Prediction: Will the Stock Market Rally Continue?
As posted on my website on May 18, 2010:
The stock market is up 68.1 percent since hitting a 12 year low in March last year (though it is still down 22.3 percent from its peak or 14,164.53 in October 2007). The climb has been one of the strongest in history, and according to many Wall Street economist’s heralds a strong economic recovery.
But according to the Associated Press, the stock market has been propelled by relatively few trades. The 200-day moving average volume on the New York Stock Exchange is now at 1.2 billion shares, down from 1.6 billion, or nearly 25 percent, a year ago. The low volume of trading of stocks over the past year reflects the vulnerability of the market rally that has been essentially riding on professional hedge fund and pension fund investors, while a majority of Main Street investors continue to stay out of it.
Now that the Dow has breached 11,000 many analysts believe this will convince Main Street investors that the unfolding economic recovery is genuine and will have the staying power that will continue to propel the stock market rally for some time to come. With the expectation that many Main Street investors will re-enter the stock market and thus push the market Indexes higher and higher.
But a stubbornly high unemployment rate, declining home values, and rising home mortgage defaults persist, undermining the very pillars of Americans’ financial security. Among Main Street investors 75% still say the U.S. economy is in a recession and just 14% disagree, while consumer confidence is at the same level as it was one year ago due to anxiety over unemployment and the inability to borrow from banks or credit institutions.
According the latest AP Economy Survey, the economy will grow 3 percent this year, which is less than usual during the early phase of a recovery and unemployment will stay high since it takes growth of 5 percent for a year to lower the jobless rate by one percentage point. Housing prices are also likely to remain flat over the next 2 years after plunging an average of 30 percent nationally since their peak in late 2006.
Lynn Tilton, CEO of the private equity firm Patriarch Partners, says, “I think there’s a huge disconnect between the stock market and the real economy.” Liquidity is plentiful on Wall Street but small and mid-sized businesses are still dealing with a “huge credit crisis.”
Howard Davidowitz of Davidowitz & Associates goes further by saying that even with the 9.1 percent rise of last month’s Same-Store Sales Index to its highest level in the index’s 10-year history, the financial condition of the country is in “dramatically worse shape” than it was a year ago, when he was making predictions about the American’s economic future back in May of last year. With “no real jobs growth…deficits gone mad” and prospects for higher taxes for all Americans, the economy is “exactly in the same place” as a year ago, despite the economy’s apparent revival.”
So the question is: now that the Dow has reached and hovering at 11,000 – will the market rally continue?
For a larger view of this chart, see this article on www.WilliamStickevers.com
The 1st House represents the general conditions regarding the question.
Moon: Co-Significator of the question, and the general public – Main Street Investor.
Jupiter: Universal Ruler of Free Exchange Markets and professional investor’s such as hedge fund and pension fund managers.
Uranus acts as a malefic in horary charts and in the 1st House often indicates that financial market conditions are in a state of flux The Moon represent the public, or in this instance Main Street investors. The Moon is dignified by triplicity and its first major aspect is a conjunction to Jupiter – the “Great Benefic”. Jupiter is the universal ruler of bountiful increase and wealth creation and has rulership over speculative exchange markets and financial institutions such as investment firms, investment banks, traders, brokers, traders, and specialized professional investors such as hedge and pension fund managers.
The Moon’s application to Jupiter, an aspect of confidence and conviction, bodes well for Main Street investors seeking to re-enter the market believing that “things are getting better,” and the worst recession is behind. This testimony supports that latest Rasmussen poll finding that a majority of Americans expect the stock market to recover within the next three years and short-term optimism is at a new high.
The Moon then passes her light from Jupiter to Uranus. Jupiter also applies to Uranus by conjunction. The Jupiter/Uranus conjunction, a 14 year cycle, appears to be concerned with rapid growth and development of “free market economies” and the resilience of speculative exchange markets. The Jupiter/Uranus aspect encourages audacity, bold speculation, and excessive risk taking. According to financial astrologer Bill Meridian, the Jupiter/Uranus conjunction is arguably one of the most bullish combinations for financial markets. During the last Jupiter/Uranus conjunction in 1997 marked the onset of the dot-com stock market bubble.
However, the Moon is in Pisces in the horary figure, indicating that the benefits promised are mixed with misfortune. Uranus position in the 1st House indicates that market conditions are in flux. Also, the malefic South Node presence in the 5th House (Stock Exchange), along with Moon passing her light from Jupiter to Uranus indicates that market instability is more serious than what it appears, therefore highly disruptive developments may erupt without warning causing erratic and highly unpredictable market movements.
The Moon translates her light from volatile Uranus and makes her last aspect to bearish Saturn. Saturn is retrograde, peregrine, and at the critical 29th degree of his sign. Saturn rules debt and liabilities and will turn direct and make its fourth (of five passages) opposition to Uranus, all testimonies that portend a series of disruptive developments that can throw a “monkey wrench” in the so-called global recovery and effectively end the stock market rally. Also, this horary testimony may also symbolically relate to the 1.4 trillion dollar commercial real estate debt that is coming due in July that will likely have catastrophic consequences for the banking industry.
Horary Conclusion: The horary testimonies above augur the formation of a highly speculative market bubble (where investors drive stocks prices dramatically above their net asset value) that will become more and more unstable as the stock market continues to rally. The question is, what time frame can we expect for the stock market to top? To answer this question we must apply Barbault Planetary Cyclic Index, a mundane astrological technique that has been a highly reliable indicator of geopolitical developments and economic stability.
Barbault Planetary Cyclic Index
The Barbault Planetary Cyclic Index determines the fluctuations of the alternative movement of the ascending (0-180) and descending (180-0) phases of Jupiter, Saturn, and the outer planets. It represents the expansion and contraction of the solar system. The upward phase of the Cyclic Index represents periods of that display economic growth, optimism, stability, unrestraint, and expansion. The downward phase of the Cyclic Index coincides with periods of economic contraction, pessimism, instability, moderation, crisis and contraction.
For a larger view of this image, see this article on www.WilliamStickevers.com
Above is a week-to-week snapshot of the Cyclic Index for 2010 along with noted astrological events as the outer planets move into formation.
Historically, during Saturn/Pluto cycles the financial markets become depressed. Saturn/Uranus cycles often correlate with market corrections. During this downward phase of the Cyclic Index, both the Saturn/Pluto and Saturn/Uranus cycles will be in effect concurrently along the World Axis (0 degree in forceful cardinal signs). Planets located at these degrees express their archetypal power on the global stage with direct and unequivocal force. In July there will be a planetary T-Square configuration (when two or more planets in opposition make a square to a third planet) when Pluto, Uranus, Jupiter, Saturn, Mars, and the Moon will be at 0-3 degrees of Aries, Libra, and Capricorn.
What makes the T-Square configuration historically significant is that that last time civilization witnessed a similar outer planetary alignment was in 410 A.D. which coincided with the collapse of the Western Roman Empire, the world’s first global superpower, and was followed by a period of massive cultural, demographic and economic decline and disruption for approximately 400 years!
The upward wave of the cycle peaked around mid-March which coincided with the sovereign debt default crisis in Greece (Greek bonds were downgraded to “Junk” status) in the Eurozone. The long slide downward began in early April as the Dow rally broke past 11,000 shortly followed by the Goldman Sachs SEC investigation and other shocks to the system such as Iceland’s Eyjafjallajokul volcano explosion, and the offshore BP drilling rig oil spill in the Gulf Coast.
Based on the Downward Phase of the Cycle Index during 2010, in regards to the Stock Market and the global economy way can speculatively say:
Increasing volatility will become a major issue for the stock market as the U.S. recovery nears a turning point that suggests a major slowdown ahead.
Expect the stock market rally to top in late July –early August, and likely bottom in late October.
Market volatility (higher volatility corresponds to a higher probability of a declining market) from “shocks” to the system, most likely stemming from the European fiscal crisis and other secular geopolitical events, will derail the global recovery. Expect spiking oil and commodity prices in gold and precious metals, rising inflation, currency instability, and trading irregularities.
Stocks will be more overbought than any time since the market bottomed last March. The Shiller price/earnings (P/E) ratio, one of the few reliable valuation techniques, of the S&P 500 valuations are will be in their top historic quintile, a very strong signal of poor long-term returns.
Sovereign debt time-bombs that have been primed to go off in Europe will likely begin mid-year, and spread to Eastern Europe (Bulgaria, Macedonia, Albania, Serbia, and Romania) and other nations whose national debt exceeds 60% of GNP.
By delaying the introduction of stricter standards, regulators are giving banks longer to repair balance sheets. Meaning that regulators essentially allowing banks to lie about their losses of $1.71 trillion during the credit crisis.
The Group of 20 Nations agreed in April that banks should hold more and better quality capital to reduce risk to the financial system. Again what this essentially means is that banks should lie more frequently and flagrantly about their asset quality so as to windfall out money they don’t really have, even though doing so will virtually guarantee that cash flow will become insufficient in the coming years and lead to a global financial meltdown worse than the fall of 2008.
Massive government intervention in 2008-09, in what has been termed as “solving the crisis” by Wall Street economists, has not solved anything. It has only postponed it, moving the nation’s economy towards an even bigger boom-and-bust cycle than the credit crisis.
In spite of some positive signs of improvement touted by the mainstream media, the economic contraction will continue with soaring government deficits, regional bank closings, high unemployment, a weak housing market, and increasing commercial real estate defaults. .
Regardless of news of new hiring, the (U6) Unemployment rate currently at nearly 20% will continue to hold steady.
Economic growth will be dramatically weaker at the end of 2010 as it now appears, as inflation begins to take hold.
Regardless of government intervention, the financial world is is still on the wrong track, moving towards an even bigger boom and bust cycle then the credit crisis.
Expect the beginning of the end of the big business and money oligarchy that has been ruling society for the sole focus on profit at all costs as the wealth gap between rich and poor increases.
Expect large organized protest, tax revolts, and civil uprisings to start mid-year by a disgruntled and angry citizenry, setting the stage for a large-scale populist movement.
Additional Commentary: Financial astrologer Mitch Lewis also doesn’t put much faith in the stock market rally either. On astrologer Jenny Lynch’s popular weekly NYC television broadcast, STARPOWER, he said “I think we are in an era similar to the period of 1966 – 1982 when we had a bear market for 16 years. Every time the markets ran up, they failed. They made new highs twice only to collapse. The ‘dip’ of 1973-1975 is a perfect example of what I expect to occur during the coming decade. Right after that precipitous plunge of the market in September 1975, the Dow Jones began a rally from 577 up to 1,014. Then it dropped several more times. The Dow Jones closed out 1965 at 910; by 1982 it closed at 884. That, my friend, is a 16 year bear market! ”
Recommendation: Continued investing in the stock market will likely become more risky than ever, the key is to begin to take measure to protect your assets. Wealth preservation strategies should now be given the utmost consideration in one’s survival preparation for the next global crisis.