(16 December 2012) Stocks drifted lower last week as the latest round of easing from the Fed failed to offset fiscal cliff fears.   In New York, stocks were modestly lower as the Dow lost less than 1% on the week closing at 13,135.  It was a similar story in Mumbai, as economic data were fairly mixed and suggested that growth could be sluggish.  The Sensex lost more than 100 points overall closing at 19,317.   US markets were generally bullish heading into the Fed meeting on Wednesday but failed to hold onto gains.  This was perhaps an apt reflection of the Venus-Rahu conjunction which can generate buying but often lacks follow through.  As expected, the late week Sun-Saturn aspect accompanied more negativity as most markets sold off. 

Fed Chair Ben Bernanke continues to try his best to keep a floor of liquidity under the market as the Fed announced it was buying a further $40 Billion per month of debt in order to key interest rates low and allow money to flow into riskier assets which might better spur economic activity.  The Fed also announced it would continue its current policy of extraordinary easing until unemployment had fallen to 6.5%.  These moves were considered quite positive for stocks but investors remain skittish about the fiscal cliff.  Bernanke himself admitted that solving the fiscal cliff was more important for the economy than anything the Fed could do.  

That sort of candor may have been an unwelcome reminder of the precariousness of the current rally, at least in the US.  As I have noted previously, Saturn is approaching a close 60 degree aspect with Pluto that may be a burden on sentiment for some time.  The aspect is closest over the next few weeks but due to Saturn’s upcoming retrograde cycle in February, the aspect will remain active well into March.