Saturn will align closely with the Moon-Sun opposition from March to June.  The Moon-Sun opposition at 13 degrees of Scorpio and Taurus is the central feature in the Dow chart so the extended influence of Saturn on these planets is more likely to bring pessimism and caution.  To be sure, Saturn is not casting its full-strength Vedic aspect to either planet but the alignment is so close — just two degrees at the time of the Saturn retrograde station in April — that we should see some effects from it.  At very least, it suggests the Trump rally will be interrupted for a while.  But it may well signal a significant decline.   I discuss in more detail this upcoming Saturn pattern in my weekly newsletter.

The other important alignment that stands out in 2018 is the Saturn-Uranus-Rahu configuration from August to October.  Two of the three planets are malefics so the alignment is more likely to coincide with a decline.  What is interesting here is that both Saturn and Uranus will station in a near-exact 120 degree alignment.  This is a soft aspect so perhaps it may not be that damaging.  But the stations reflect situations of greater intensity and could well signal some important developments in financial markets.  One saving grace is that the alignment does not appear to hit any key points in the Dow natal chart, either positive or negative.  So if there is a late summer sell-off, it could be fairly modest.

Whereas 2017 didn’t see any pullbacks greater than 3%, it seems more likely that we will have at least two distinct down periods in 2018.  Both should be much larger declines and I would think at least one of them could turn out to be a full-blown correction of at least 10%.  With two significant pullbacks likely in 2018, it will be much harder for stocks to post another winning year.  It is still possible that rallies may be large enough to offset the corrections, although it could be tough going for stocks. 

Weekly Forecast

Most world stock markets hit new all-time highs last week on extended New Year’s optimism.  The Dow hit 25,800 on Friday while India’s Sensex is fast approaching 35,000 after Monday’s gain.  These highs were in keeping with last week’s market forecast as I thought the multi-planet Jupiter alignment would likely coincide with some upside.  However, I also thought we might have seen some profit taking later in the week as some of these aspects began to separate.  Alas, market bulls continued to rule the roost.

Nonetheless, this week looks less positive as Mars enters sidereal Scorpio.  This doesn’t always translate into declines but it still argues for some added caution.  Friday’s Moon-Mars square looks most volatile in that respect.  That said, some gains should also be forthcoming given the conjunction of the New Moon with Venus this week.  It is difficult to say where stocks will end up, however. 

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.