The SOS Global Stock Markets Report

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VOL. 14, NO. 1
JANUARY 7-9, 2008

Summary of Long-Term Cycles Labeling: Welcome to the first issue of our 14th year of publication for SOS. As you know, it has gone through a transformation in the past three months, and is now a monthly publication instead of a 6-8 week one. With the fast changing market environment, it was necessary to do this in order to better serve clients. And we also moved from individual stocks to an analysis of world stock indices. That too was necessary given our growing international clientele. And so here we are today with a new format, but the same motivation and qualities of reliability and dedication to valuable service as ever.

The financial market community starts out this year with a lot of fear and uncertainty. The status of many longer-term cycles has now opened up some new possibilities, which we will discuss in this issue. I know many readers want definitive outlooks, cast in stone about what the future holds, but that is impossible. The fact is that about 70% of the time there are multiple possibilities for the future of the stock market, and the analyst who doesn't alert his clients to alternative outlooks to his/her preferred scenario is either doing a great disservice to that client, or living in arrogant self-delusion. I won't do that. And therefore in the first sections of each SOS report, you will read the cyclical and geocosmic factors that I consider in my analysis, with preferred and alternate scenarios, depending on how the market performs when it is not in a clear trend (as is the case right now).

We will start, as always, with a list that outlines the current status of all long-term cycles (one-year or greater) that we follow, and from whence the enclosed projections are made. And there are usually alternate possibilities to these outlooks, as discussed within the main body of this report. These cycles (and their projections) pertain to the historical studies on the Dow Jones Industrial Average (DJIA) and British stock prices, dating back to the 17th century. We will assume that most of the other world indices are at similar stages in their cycles, unless otherwise noted in the discussion of their particular cycles. For further information on the longer-term cycles, please refer to the annual "Forecast Book."

Readers should also keep in mind that all cycles contain "phases" that are divisions of the greater cycle by the numbers 2 or 3. Thus an 18-year cycle may be comprised of two 9-year cycles, or three 6-year cycles, or both ("combination").

" 72- and/or 90-year cycles last occurred in July 1932. They - and their half-cycles - are due to bottom next in 2011-2016. Their crest is still unfolding and due 2008-2010. There is now a possibility that it topped out October 2007. The decline is expected to see stock prices around the world decline 50-90% from their all-time highs, into the low that is due 2011-2016.

" The 18-year cycle bottomed in October 2002 in U.S.A., and March-April 2003 in Europe and Asia. It is due to bottom again with the 72- and 90-year cycles, which means it is could contract to 12-14 years in 2014-2016. There are two historical instances of 13-year intervals. New highs could still be ahead. There is a possibility that this is the 21st year of an older 18-cycle that is expanding to perhaps 23-26 years.

" A 6-year cycle (range 5-8 years) is due 2007-2010. The top is still unfolding, but is due before the end of 2008, and then a 1-2 year corrective decline to this low. There is a possibility that it topped out October 11, 2007, and the decline will last 2-3 years.

" The 4-year cycle (range 3-5 years) bottomed August 16-17, 2007. A new bull market is now in effect that could take many stock indices to more new all-time highs within the next year, and maybe next 2-3 years. Alternate: The 4-year cycle is expanding to six years, and will bottom in 2008 with the 6-year cycle, as it did 1932-1938. The high is already in, and the DJIA is headed to 10,000-11,500 in 2008.

" A 78-week (or 18.5-month, with range 15-22 months) cycle in several world stocks indices is due September 2007-May 2008. This cycle probably formed with the double bottom in August and November 2007. However, it may still be unfolding if prices continue to fall this month.

" The 50-week cycle bottomed August 16-17, and the new 50-week cycle is pointed higher, indicating new all-time highs by year-end. Alternate: a bearish head and shoulders pattern is forming, and the U.S. stock market may not make a new high before falling hard to a 4-year and next 50-week cycle trough.

" The most difficult long-term geocosmic signatures are over until November 2008. However, that doesn't necessarily mean there will be no serious declines before then. Those longer-term signatures that commence in November can start having an influence as much as 10 months earlier.

Summary: The U.S. and most world stock markets are at a very critical point right now. If the Dow Jones Industrial Average starts to close below the neckline of a bearish head and shoulders formation (about 12,800), and especially if it takes out the 12,517 low of August 16, a decline to 11,380 +/- 335 or even lower is possible. This would suggest that the 4-year cycle is indeed expanding to 6 years for only the second time since the 1890's. But worse, it could mean the longer-term 18-, 36-, 72- and/or 90-year cycles are also commencing, and the DJIA could fall to 7500 or lower by 2011. However this is an election year and neither Bernanke nor Paulsen want to see a recession and stock market crash on their watch. So I am more inclined to believe that the market will recover and post another strong rally this year, into the election, and the longer-term cycles are still on target for a top in 2008-2010, followed by a 50-90% decline into 2011-2016.

The Long-Term Cycles: Although my bias of the longer-term cycles' picture remains bullish, the activity of the past month opens up new bearish possibilities. Let's review these cycles. First of all, the last 72- and/or 90-year cycle unfolded in July 1932. A 72-year cycle would next be due 1992-2016. A 90-year cycle would be due 2007-2037. I anticipate that the actual low will occur during the overlap period, which is 2007-2016.

The 36-year half-cycle to the 72-year cycle last unfolded in 1974. It is next due 2010 +/- 6 years, or 2004-2016. The 45-year half-cycle also occurred in 1974. It is next due 2019 +/- 8 years, or 2011-2027. All of these cycles overlap 2011-2016, and thus that is the time band in which I anticipate the long-term cycle lows. Based on the history of the longest-term cycles, I would expect the DJIA to fall 50-90% off its high by then. Given that the high so far has been 14,198, the DJIA would be expected to at least test the 7000 mark again if 14,198 is not first taken out. There are some reasons now to wonder if it will be taken out, as will be explained in this report. However, those reasons are not yet strong enough to push my bias away from the idea that we will first make another new high.

Within the 72-year cycle are usually four-five 18-year cycles, with a range of 15-21 years. We are in the 5th one now. There have been two (of 11) cases in which this cycle distorted (contracted) to only 13 years. There is no reason why it cannot contract or expand slightly when longer-term cycles come in, like now. Thus we have to be open to the idea that the current 18-year cycle may contract (to say, 12-14 years) or expand (to say 22-26 years).

And that brings us into our current dilemma with the 18-year cycle. If it bottomed in October 2002, as I currently believe, then the next occurrence is ideally due 15-21 years later, or 2017-2023. It would have to contract to 9-14 years in order to fit our time band of 2011-2016 for the longer-term cycles. On the other hand, if the start of the current 18-year cycle was actually during the crash of October 1987, then 2008 would start the 21st year of an older cycle. In order to fit our idealized 2011-2016 time band for this longer-term low, that 18-year cycle would have to expand to 24-29 years. I don't think it would expand beyond 28 years, and probably not beyond 26, based upon other historical studies.

Now within the 18-year cycle we oftentimes see three 6-year phases. If we look at the monthly chart of the DJIA since 1987, we will see instances of this phase with the troughs in 1994 and 2002 that were seven and eight-year intervals each. The next instance of this cycle would be due 2007-2010. The question is: will this 6-year cycle phase be the third and final one of an older 18-year cycle that started in 1987, or the first of a newer one that started in October 2002? I have believed the later - that this will be the first 6-year cycle phase of a newer 18-year cycle that started in October 2002, because of the chart pattern going into that 2002 low, and the chart pattern that has followed. In other words, the low of October 2002 was a double bottom formation to the low of October 1998, the prior 4-year cycle. It was also the steepest decline of the entire cycle that started back in October 1987. When longer-term cycles end in bull markets, the last phase contains the steepest decline, and prices will oftentimes go back to the low of a previous sub-cycle. The low of October 2002 fit these "rules." Also, in new longer-term cycles, the first phase will generally be bullish, and oftentimes very bullish. Since the low of 2002, there can be no argument that the U.S. stock market has indeed been very bullish. That is a characteristic of the first phase of a new long-term cycle (bullish), not the last phase of an older one, which is more bearish. Thus my bias that 2008 begins the 6th year of a newer 18-year cycle. The chart pattern (so far) fits that analysis in classical textbook fashion.

However, if the market was to make a huge decline now - say back to 7000-7500 - I would have to shift my labeling to reflect this as being an older 18-year cycle. As of now the chart pattern doesn't support this more bearish outlook. It supports the idea that this current decline would be that of the first 6-year cycle phase in a newer 18-year cycle. As such, we would only look for a normal corrective decline based on the rally of 2002-2007. At this point, that projection would be to 10,679.95 +/- 826.11, if the high of that cycle occurred last October 11. As long-time readers know, I like this idea because that would essentially be a re-test of the June 2006 low, which was 10,683.70. If that area holds, then it sets the stage for another bull rally as we start the next 6-year cycle. The DJIA could make a new high, or at least challenge the highs of October 2007 again. Right now, this is my bias as to what will happen.

But of course there are things along the way that could alter this bias. For one, the crest of 6-year cycle is not yet confirmed in the DJIA. For that to happen, we have to close under the 23-month moving average, which is currently about 12,400 (and rising). Until we do that, the possibility remains that the DJIA could go to new highs, above 15,000. And as mentioned before, if we start falling hard, I can't imagine Bernanke and Paulsen NOT intervening, which always keeps open the possibility of powerful and sudden rallies. Secondly, if the market does decline, there is the possibility that it falls more than the "normal" corrective area of a six-year cycle. After all, the very longer-term 72- and/or 90-year crests are due. In fact, it is very late in the time frame for them to unfold. A market crash is always possible when long-term cycles top out. Think of what happened at the crest of the prior 72- and/or 90-year cycle, which was in September 1929. Then too it was very late in those cycles, and the last phase of the 18-year cycle was explosive to the upside. But then in the next 2 years and 9 months, the DJIA lost 90% of its value. There is thus precedence for this being an older 18-year cycle within a 72- or 90-year cycle, and then suddenly reversing and falling much harder than anyone expects in less than 3 years. I am not saying this is going to happen. In fact, it is not even my bias, but…. it is a possibility, given the market had been up for 75 years. The high in 1929 was also the end of a 72-year bull market.

Geocosmics and Long-Term Cycles: I believe geocosmics also favor the idea that the market has not yet topped out, though there is room for debate here too. First of all, Pluto is about to enter Capricorn on January 26. It will remain there only until June 13, when it will retrograde back into Sagittarius until November 26. Then it stays in Capricorn for the next 15 years. Capricorn is a cardinal sign. As pointed out in "The Ultimate Book on Stock Market Timing Volume 2: Geocosmic Correlations to Investment Cycles," the U.S. stock market has always made a new all-time high in the early part of Pluto's transit through cardinal signs. Then it crashes, much worse than anyone thinks, lasting until 5-11 years before the entrance to the next sign. Then it recovers for the next few years before suffering a secondary low at the end of that cardinal sign, or the first few degrees of the next fixed sign. This pattern suggests a top in the DJIA anytime from 2008 through say 2013 and then a crushing decline into 2012-2018.

The second very long-term geocosmic cycle to be aware of is the forthcoming Saturn-Uranus opposition, which takes place five times beginning on Election Day 2008, and ending July 26, 2010. Within an orb of 10 months, this 45-year cycle has an impressive correlation to 18-year or greater cycles, or their secondary lows. That range of time actually starts now, in January 2008, and lasts through May 2011. Since the market has been rising, my idea was that it would coincide with the 18- and 72-year cycle crest. But, if these long-term cycles did top in October, it could instead correlate with the long-term cycle trough. One might then ask, "Well then, what geocosmic cycle correlated with the long-term cycle crest if it happened in October 2007?" The answer is, maybe the Saturn-Neptune opposition of 2006-2007, which was the second of the three "triple Saturn oppositions" of 2001-2010. In the past, whenever the "triple Saturn oppositions" happened within a 10-year period, the stock market did make an all-time high and then declined substantially for a few years afterwards. Nevertheless, I believe it would be a "better fit" if the long-term stock market cycle topped out during the Saturn-Uranus opposition than the Saturn-Neptune one, and then bottomed during the Uranus-Pluto square of 2012-2015.The last Uranus-Pluto square occurred in 1932-1933, which was the 72-year bottom.

Summary: My view is that the market is not yet ready for the "big one." It could fall back to a six-year cycle low this year, perhaps to 10,000-11,500, and if so, I think there will be another rally to challenge the all-time highs again within the following two years. But the crest of the current 6-year cycle may not even be in yet, as long as we remain above 12,400. Nevertheless, there are reasons to now be concerned that the "big one" could be starting, and so investors are advised to maintain long-term bullish strategies, but with protective strategies at this time  just in case.

The 4-Year Cycle: As discussed above, I think the 4-year cycle is stretching out to six years this time, as it did in 1932. Back then, the DJIA fell 50% from its high of that cycle in March 1937, and the decline took 12 months. A 50% decline now would be too much for this to be a "corrective decline," and 2008 would be too short of a time frame for it to be the end of the longer-term 72-year cycle.

If the DJIA falls below 12,400, the 23-month moving average, it would confirm October 11 as the crest of the 4-year (and hence 6-year) cycle. I would then be inclined to interpret this six-year cycle as consisting of two 3-year cycles, or actually two short 4-year cycles. From the low of October 2002, we had a 36-month cycle trough in October 2005. That was the only time the DJIA penetrated below its 23-month moving average, and thus it could have been a 36-month four-year cycle (range is 36-56 months). But it may also have been the half-cycle to a 6-year cycle, and thus the next three-year cycle phase would be due October 2008 +/- 6 months. Interestingly enough, the MCP (mid-cycle pause) price objective for the crest of this second half 3-year cycle would have been 13,443.81 +/- 796.07. The October 11 high of 14,198.40 was right at the top end of this range. Thus this is yet another factor suggesting that the high of October 11, 2007 could have been a 4- or 6-year cycle crest. If that is the case, then we might see a 20+% decline in the DJIA after all, which has been the case in over 85% of past 4-year cycles. A 20% decline from the October 11 high comes out to 11,358. That is close to other price targets we have on the downside, if 12,400 breaks.

The 50-Week Cycle: Despite the uncertainty about the 4-year cycle, the 50-week cycle still retains its consistency. With a range of 38-62 weeks, it is next due within 12 weeks of July 25 - unless it is going to distort as a longer-term cycle comes due. This is possible because the 4- and/or 6-year cycles (and the latter's half-cycle) could come due in 2008. As stated last issue, "The low of August 16 was a 50-week cycle. According to our studies in Volume 1 of the Stock Market Timing series, the majority of bearish (left translation) 50-week cycles topped out between weeks 7-22. If there is going to be a 3-year and 6-year cycle trough in 2008, then we would anticipate this 50-week cycle to exhibit a bearish left translation pattern. In the 1932-38 instance the crest occurred in the 9th week of the last 50-week cycle. The high of October 11 was the 8th week of this current 50-week cycle... But if the 4-year cycle already bottomed with the lows of August and November, this 50-week cycle will be bullish. It will last longer than 22 weeks, and the price objective for its crest is 15,856.60 +/- 610.45." Whether it is bullish or not is being tested right now. A break below the 12,517 low of August 16 suggests this cycle will be bearish, and not due to bottom until at least late March.

The one geocosmic signature that could suggest a low before March is the January 21 instance of Jupiter trine Saturn. This will be the third of five passages in this aspect, and the first involving earth signs. The final two come up September 8 and November 21. As pointed out in Volume 2 of the stock market timing series, 4-year cycles have been noted within 1 one of the first or second passage. However, there have been no cases of five-passage series, so I think this idea could apply to any passage other than the last passage, which means it could be happening now, within one month of January, or within a month of September. Therefore, even though the 50-week cycle is more in line with the September passage, traders and investors should be careful that a low could be forming even on this current decline. And once again, I would not be surprised to see Bernanke and Paulsen enter to support the market in some way of this decline continues in January.

The Dow Jones Industrial Average Primary Cycle: This starts either the 6th week of a new 15-21 week primary cycle or the 21st week of an older one in the Dow Jones Industrial Average, as prices now re-test the lows of August and November. In fact, today, January 8, the DJIA has traded well below the trendline connecting the August and November lows, which is also the neckline of a bearish head and shoulders formation. A close below there (12,800) gives a downside projection to about 11,400 +/- 330. If we have a gap down day, it could be even more severe.

However, much depends upon which labeling of the primary cycle is correct. If this is an older primary cycle, this decline could end at any time in a triple bottoming formation. A close above the 25-day moving average (currently about 13,330 and falling) within the next 1-2 weeks would suggest this is the case, especially if there is a wide "gap up" day along the way in the March S&P futures. If that happens before prices move below 12,517, then we are on target for a re-test of the October 11 highs, or even our previously mentioned price target of 15,856.60 +/- 610.45 or 15,442.66 +/- 345.12, for the 50-week cycle crest. If prices do break below the 12,517 level, then our downside price target for an older primary cycle would be 12,306.10 +/- 223.30 or the 11,400 "breakout" projection of the neckline target given above. One of these levels could be achieved by our next critical reversal zone, which is January 25-28 +/- 3 trading days, or within 12 trading days of the Jupiter-Saturn trine of January 21. If this is a newer primary cycle, then the bottom would not be realized until another 7-15 weeks. In that case, the 50-week cycle would be pointed down, and not due to bottom until July 25, +/- 12 weeks. In that event, this would also be the 4- and 6-year cycle troughs, and we could be down to 10,000-11,500.

As stated last issue, "At this point, all we can say is that it is either very bullish or very bearish. The determination can only be made after we see the structure of this current rally to the crest of this new primary cycle - how high it goes and how long it lasts. We should know before the end of January." The structure is actually bearish, and so my bias is that that DJIA will fall hard in this primary cycle, and continue lower until the 50-week and 6-year cycle troughs are completed within 12 weeks of July 25. But be aware of the political factors, which mean that Bernanke and/or Paulsen could make surprise announcements, or intervene on the market's behalf, in order to create another very bullish run, especially this month. I would think a close above 13,300 would suggest this is happening.

Summary: Currently the DJIA has turned bearish, with a primary cycle trough price target of 12,306.10 +/- 223.30 or the 11,400, +/- 330, and possibly even lower as the 50-week cycle continues down into summer-fall. However, if prices start to quickly close above the 25-day moving average it may also be bullish. But until those things happen, our short-term studies are bearish for DJIA.

The German DAX:  The DAX continues to struggle with the 8100-8150 resistance area on all rallies. On the other hand, there is major support down to 7700. In fact, once could say the DAX is in a congestion zone between 7550-8150. Whichever breaks will probably be followed by a significant continuation.

The all-time high of 8151 on July 13 was tested again on December 12 and January 2 at 8117 and 8100, and each attempt has been turned back to just under 7800. January 7 begins the 6th week of the newer 20.5-week primary cycle. A 5-8 week major cycle trough may be forming now, with a price target of 7781.09 +/- 79.41. We are in that range now, and this is a critical reversal period. Thus if this holds, the next rally could make a new high with an initial price target of 8454.85 +/- 119.21- assuming that 8100-8150 resistance zone can be exceeded. Aggressive traders could look to buy if that retracement zone holds. But in the event that it breaks, and especially if this current decline falls below the 7444 low of November 27 that began this primary cycle, this primary cycle turns very bearish. That indicates that the market is headed down to its 18.5-month cycle trough. January starts the 19-month of that cycle, so it could yet happen if it didn't already bottom in August. As stated last issue, "It is very possible that this cycle contracted to the 14th month and bottomed with the 7190 low on August 17. That low was re-tested successfully on November 27, the 17th month, when prices dropped to 7444. However, even though the double bottom of August 17 and November 27 may be the completion of the 18.5-month cycle, it is also possible that this was just a pause along the way that could still end up with a more severe decline to the 18.5-month cycle trough within the next 4 months. But if those lows of August and November were the 18.5-month cycle troughs, then the price objective for the crest of this 18.5-month cycle is much higher: 8987.41 +/- 441.75."

Based on the idea that the DJIA is going to fall to a 6-year cycle low this year, I think there is a good chance that the DAX will also undergo a sizable decline unless it can close above that 8100-8150 resistance zone. The price target for that low is 6561.97 +/- 188.28. Aggressive traders may wish to sell any rallies that fail to take out 8100-8150. As always, look to trade opposite any significant lows into critical reversal zones, such as January 25-28, +/-3 trading days. If the DAX is rallying into these reversal zones, look for selling opportunities. If it is falling into those time frames, look for buying opportunities.

The Netherlands AEX: Since our last report, the AEX rallied to a high of 521.49 on December 12, which was within three days of our December 10 critical reversal date. It has since fallen to a low of 496.05 on Monday, January 7, which begins either the 7th week of a newer 17-27 week primary cycle, or the 21st week of an older one. If this is a newer primary cycle, then a 5-8 week major cycle trough may be bottoming right now, as Venus squared Saturn on Sunday, January 6, and this signature oftentimes marks the end of corrective declines. A "normal" corrective decline for this first major cycle phase of a new primary cycle would be to 501.18 +/- 4.80. We are testing the lower side of that range now. A move below 495 will be cause to go from bullish to neutral. And a break below the 480.87 double bottom low of November 21 becomes bearish, suggesting this is an older primary cycle that is "washing out" to a primary cycle low that has price target down to 442.93 +/- 13.75.

Longer-term, the AEX is also trying to define its 18-month cycle, which is due within three months of December 2007. We can confirm the crest of that cycle is in as of 563.98 high of July 13, because the AEX is well below its 39-week moving average. A close back above this average at 529.75 would suggest the bottom of that cycle is in, and the AEX could rally to test its old high or make a new one. But until then, the price target for the 18-month cycle trough remains at either 486.76 +/- 9.11, 442.93 +/- 13.75, or a retest of the 409.56 low of June 2006.The double bottom lows of August and November at 479.49 and 480.87 satisfied the first target, and therefore may be it. Right now the market is in congestion between 479 and 522. Whichever breaks will tell us the phasing of the longer-term cycle. Until then, this is just a trader's market. That is, look to buy any declines, or sell any rallies, into geocosmic critical reversal zones.

The Australian All Ordinaries Index: Here too the market rallied into our December 10 critical reversal date, posting a major cycle crest at 6741.40 on December 11. It then fell to a low of 6168.30 on December 18, one day before Saturn turned retrograde. A modest rally followed into January 2 before the next decline, which now finds prices testing the low of December 18 again. It thus appears that January 7 begins the 21st week of an older 13-23 week primary cycle. If so, the primary cycle low could be in anytime in the next two weeks. The ideal price target would be 6182 +/- 163.12. We are in that range now and so we may see a lower downside price target that can be calculated to 6027.17 +/- 99.83. Anything below there suggests that a longer-term cycle may be in force. For now, traders can buy this decline as long as it remains above the 5900, as an older primary cycle trough is now due before the end of January. A close above 6550 would be a strong sign that the primary trough is in and a new cycle has begun.

The Hang Seng Index: The last issue of SOS stated, "Whether that (25,861.70 low of November 22) was the primary cycle trough or not remains to be seen, for the time band of an older primary cycle is still in effect and there is no confirmation yet that this is a new primary cycle. However, on November 29, the Hang Seng index made an impressive gap up at 27,455-28,114, and in the process this also created a very bullish island reversal signature. This is the kind of chart pattern you like to see shortly after a primary cycle trough has formed. Therefore my bias is that the low of November 22 was a primary cycle trough, and December 10 begins the 3rd week of a new primary cycle. In the event that the Hang Seng has a gap down day below 28,114, it will create a bearish island reversal, and the bullish strategy should be abandoned. That would suggest this is the 17th week of an older primary cycle, and prices could quickly fall to the original downside target of 22,000 +/- 2000 by the end of January." Well, on December 28, the Hang Seng did gap down and form a bearish island reversal pattern, with the gap area at 27,842.90. It was not quite the type of bearish island reversal we were watching form, but it is one nonetheless, which means that there is downside risk to the 20,000-24,000 area until prices can close back above 27,843. Any break of the recent double bottom at 25,861 and 26,094 means this is happening

This now starts the 21st week of the 14-24 week primary cycle here too, so once again this market could also have a sudden "washout" into the end of this month unless prices start to rally quickly back above 28,000. Given that this is a geocosmic reversal zone for stocks, with Venus forming a T-square to Saturn and Uranus January 6-12, aggressive traders can look to buy this decline. But be ready to reverse to the short side again if prices cannot close the 27,843-28,000 resistance zone on any rally, as prices might fall again in to the end of this month otherwise. If the market can close above 28,000, then it begins to suggest that this is a new primary cycle, and the rally could be substantial, testing 30,000 again, or much higher, depending on political and central bank activity both in China and around  the world. When that happens, traders can adopt more bullish strategies.

The India NIFTY Index: The NIFTY index continues soaring to new all-time highs, reaching 6357.10 on Tuesday, January 8. As stated last issue, "In the meantime, the price target for the crest of this primary cycle is 6636.37 +/- 310.84, or 6405.35 +/- 165.72. Once the crest is in, a decline back to 5000-5500 is possible." We are now nearing those price target areas for the crest of this primary cycle, which is expected to be completed this month.

Last issue's astrological turning dates worked out quite well. It stated, "There are two astrological turning points that have to be watched closely. The first is right now, December 11, as Jupiter forms its 13-year conjunction with Pluto. The next period will be December 18-26, when the Sun will conjoin Pluto and Jupiter, and Mars will oppose both the Sun and Jupiter. This would normally lead to large price moves in stock indices around the world, and especially in Asia." On December 13, two days after the Jupiter-Pluto conjunction, the NIFTY made a new all-time high at 6185. It then fell hard, down to 5676.70 on December 19, as Saturn turned retrograde. But then it reversed as the all the Jupiter transits came in right afterwards, and that rally to even newer highs continues as this is being written. It seems that indeed India's stock market follows closely with geocosmic signatures, especially involving Saturn (lows) and Jupiter (highs). Thus it will be very interesting to see what happens around January 21, when Jupiter forms a trine aspect to Saturn, or February 1 when Venus forms a conjunction to Jupiter. Perhaps this "blow-off" will end around that period, and another sharp decline will follow to the primary cycle trough, which is due even now. Or maybe we get the 2-5 week sharp decline into that period. Even though the market looks like it is in steady rise upwards as suggested by those geocosmics coming up, traders cannot be advised to buy until we see a 2-5 week decline to a primary cycle trough.

The NASDAQ Composite: The head and shoulders formation in the NASDAQ Composite broke down with a gap on January 4. This is a very ominous signature, and projects a downside target to 2301.75 +/- 66.05. In fact, it could be even lower as longer-term cycle trough would be unfolding with a target back to test the 2000 lows of July 2006 again. As stated last issue, "But there are things that could derail this (bullish) outlook. First of all, this 50-week cycle is the second half of the greater 22-month cycle. The rally so far has only been to 2727. This is nearby to the 2724 high if July 19, which may have been the left shoulder of a developing head and shoulders pattern. If the market is bearish, the crest of this new primary cycle would occur in weeks 2-5, or December 10-January 4. We are there now, and this is a critical reversal zone (December 10), and the Composite is rallying to highs for this new cycle. This could be the "right shoulder" forming now. If prices now reverse and fill the gap at 2585, then they will also likely fall below the trendline that connects the lows of August 16 and November 26, which is also the neckline of a head and shoulders formation. That would be bearish and point the way to a further decline as the current 50-week cycle continues lower and lower until it is completed, along with the 22-month cycle trough. That could propel prices eventually back down to test the 2000 mark within 4 months of May 2008."

January 7 begins the 21st week of the 15-23 week primary cycle in the Composite index. An MCP price target for this primary cycle trough would be 2413.12 +/- 52.91, which we are nearing now as we come to the end of the "normal" time band for the primary cycle trough. It could unfold this week, as we are between Venus-Saturn and Venus-Uranus squares (January 6-12), and Uranus rules this index. Or it could expand to the two-week period surrounding the Jupiter-Saturn trine of January 21, and especially around our January 25-28 critical reversal date. The Venus squares in effect this week lead me to think that we may see the FRB or Treasury department make a surprise announcement to try and stop this decline of the New Year. How effective this will be remains to be seen, but surely there is a chance it could coincide with a sudden primary cycle low and sharp rally, like we saw in mid August of last year. But if such a rally does not last more than 2-5 weeks, or close above the extension of the broken neckline (say around 2600), then another wave down would likely follow to complete 22-month cycle trough due within 4 months of May 2008. For now, traders can look to sell all rallies that fail to close above 2600. Aggressive traders may look for signs of a bottom to a primary cycle trough, and a rather sharp 2-5 week rally to start before the end of this month.

The XAU Gold and Silver Mining Index: As stated last issue, "However, if November 20 was not the end of the primary cycle, then this starts the 17th week of an older one, and prices could fall further, to say 157.95 +/- 8.90. If that happens, traders would be advised to buy there too, with a stop-loss just below 143. A break below 143.00 would not be good for the bulls." Bingo! On December 18, one day before Saturn turned retrograde, the XAU dropped to 157.42. It then reversed and is now again testing the 195.50 highs of November 7. They reached 193.78 today, January 8. If they don't make a new high here, we will have a case of intermarket bearish divergence, for Gold did soar to a new all-time high today.

This starts the 3rd week of the new primary cycle. The MCP price target for the crest of this new primary cycle is now 232.51 +/- 13.23, assuming it can pass 200, the range of a double top formation. There is some concern however because we are approaching the important Mars direct date of January 30. Within say 7 trading days, Gold prices oftentimes makes a primary cycle crest or trough. Plus that is a critical reversal period (January 25-28, +/- 3 trading days). Aggressive traders may wish to look for spot to sell short if Gold continues making highs are then, especially if under 200. Other traders would be advised to buy any corrective declines while we are still early in this primary cycle, down to the 168.00 area. Complicating the picture is the concern that the Dollar may yet stage another impressive rally of 10% or more before May, and that could put a restraint on the XAU's continued rise. Still, if we go by just cycle studies and chart formation, we should be buying all corrective declines now that do not close below 168.00. Below there is neutral, and below 157.50 is bearish.

Geocosmic Signatures for near-term: Jan 2 %K_ (8.64), Jan 6 $G& (9.40*), Jan 12 $G* (9.25*), Jan 19 $K% (8.44), Jan 21 ^H& (9.39*), Jan 24 $A_ (8.70), Jan 28 #C (9.15), Jan 29 $H& (8.81), Jan 30 %V (9.28*), Feb 1 $A^ (8.43), Feb 10 !A( (9.48**), Feb 14 !H% (9.13*), Feb 18 #V (8.88), Feb 24 !K& (9.57**). The idea is to find a "cluster" in which there are no more than 6 calendar days between any two consecutive signatures, and then take the midpoint of that cluster as a critical reversal date, +/- 3 trading days. You will see such a cluster in effect January 19-February 1. The midpoint, or critical reversal date, is thus the weekend of January 25-28, +/- 3 trading days.

Critical Reversal Dates: The following geocosmic critical reversal dates are based on the studies published in "The Ultimate Book on Stock Market Timing, Volume 3: Geocosmic Correlations to Trading Cycles." The more the number of stars, the higher the correlation to a reversal. Look for cycle crests or troughs to form within three trading days of these dates.
      January 25***
      February 15-18**

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