Week of March 30- April 3 v. 2/13

Wall St. extended its impressive March rally last week as stocks rose more than 6%.  After trading above 7900 on Thursday, the Dow closed Friday at 7776 while the S&P finished at 815.  I missed this most recent up move as my bearish forecast mistakenly focused on individual planetary aspects rather than the larger underlying trends.  The tense aspects of Mars-Rahu and Mercury-Pluto therefore did little in the face of more powerful bullish energies of the approaching conjunction of Sun, Mercury and Venus in Pisces and in the nakshatra of Uttara Bhadra.  I underestimated the helpful effects of this triple conjunction, and lost sight of the potentially significant fact that Uttara Bhadra is ruled by Saturn. Although a natural malefic, Saturn is quite strong at the moment due to its transit of Venus-ruled Purva Phalguni in Leo.  As we know, Venus is currently exalted in Pisces so that enhances Saturn’s strength, which in turn strengthens the Sun, Mercury and Venus. In any event, stocks have rallied 20% off their March 6 lows as a growing number of investors are piling into the market on the belief that a solid bottom has been put in place. Some even believe, like fund manager Mark Mobius, that a new bull market has begun. So there are some basic questions for us to consider this week. What kind of technical retracement can we expect in April as the market pauses after this big run-up?  How solid (or Satanic!) are the March 6 lows of SPX 666?  And finally, have we really begun a new bull market or is this merely another bear market rally?

This week we will likely see the end to the rally ahead of the Mars-Saturn opposition that comes exact on Saturday April 4.  These sorts of powerful aspects don’t always manifest when are at their closest so there is some leeway here.   The other key aspect this week is Monday’s Sun-Mercury conjunction.  This is nominally bearish because the Sun combusts or burns up Mercury, the planet of trading.  Perhaps more importantly, this conjunction will mark the beginning of the separation of the triple conjunction of planets that have been part of the reason for the recent gains. By Tuesday, both Sun and Mercury will enter Mercury-ruled Revati and thus will turn off the bullish feedback loop that focused on Saturn and its connection with exalted Venus.  This will further weaken the market because instead of Sun and Mercury being boosted by Saturn in their transit of Uttara Bhadra, the Sun and Mercury will move into the nakshatra of Revati that is ruled by a debilitated Mercury.  So Monday could go either way as the Sun-Mercury conjunction occurs in close harmonic aspect with Neptune, indicating possible weakness.  It may however manifest instead as continuing dreams (Neptune) of a bull market that sends stocks higher still. Tuesday looks more negative, however, as the Moon forms a t-square with Mars and Saturn. Wednesday has a good chance at an up day, as retrograde Venus moves into harmonic aspect with Jupiter.  Potentially offsetting this positive influence is the aspect between Mercury and Mars.  Thursday looks negative as Mercury forms an aspect with Saturn with the Moon completing the aspect in the afternoon.  Friday seems the most bearish day of the week, not only because of the proximity of the Mars-Saturn aspect but also due to the a number of declinational parallels that are forming between Sun and Venus with Saturn.  While we could see another rally attempt to reach or even slightly exceed last week’s highs of 7900/835 on Monday or Wednesday, I think the overall momentum will take the market down, perhaps hard.   If Monday does not see a big rise, there is a  real opportunity for 7200/750 by Friday.  Much of the extent of the decline will depend on when the bulk of the fallout from the Mars-Saturn aspect will occur.  If it spreads into early next week (April 6-10), then our declines this week will be more modest, perhaps only to 7500/785.

Given the strength of the March rally, April is shaping up to be a generally negative month.  The direction is likely to be down through April 10.  Some gains are likely after that for the next 5-7 days, but the period around April 18-25 also appears to be mixed at best, but with significant down days.  Assuming we top out near SPX 840 this week, a conservative 50% retracement here would mean 750, with a 62% retracement translating into 735.   I believe there are enough negative planetary energies out there to take the markets down to 735 or perhaps even lower here in early April.  Perhaps more uncertain is how the rest of April will play out.  The Venus retrograde cycle will end April 18. Stationing planets are very powerful and Venus will station just a few degrees away from malefic Mars and unpredictable Uranus at this time.  This is one reason why we could see more bearishness then. Given the pullbacks likely in the second half of the month, it is not yet clear to me if we might move down even further, perhaps to 700.  This is a possible scenario particularly if this week’s planets produce a sea change in popular sentiment.  Right now,  there is a prevailing sense that a bull run is inevitable but this may quickly change back into gloom if earning disappoint or some other bad news occurs.  With earnings coming out now, a quickly darkening mood is possible. That said, I think the March 6 lows are solid but if we fall harder than expected this week, then I will revisit the question in next week’s newsletter.  A close near 700 here would put the March 6 lows in some jeopardy, although even then, I would not put it as a probability only a possibility.  As for the whole question of a new bull market, I don’t believe it for a second. This March rally is the early stage of a bear market rally which may last several months, is nonetheless very likely to collapse in the fall and early winter.  Assuming the SPX 666 holds here, we will likely break through that level in early 2010.
 
Trading Outlook:  Any rally attempts this week will be a tempting short target.  With some downside pressure likely to extend into the week of April 6, it may be worth considering holding on to short positions until then. Investors seeking to add to long positions may wait until April 6-10 after the markets have hopefully retraced significantly.  An additional entry opportunity is likely around April 20, although the price level is uncertain.

The US dollar recovered somewhat last week as the dollar index closed above 85. This was largely in keeping with our previous forecast which noted the auspicious placement of the transiting Sun, Mercury and Venus to the 4th house cusp of the natal chart. In fact, it was only the presence of these planets late in the week that resulted in a positive week for the dollar. Monday may be negative for the dollar as Mars conjoins the natal Moon in the index chart. At the same time, the Sun-Mercury conjunction at 16 Pisces will be in close harmonic aspect with the natal Jupiter at 17 Capricorn, so any decline is likely to be modest or even offset completely by the bullishness of the Jupiter influence. Generally, it looks mostly up for the dollar this week with a price target above 86. The approach of the Mars-Saturn aspect on Saturday is something of an unknown quantity since it will occur astride the 4th and 10th house cusps. This is a re-enactment of the Mercury-Saturn opposition two weeks ago that coincided with a major sell off in the dollar. I don’t think that’s going to happen this time because of other more favourable factors, but it is still something to watch for.

After its recent stunning rally, the Euro fell back somewhat last week closing below 1.33. This was largely expected given the indifferent transits in the Euro natal chart. This week may also feature more weakness, especially early on as the Sun-Mercury conjunction occurs in a negative place in the Euro chart. Some midweek strength is likely as Venus approaches the natal ascendant. We may see the Euro trade near 1.30 at some point this week, although it may finish somewhat higher, say around 1.31-1.32. The Indian Rupee was mostly unchanged last week as it closed Friday near 50.5. I think it should weaken somewhat this week, perhaps moving above 51. Look for this downward bias to continue through much of April as the Rupee may again reach 52 by April 22.

After undertaking a formidable rally for March, crude oil took a breather last week as it closed mostly unchanged near $52. As I suggested last week, crude did in fact trade as high as $55 midweek before falling back in Friday’s session. The early strength fit nicely with transiting Venus still fairly close to the natal Sun in the Futures chart. The Mars aspect to the natal Sun on Thursday and Friday pushed prices down as forecast with Friday being singled out as the most likely down day. This turned out to be the correct call. Thursday ended with a significant gain which was not unexpected, due in part to the favourable position of the Moon.

This week looks mostly bearish for crude, although some early week gains are likely. Monday’s Sun-Mercury conjunction will form a close aspect with the natal Jupiter in the Futures chart so a one or two day rise is possible. This may push prices back towards $55. Later in the week, the impact of the Mars-Saturn opposition may be felt in the oil market as Saturn is significator for oil and the Mars influence is likely to make this market less attractive. Friday or next Monday (April 6) may see a sharp sell off that will force down crude towards $50. $45 is very possible by next week, although picking the low from this retracement is quite speculative. The planetary energies seems very negative here, so any kind of decline from 10-20% is possible.