(19 February 2024) US stocks moved modestly lower last week as the closely-watched CPI report came in hotter than expected. The S&P 500 finished the week down less than half a percent to 5005 while the rate sensitive Nasdaq-100 lost more than 1% to 17,685. The bearish outcome was in line with expectations as I thought the Mars-Pluto conjunction would likely coincide with some selling.
Last week’s inflation data is forcing the market to accept the Fed’s higher-for-longer stance. After previously pricing in 150 basis points of cuts in 2024, market odds are now showing just 100 basis points. Not surprisingly, bond yields rose last week as the 10-year broke above key resistance to close at 4.30%. While resurgent inflation and higher bond yields are usually bad news for stocks, there are signs that the market may becoming more comfortable with this higher rate environment since the selling was quite mild. A further rise in yields may bring a sharper reaction in the equity market, however, as participants would be less able to dismiss it as a temporary aberration. Nonetheless, recession remains the greater medium term downside risk for stocks as many observers are wondering when all the recent corporate layoffs are finally going to show up in official labor statistics. For now, markets are focused on the strong macro data which continue to support the bullish soft landing scenario.
The planetary outlook is uncertain. While last week’s decline appeared to confirm the diminishing bullish effect of Jupiter as it separates from Saturn, it is still unclear if sentiment will continue to deteriorate. Nonetheless, there is more reason to think that further downside is likely since Jupiter has been weakened on two fronts. First, Jupiter is separating from its 60-degree alignment with Saturn and second, Jupiter is separating from its conjunction with Venus in the NYSE chart. Angular separation is associated with weakening influence and thus bulls may now have less positive sentiment on their side. And we should also note that bearish Saturn may become stronger in coming days as it is due to align with natal Venus in the NYSE chart on Feb 20. And with Mercury and the Sun due to conjoin Saturn in the last week of February, there is a greater likelihood of more downside, even if its magnitude is unclear.
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This week (Feb 19-23) leans bearish as Venus conjoins Mars. This is a fairly reliable bearish pairing that should deliver one or two down days this week. After Monday’s holiday closing, Tuesday could be somewhat bearish as the Saturn transit to the natal Venus may offset the favorable Mercury influence in the NYSE chart. This is not a high probability bearish set up, however…
