(14 April 2024)  Stocks sold off last week as a hot CPI inflation number undermined hopes for rate cuts amid renewed war fears in the Middle East.  The S&P 500 fell by 1.5% to 5123 while the Nasdaq-100 finished at 18,003.  This bearish outcome was in line with expectations as I thought the Mars-Saturn-Rahu alignment would likely coincide with some selling.

The rally seems to have hit a speed bump.  Last week’s rise in inflation surprised many traders and may have postponed rate cuts for the foreseeable future.  Fed governors continue to downplay prospects for lower rates this year, even if FedWatch is still pricing in two cuts to 5%.  With inflation expectations rising, bonds got pounded yet again as yields rose to 4.5% on the 10-year.  Clearly, the traditional negative correlation between stocks and bond yields has asserted itself once again as the 10-year may be heading back up to 5%.   And with most commodities also moving higher, the specter of persistent 1970s-type stagflation is very much back on the table.  Even if the Fed keeps rates elevated at current levels, it may not be enough to slay the inflation dragon given the huge deficits the Biden administration is running ahead of the November election.  And now the possibility of an Israel-Iran war not only heightens geopolitical uncertainty but could end up becoming another bottomless pit of military spending.

The planetary outlook is mixed.  This week’s Jupiter-Uranus conjunction would seem to give the bulls the advantage here, if only in the short run.  While no alignment is guaranteed, Jupiter-Uranus alignments – and conjunctions especially – are fairly good indicators of some upside.  On the other hand, there are some questionable other alignments involving Mars and Saturn this week which could create some choppiness…

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This week (Apr 15-19) leans bullish.  While the positive influence of the approaching Jupiter-Uranus conjunction could be felt at any time this week, the late week seems a bit more bullish than the early part of the week.  Monday’s Mercury-Jupiter-Uranus alignment could be somewhat bullish, although I would not classify it as high probability since Mercury will be separating from Jupiter and Uranus…