Week of May 25 – 29 v. 2/21

Stocks on Wall St. were mostly unchanged to slightly positive last week as the bears chipped away after Monday’s big gain that saw the Dow trade above 8500.  By Friday’s close the Dow stood at 8277 while the S&P was at 887.  This indecisive outcome was broadly in keeping with expectations, although I thought we might see a little more downside from the Venus-Saturn aspect early on.  Perhaps the biggest surprise was that the Mercury-Jupiter optimism forecast for midweek arrived ahead of schedule on Monday and early Tuesday.  In retrospect this occurred due to Monday’s Sun-Mercury conjunction at 3 Taurus and this was still close enough to activate the Jupiter-Neptune at 2 Aquarius, rather than wait another day or two for Mercury to slip back into the second degree of Taurus as I had predicted.  So I was guilty of some number fetishism there since these aspects do not always express themselves precisely when the cosmic tumblers line up.  Nonetheless, the late week bearishness did come on the Moon-Mars and Sun-Rahu influences and this was more or less according to expectations.  Technically, the failure of  either the Dow or SPX to trade and close above the May 8 highs last week should be seen as a bearish signal.  Other potentially bearish indicators include the MACD, which continues to show growing negative histograms and falling moving average lines, and the fact that indexes are trading at or below there upward price channel, depending on how one wishes to draw it.   So all in all, the market appears to be in retracement mode as Mercury concludes its retrograde cycle after this week.

This week features a couple of potentially offsetting influences so we could once again be looking at two countervailing moves this week. First and foremost, Jupiter finally conjoins Neptune exactly on Wednesday.  While this is a very bullish influence and we can isolate it as the key engine behind this two month "hope" rally, I’m less certain that we can expect a lot of upside this week from its conjunction.  Slow moving planets like Jupiter and Neptune require faster moving planets to release their energy (like last Monday’s Sun-Mercury!) and we have two possible candidates this week.  First, the Moon forms a trine aspect with Jupiter-Neptune very early in the week. With US markets closed Monday, there is a chance that Wall St may miss out on some of this available bullish energy. Second, Mars (2 Aries) forms a sextile aspect to Jupiter-Neptune but the difficulty here is that Mars is unreliable as a positive trigger.  Mars contains a lot of energy, so there is a chance for a bigger than average move here (>2%), but it’s not clear which direction it will be in.   Mars could act as a negative influence on stocks during the midweek since Mercury will join Mars in Aries.  I am acknowledging a very real ambiguity here about the role of Mars here, although I would lean towards a midweek pullback, probably concentrated on Tuesday and Wednesday.  Thursday and especially Friday seem more clearly bullish to me, however, as Mercury will move into a positive harmonic aspect with Venus.  If we do see the markets sell off midweek, then a good portion of the decline may be erased by Friday, although I think the overall bias this week will be somewhat negative.  If, by chance,  however, Tuesday ends up positive, then we will probably be looking at a positive week overall with a possibility of matching the May 8 highs.   As an added complicating factor, Neptune will turn retrograde on Friday.  Given Neptune’s association with image, illusion, and confusion, we should watch out for media distortions or deliberate misinformation that come to light around that time.  By itself, this is likely a slightly negative factor for stocks. 

Next week (June 1-5) seems more clearly negative given the Mars-Rahu square June 2 and Sun-Saturn square on June 5.  However, even there, it is important that there will be some major up days since Venus (2 Aries) will trigger the Jupiter-Neptune earlier in the week.  Overall, I think there is a chance that the first week of June may be the interim low here, after which stocks will rise through June and July.  If this week ends up negative, then there is a good chance that we will see the Dow trade towards 7800 by early June.  The default setting in this market is still up, however, so the downside seems fairly limited.   An important acid test for resuming the rally will occur June 8-10 when Mercury is in aspect with Jupiter, Uranus and Neptune.  If the rally is going to extend towards Dow 10,000/SPX 1050, then this configuration should produce a big up move (>3%).  Similarly, June 15-17 coincides with a very nice Sun aspect to Jupiter, Uranus and Neptune and this should take markets substantially higher.

5-day outlook  — bearish-neutral
30-day outlook — neutral-bullish
90-day outlook — bullish
1-year outlook  — bearish

The dollar got hammered last week as treasury yields rose on fears that the government-issued debt might be so excessive as to warrant a ratings downgrade. The USDX fell five days in a row and barely managed to finish above 80. While I foresaw some of this negativity especially later in the week, my call for an up day on the Venus-Ascendant trine aspect did not come to pass. As it happened the Sun-Mercury conjunction at 3 Taurus in opposition to the natal Saturn set the tone for the week, and the declines kept coming as the Sun transited exactly opposite the Saturn on Thursday and even into Friday. This week seems mixed with the chance of some rebound earlier in the week as the Sun trines the MC in the natal DX chart. Admittedly this isn’t much to go on, but I am triangulating with the Euro chart here which features a more problematic pattern. The late week may see dollar weakness again as transiting Mars will aspect the natal Sun. So if Tuesday is positive for the dollar, it should manage to stay above 80 this week, perhaps moving towards 81. Next week (June 1-5) seems more bullish for the dollar, so we may see it move towards its resistance level of 83 and its 200-day moving average. With the rally in stocks likely to extend further this summer, we may see the dollar fall to 74-77 before it rallies strongly in the fall. Even if that rally is strong, it is unlikely to get back to 90.

As the greenback plunged on US treasury worries, the Euro took flight and closed just below 1.40. I mistakenly thought Monday’s Sun-Mercury conjunction would be Euro bearish but instead it pushed it higher. While it did form a negative aspect with the natal Saturn, the source of the optimism may have derived from the fact that the conjunction took place near the benefic 9th house cusp. This week there is a chance for a sharp sell off in the Euro as transiting Mars will conjoin the natal Saturn in the malefic 8th house. Normally, this conjunction would essentially guarantee a significant one- to two-day decline but we have to be careful here since the Jupiter-Neptune conjunction will be softening the blow somewhat since it forms a sextile to Saturn. So while I am bearish on the Euro this week, its a very conditional forecast. The late week may see a bounce as Venus comes under the supportive aspect of natal Rahu. Overall, we might see 1.35 over the next two weeks, although the summer rally in the Euro may well push it back up to 1.50. Buoyed by the pro-market election results, the Indian Rupee surged to 47 to the dollar this week. Some profit taking is inevitable here over the next two weeks, and 48-49 seems quite possible.

US Dollar

5-day outlook   — neutral-bullish
30-day outlook — neutral
90-day outlook — bearish
1-year outlook   — bearish

The rally in crude oil assumed a new level of confidence last week as it shook off the previous week’s sell off and made its highest close yet, above $61. I grossly misinterpreted Monday’s Mars-Sun aspect in the ETF chart and as the Jupiter-Neptune aspect continued to work its bullish magic in the key natal charts.

This week offers two contradictory indications, at least for the early week period. On the bullish side, Venus conjoins the natal Sun in the ETF chart on Tuesday, an apparently auspicious signature, but Mars aspects the natal Mars in the Futures chart, a very bearish indication. I am tempted to think the Mars-to-Mars contact will carry the day and usher in some profit taking for Tuesday and Wednesday, but I can’t be sure of that. The Jupiter sextile to the natal Mars has the potential to mitigate a lot of the negative effects of the Mars-Mars contact. Nonetheless, a negative outcome appears to be the most likely scenario here, and with next week shaping up to be more clearly negative, we will likely see crude move back towards $55, and perhaps even to $50. Given the speculative nature of the crude oil market and the big daily moves, predicting price levels has been very difficult.

5-day outlook   — bearish-neutral
30-day outlook — neutral-bullish
90-day outlook — bullish
1-year outlook  — bullish