(29 January 2024) US stocks rallied higher yet again last week as strong GDP data and another decline in PCE inflation kept dip buyers in control. The S&P 500 added 1% on the week to 4890 while the Nasdaq-100 finished at a new all-time high of 17,421. This bullish outcome was unexpected as I thought we might have seen more late week selling on the Mars-Mercury-Chiron alignment. While Friday did finish lower, the decline was far too small to offset the preceding upside.
The market melt-up continues as fears of a recession are fading fast amid renewed hopes of a ‘no landing’ scenario. Even if the apparently robust 3.2% GDP print was partially the result of heavy government spending in an election year, the recession hypothesis is now very much on the back burner. Without any significant deterioration in the job market, the stock market is therefore likely to stay elevated. Perhaps the only risk in the immediate future is if interest rates rise further. The 10-year yield was unchanged last week and remains below the potentially key 4.25% resistance level. Similarly, the 2/10 year curve is also sitting at some important resistance at -0.19%. If the inverted yield curve is a traditional early warning sign of recessions and bear markets, the subsequent de-inversion is associated with an immediate red flag about the economy. De-inversion occurs when short term rates fall in anticipation of slowing economic activity while long term rates stay flat or move higher. With Wednesday’s FOMC meeting likely to move markets, bond yields should be monitored closely as a hawkish Fed could push the 10-year yield up to that 4.25% level and beyond — with unpredictable consequences for the stock market.
The planetary outlook has rising downside risk. Since the Dec 30 Jupiter station, we have seen broader indexes consolidate sideways, while the blue chips and megacaps have put in higher highs, albeit at a somewhat reduced upward pace. The absence of any January pullback has been therefore been surprising, especially given the more prominent position of the normally bearish Saturn through its alignments with Uranus and Rahu. The overall transit picture is therefore unclear as the alignments I had expected to coincide with some selling haven’t generated any downside…
[…]
This week (Jan 29-Feb 2) leans bearish. Wednesday’s FOMC meeting is likely to be pivotal in this respect although we could see some selling in the early week. The Mercury-Mars-Rahu alignment looks bearish and it will be within effective range for the whole week. The Mercury-Mars conjunction occurs over the weekend but will still be close enough on Monday to create some selling. On the bullish side of the ledger, the Venus alignment with Jupiter and Saturn could offset some of the negativity from Mercury and Mars, although I would be reluctant to suggest a bullish close on Monday. Tuesday’s Moon-Jupiter-Saturn alignment looks a bit bullish, and argues from a rebound attempt in the event that Monday has been down. Wednesday leans bearish as the Moon conjoins Ketu and aligns with Mars. The afternoon looks more vulnerable to downside in this respect. Thursday could be a bit bearish also as Mars aligns with Saturn while the Moon forms a wide alignment with Mercury and Pluto. Bulls could have a decent chance on Friday, however, as the Moon aligns with the Sun and Venus…
Subscribe and read the rest of this week’s newsletter
