(31 December 2023) US stocks finished the year on a winning note as the Santa Claus rally delivered modest gains in the absence of any clearly negative developments. The S&P 500 added just 15 points on the week to 4769 while the Nasdaq-100 closed out the year at a record high 16,825. This bullish outcome was unexpected as I thought the midweek Mercury-Mars conjunction might have generated some selling despite the underlying bullish influence of the approaching Jupiter station on Dec 30.
With inflation continuing to moderate going into 2024, the ‘soft landing’ or even ‘no landing’ scenarios have become the consensus view. Investors are expecting no less than six rate cuts in the coming year as the falling cost of borrowing is expected to give a boost to the economy through expanded credit. And since growth remains reasonably strong, recession fears are quickly fading as the market is betting that the forecast rate cuts will not reflect deteriorating economic conditions. We shall see. While bond yields fell again last week, we should again note that the benchmark 10-year is still near potential support at the 50 WMA at 3.97%. Therefore, there is some risk of a bounce in yields in the near term, if only temporarily. The risk of higher yields is one reason why I think stocks are vulnerable to declines in the coming weeks. Besides the technical argument, the horoscope of US Treasuries looks afflicted in the coming weeks. Looking at the first trade horoscope of US Treasuries, we can see that recent decline in yields – and rise in value – may have been related to the bullish 135-degree alignment of Jupiter to the Ascendant and Mercury. With Jupiter stationing direct on Dec 30, this bullish Jupiter influence will gradually weaken. In addition, Saturn will form a bearish square alignment with the natal Moon which is exact in late January. The Lunar Nodes, Rahu and Ketu, will also form a half-return with their natal positions in the coming weeks which may coincide with a rise in volatility.
The planetary outlook is bearish for January. Despite last week’s surprising gain, the bullish influence of Jupiter is more likely to wane in the coming days after Jupiter reverses its direction on December 30. These directional reversals do not always coincide with market reversals but they nonetheless increase the odds of a trend change. The bearish Saturn influence is likely to intensify in January as it forms a complex angular separation alignment with Pluto, Uranus and Chiron (=34 degrees). Given the slow speed of all of these planets, this alignment should be seen as a general background influence without a precise date of manifestation. Rather, it is likely to act as an amplifier for other bearish alignments that occur in the first weeks of 2024…
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Photo Credit: Apostolis Kokkalis
