Preview for the week beginning September 6, 2010

Review and Preview

In typical Mercury retrograde fashion, nothing was typical last week and prices continued to see-saw back and forth every 1-4 days, with an end-of-week notable spike to the upside. There were ample displays of market divergence throughout the week, suggesting that the markets continue to perform with “unusual uncertainty,” in the words of Fed Chairman Ben Bernanke. But the good news is that even with these signs of divergence, several stock indices are exhibiting bullish signs. The not-so-good news is that these bullish signals are being generated while Mercury “the Trickster” is retrograde. We can’t be certain that these normally reliable technical and pattern-recognition signals will be valid this time.

In Asia and the Pacific Rim, the Hang Seng of Hong Kong, Nikkei of Tokyo, and NIFTY of India, all sold off to a bottom on August 31-September 1. The MICEX of Moscow and All Ordinaries of Australia did not take out their lows of August 25, for a case of weekly intermarket bullish divergence. Each of these markets rallied into the end of the week, but only the Hang Seng has succeeded so far in taking out its high of August 9, during the Cardinal Climax.

In Europe, only the German DAX index took out its low of August 25. It formed a new weekly low on August 31. Each of the European indices then rallied sharply into the end of the week, but only the FTSE of London made a higher high than its peak of early August (Cardinal Climax). So we have a case of intermarket bullish divergence on the lows, and possibly a case of intermarket bearish divergence developing on the highs of last week.

In the Americas, all, the equity indices held their lows of August 25-26. However the Dow Jones Industrial Average and NASDAQ Composite came very close to those lows again on August 31 before reversing sharply to the upside. So far none of these indices has exceeded their highs of early August when the Cardinal Climax was in full force.

So, from the viewpoint of Financial Astrology, what was so important about those lows of August 31 or September 1? That was the middle of the Mercury retrograde time band of August 20-September 12. One of our rules is that markets which do not reverse their trend around the date of Mercury retrograde, will oftentimes undergo a strong but brief counter-trend reversal in the middle of the retrograde zone. That happened in many of these world stock indices, which continued lower past Mercury retrograde on August 20. It may have worked the opposite way in Gold, Swiss Franc, and the Japanese Yen, which continued their up trend past Mercury retrograde, but experienced their highest price to date (or double top) on August 31-September 1.

The most impressive move last week may have been in Silver. From a low of 1778 on August 24, just two trading days after Mercury turned retrograde, the December contract soared to 1997 on Friday. The chart pattern in Silver looks like a very bullish breakout. But then again, this is all happening under Mercury retrograde. Can it be trusted?

Short-Term Geocosmics

This forthcoming week is interesting for many reasons to Financial Astrologers. First of all, September 4 begins a long time band, lasting through October 8, in which there will be 11 important geocosmic signatures with higher than average correspondence to reversals in many financial markets. There are no more than 5 calendar days separating any two consecutive signatures. That constitutes a “geocosmic cluster” from which critical reversal dates are determined, as reported in the studies of “The Ultimate Book on Stock Market Timing Volume 3: Geocosmic Correlations to Trading Cycles.” Given that this period covers the Autumnal Equinox of September 21, this particular cluster should be significant. After all, the planets of the Cardinal Climax are in the very early degrees of cardinal signs, which are the degrees of seasonal equinoxes and solstices. They are doubly significant now.

This week is also important from the perspective of Financial Astrology because on September 8 there is a new moon, and both Venus and Jupiter change signs. Each of these can correlate to a change of values in the investment community as well as for world leaders. What was the focus of attention before, now shifts to something else. Perhaps investors wake up to the idea that investing in Treasuries at such historically low yields is – was – not such a good idea. They may tip their toes back into the water where there is more reward for well-calculated risks.

Longer-Term Thoughts

However, how confident can investors be in this economic and political climate? When the chairman of the world’s most influential central bank describes the economic future as “unusually uncertain,” who really knows what a well-calculated risk might entail? Maybe a Financial Astrologer could be helpful, for there are correlations between the planetary patterns of today with themes (and outcomes) that occurred under similar celestial patterns in the past. That is, after all, one of the values of Financial Astrology. But it does require an open-mind, something that is claimed by many, but demonstrated by few, when it comes to subject of Astrology.

let’s consider recent events in light of basic astrological tenets, and even common sense. The Federal Reserve Board Chair makes the statement in mid-August (under the intensity of the Cardinal Climax) that the economic outlook is “unusually uncertain.” Prior to that, he had announced the Fed would trim down its balance sheet which had tripled in assets following the Panic of 2008. It had printed massive amounts of money and used that to purchase U.S. Treasuries and mortgage backed securities. Those treasuries and securities were coming due.

Now, as a trader or investor, let me ask: if you see the outlook as “unusually uncertain,” do you normally make a decision to purchase a large amount of assets whose value will be affected by the economic climate? Or do you sit tight and wait for the picture to clear, and then make a decision where to invest your monies – or in this case, the monies of other people you serve?

Bernanke and the Fed made the decision to vary from the previous mentioned strategy. Instead of drawing down the Fed balance sheet, they would instead use the monies from the sales of these Treasuries and securities to buy more long-term Treasuries (but not more mortgage backed securities). The question is: was that a wise decision, given that the market was viewed as “unusually uncertain,” and also given that the Cardinal Climax planets were forming a grand square to the Sun-Pluto opposition of the FRB chart (December 23, 1913, 6:02 PM, Washington D.C., source New York Times)? Or will there be unforeseen consequences later on this decision of further stimulus, further manipulation and interference with the normal market climate? From the viewpoint of Financial Astrology, I would be concerned about the wisdom of this decision.

To me, this decision does nothing to address the problem of the out-of-control federal debt. To the contrary, it gives support to the government’s urge to continue with $1 trillion + budget deficits. In his more wise moments (and he has had many of them, in my opinion), Bernanke has warned Congress and the White House numerous times that they need to address and bring down the federal deficit. Why does he warn the government of the need to seriously tackle the federal deficit and ballooning debt? From a Financial Astrology viewpoint, it is because the U.S.A. is going bankrupt. Pluto and Uranus (in early Cardinal signs, with Jupiter) are forming a T-square to the USA Venus-Jupiter conjunction in early Cancer. These are classical bankruptcy signatures, which simply mean there is the temptation to spend more than one can afford, and then the debt gets out of control – unless one takes measures of austerity to prevent that from happening. By deciding to resume buying long-term Treasuries, the Fed is enabling the never-ending spending addiction of Congress and the White House. At some point (very soon, I think), there will be consequences directly related to this inability and unwillingness to control spending.

Why is this important? Simple: the Fed is hastening the day of sovereign default which, in truth, will be caused more by the betrayal of our political leaders as fiduciary managers of our nation’s finances than by the Fed itself. It is no longer a matter of IF the United States will default, but rather WHEN and HOW it will default, and what that will do to the U.S. Dollar in terms of its special status as the world’s reserve currency, which in turn lets the Fed freely print more and more dollars as it sees necessary. What happens when that changes?

But don’t despair and lose sleep over this. The possibility of default is not just an American phenomenon. The entire world is on the verge of default (well, a great portion of it is). After all, Pluto in Capricorn squared by Jupiter and Uranus in Aries (now late Pisces) affects every one. We are all in this together, and it is the dynamic that is going to lead to a whole new era of shared sacrifices and changes in governance and banking throughout the world. It has already started, as we are now fully into the Cardinal Climax of 2008-2015, and in fact we have just passed through the Astrological center of this cosmic tsunami. There is something cleansing that occurs after such an ordeal. That’s the promise of Pluto in Capricorn, 2008-2023.

As you might expect, the idea of sovereign default, bankruptcy, and a bubble in the U.S. Treasury market is not a view shared by everyone, and certainly not by those who are the frantic buyers of U.S. debt right now. It is possible that my read of this possibility is incorrect because as Bernanke says, the outlook is “unusually uncertain.” It depends upon how much you trust your government and its leaders – their intentions as well as their level of competency to manage the nation’s finances. Here are two interesting links that outline the two sides to this discussion.

http://www.bloomberg.com/news/2010-08-25/morgan-stanley-says-government-bond-default-is-question-of-how-not-if-.html

http://www.businessinsider.com/david-rosenberg-on-the-bond-bubble-2010-8

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Disclaimer & State of Purpose

The purpose of this column is not to predict the future movement of various financial markets. However, that is the purpose of the SMT (Schogt Market Timing) & MMA (Merriman Market Analyst) subscription services. This column is not a subscription service. It is a free service, except in those cases where a fee may be assessed to cover the cost of translating this column from English into a non-English language.

This weekly report is written with the intent to educate the reader on the relationship between astrological factors and collective human activities as they are happening. In this regard, this report will oftentimes report what happened in various stock and financial markets throughout the world in the past week, and discuss that movement in light of the geocosmic signatures that were in effect. It will then identify the geocosmic factors that will be in effect in the next week, or even month, or even years, and the author's understanding of how these signatures will likely affect human activity in the times to come.

The author (Merriman) will do this from a perspective of a cycle's analyst looking at the military, political, economic, and even financial markets of the world. It is possible that some forecasts will be made based on these factors. However, the primary goal is to both educate and alert the reader as to the psychological climate we are in, from an astrological perspective. The hope is that it will help the reader understand these psychological dynamics that underlie (or coincide with) the news events and hence financial markets of the day.

No guarantee as to the accuracy of this report is being made here. Any decisions in financial markets are solely the responsibility of the reader, and neither the author nor the publishers assume any responsibility at all for those individual decisions. Reader should understand that futures and options trading are considered high risk.