(15 February 2016) Financial markets remained turbulent last week as Fed Chair Janet Yellen did not backtrack on her plan to hike interest rates further in 2016.  Investors had hoped that the usually dovish Ms. Yellen might have been more reassuring about the reduced likelihood of further hikes given the current sorry state of the global economy.  At the same time, she did suggest that the Fed might consider bringing negative interest rates to the US if circumstances demanded it.  While some investors saw this as an olive branch to the markets, others were scared off with the hint that this latest unproven central bank experiment might actually be put into practice in the US.

Despite a rebound Friday, the Dow finished down more than 1% on the week at 15,973.  Indian stocks fell more sharply as the Sensex ended the week at 22,986.  Indian stocks have now given up all the gains in the post-Modi election rally from May 2014. Not surprisingly, gold also enjoyed a strong gain to $1263 as the Venus-Jupiter aspect tightly activated the 1919 gold horoscope as discussed in last week’s post.

In last week’s market forecast, I had thought we might have seen more gains on the midweek Venus-Jupiter alignment.  We did see strong gains in Europe on Wednesday but the positive vibes eventually petered out during the US session as intraday gains disappeared by the close.  Stocks became more bearish after Venus began to separate from Jupiter on Thursday. 

While we could see Friday’s optimism continue into this week, the broader picture still looks challenging for the next several weeks.  As I have discussed previously, the ongoing Jupiter-Rahu conjunction has been a negative influence on markets since December and could well depress prices until it ends in mid-March.  Or rather, its first conjunction is due to end in mid-March since Jupiter’s current retrograde period means that it will form a second conjunction with Rahu (North Lunar Node) that will last from May through to July.

Mars in Scorpio: Principles in financial astrology

But we should also take note of another ongoing influence that could move markets in the near term: the transit of Mars through the sign of Scorpio.  Mars enters sidereal Scorpio this Saturday, 20th February and will remain there until 18th June.  This is an unusually long transit of Scorpio because Mars will turn retrograde in April and then retrace its path through Scorpio.  It will briefly move out of Scorpio into the last degree of Libra for a few weeks in June-July but it will again move through Scorpio from 11th July to 17th September.   And please note, this is sidereal Scorpio I’m referring to here as used in Indian astrology (i.e. "Jyotish").  The Western tropical zodiac is now offset 24 degrees from its sidereal counterpart and does not follow the correlation I am advancing here.

One of the basic principles of financial astrology is that some planets are negative by nature.  When they are aligned with other planets or otherwise strong, they tend to damage sentiment and therefore are correlated with declines.  Due to its low velocity, Saturn is the most dominant negative planet, but Mars is also usually bearish in its effects.  Because it moves fairly quickly, however (0.6 degrees/day), its effects may only last for a day or two as it forms aspects with other planets.

But what happens when Mars transits through certain signs for several weeks?  Scorpio is a sign which Mars is said to "rule" — that is, it shares many of the symbolic associations of Scorpio (violence, intensity, sudden actions, etc).  Scorpio is only one zodiac sign out of 12 so Mars transits this sign once every two years or so.  When Mars is in its normal forward motion, the transit lasts about 6 weeks.  In traditional astrological terms, we say that Mars is strengthened through its transit of its own sign, Scorpio.  But in market terms, a stronger Mars probably means it will do more damage to sentiment.

So the idea that Mars in Scorpio is bearish is deductively plausible.  In fact, most astrological thinking is deductive in nature, and this is one of its weaknesses.  Mars is a bad planet, and Scorpio is a "bad" sign for Mars, so that should be really bad for markets.  Right?  (And apologies to all Scorpios here, but please note that we are talking about financial markets and not individual human beings.  Scorpios are great people!). 

But is Mars in Scorpio actually bad? What does the evidence say?  Astrology works best when it moves out of the realm of pure deduction into the realm of evidence-based empiricism.  One of the reasons I became interested in financial astrology was because it offered a constant flow of empirical data about the possible effects of the planets.  Just as the planets are in constant motion, the markets are also constantly changing. 

The table below was constructed from an admittedly small sample of the recent transits of Mars through sidereal Scorpio dating back to 1999.  There are only ten cases here, which is nowhere near enough to produce standard statistical significance.  And yet, I think the evidence presented here is at least interesting, if not impressive.  I was actually surprised the correlation was as strong as it appears to be from such a simple two-factor model. 

In 9 out of 10 instances of Mars transiting through Scorpio, stocks declined.  In 6 out of 10 instances, stocks fell by 4% or more.  The fact that stocks declined during this transit is even more significant because the market has generally risen over that time from 1999 to 2014.  The Dow Jones Industrial Average was around 11,000 at the time of the first transit in the table and 17,000 at the time of the last transit in 2014.  So the market bias was positive overall and yet this six-week transit was almost always negative.  That’s interesting.

Even more telling is that the only positive instance of Mars Scorpio transit coincided with Jupiter’s transit of — you guessed it — Scorpio. Jupiter is a positive planet, of course, and it only transits through one sign per year.  It therefore only transits through Scorpio once every 12-13 years.  The fact that stocks rose modestly (+1%) from Nov 2006 to Jan 2007 is likely attributable to Jupiter also transiting Scorpio.  Jupiter’s presence in the same sign could therefore neutralize or offset the negative Mars influence.

Unfortunately, there is no such Jupiter influence this year, as it’s due to pass through Scorpio again in 2019.  And not only is Jupiter not there to lend a helping hand, but bearish Saturn will also be in Scorpio for the whole year!  This could make the Mars transit even worse.  We are therefore even more likely to see stocks fall during this year’s transit of Scorpio.  And the fact that there will be two separate transits due to Mars’ retrograde motion loads the dice for the bears even more in 2016.  The last time Mars had its once-every-two year retrograde cycle in Scorpio was 2001 right in the middle of a bear market.  The Dow fell 15% during the combined transits of Mars through Scorpio that year. 

So this likely means that the next few months could see more turmoil in financial markets.  Due to the April retrograde station, the first Mars transit of Scorpio lasts for a very long time, from February 20 until June 18.  Just like Scorpio likely makes Mars more damaging, so does the extra long time of the transit likely to make its effects worse than they otherwise would be.   And this is only one negative planetary influence out of several I can see this year.  No matter what tricks the central banks of the world might try to postpone this recession, I don’t think they will be successful.

Weekly Market Forecast

Stocks have moved higher Monday.  Asian and Europe were sharply higher and US futures are looking to follow suit although there will be no trading today on Presidents’ Day. I would think we will see more upside this week as Mercury and Venus move in tandem into Capricorn.  With the Sun safely off in Aquarius, there will likely be some room for optimism this week.  However, Mars aligns with Ketu (South Lunar Node) for much of the week so there could be some sudden sell-offs mixed in here, perhaps later in the week.

For more details on the market trends this week, this month and this year, please check out my weekly MVA Investor Newsletter.  The newsletter covers US and Indian stock markets, as well as gold, oil and major currencies.