Merriman Market Analyst

Review and Preview

 Last week’s stock market activity throughout the world offered classical example of Financial Astrology in action. After completing the first leg of its rally after the panic-selling lows of August 16-17, the global equity markets sold off rather sharply into Tuesday, the day of a total lunar eclipse, and ending by early Wednesday. Equity markets then rebounded smartly, continuing their rally to  new highs for this primary cycle by Friday’s close. Last week’s report had stated, “The major geocosmic signature of significance this week is the total eclipse of the Moon, which takes place Tuesday, August 28. Normally I would think that such a total lunar eclipse could have a powerful impact on financial markets – and it might. But this is the end of the month, and the week leading to the Labor Day holiday in the United States (the following Monday, September 3). If there is an impact, I think it will be short-lived, perhaps lasting only 1-2 days. I would be more focused on the week following Labor Day, when Venus will turn direct.”

 In the Pacific Rim, the Hang Seng Index of Hong Kong continued its torrid advance, making a new all-time high on Friday at 24,089. This index is has now gained over 24% since its primary cycle trough of 19,386 just two weeks ago. The Australian All Ordinaries rallied from the low of 5490 on August 16 to a high this past week of 6248, a gain of nearly 14%. Even the Nikkei index of Japan rose sharply this week, closing at its highest weekly high of 16,569, up sharply from its primary cycle low of 15,262 just two weeks ago. Each of these indices had a sell off into Wednesday of last week before rebounding sharply into Friday.

 In Europe, the pattern was similar. After making highs on Monday following those lows of August 16-17, each index sold off into Wednesday, then reversed sharply to new highs for the current primary cycle by Friday’s close. The AEX of the Netherlands rose from a low of 479.49 two weeks ago to an intraweek high of 525.27 on Friday. The German DAX rallied from 7190.36 to 7659.72. In England, the FTSE surged from the low of 5821.70 two weeks ago to Friday’s intraday high of 6309.50. And in Switzerland, the stock index rose from a low of 8329.63 on August 17 to a high of 8907.96 on Friday.

 In the United States, the Dow Jones Industrial Average fell from 13,387 on Monday to test the 13,000 mark on Wednesday, a loss of approximately 40% from the rally that started back on August 16. But by Friday, the DJIA made a new intraday high in this new primary cycle at 13,429. The same happened with the NASDAQ Composite,. After bottoming at 2386 on August 16, it rose to 2576 one week ago. It then sold off back to 2500 on Tuesday, before resuming its rally to a new cycle high of 1603 intraday on Friday.

 Gold and Silver also continued their two week rallies into Friday last week. December Gold rallied from a low of 652 on August 16 to a high of 683.90 on Friday. December Silver soared to 1227 intraday on Friday, its highest level since the 1128 low of August 16. Crude Oil continued climbing too since its 68.63 low of Wednesday, August 22. On Friday, it was back up to as high as 74.44. It appears on track to test of surpass its recent all-tie high of 78.77, achieve on August 1. This is consistent with our previously expressed thoughts that crude oil would form its long-term cycle crest when Uranus was in the middle degrees (10-20 degrees) of Pisces. It is currently at 17 degrees of Pisces, and  retrograde. It will end its retrograde motion at 14 degrees of Pisces November 24, but will remain in these middle degrees through mid-2008. Could we hit $100.00/barrel between now and mid-2008? It’s certainly possible. And then, according to the past behavior Uranus transiting signs of sectors over which it rules (Pisces rules Crude Oil), the price of “black gold” could drop as much as 80% before leaving this sign.

Short-Term Geocosmics

 If we were looking solely at cycles and technical studies, we would have to be very impressed with the rally in the world stock indices these past two weeks. It would be very tempting to announce that the low of two weeks ago was the 4-year cycle trough. And in fact, it may have been, especially given the way that Treasury Secretary Hank Paulsen and Federal Reserve Board Chairman Ben Bernanke have responded to the sub-prime crisis that peaked in mid-August. One gets the feeling that the stocks markets of the world will never again go through a sustained decline lasting more than a few days as long as they are in charge. Never mind the estimate that the M3 money supply is accelerating at a 13% annual clip since the FED quite reporting this figure shortly after Bernanke’s ascension to the role of chair. Never mind that the FED and the Treasury Secretary can make surprise announcements and decisions to inject large sums of money into the system whenever the market gets jitters, thereby pumping stock prices immediately back up. Their job is to keep the economy – or the “faith” in the economy and the markets – up. Under no circumstances do they want to see a recession of crisis in confidence during their watch. Put two fire signs in charge, and they will be quick to pull whatever triggers they have at their disposal to assure that doesn’t happen (Paulsen is an Aries, Paulsen a Sagittarian).

 But this week, the geocosmic picture may give cause to reassess all this wonderful news and bullish studies. The aspects between September 3 and September 9 are amongst the most powerful geocosmic correlates to trend reversals. On Monday, September 3 (Labor Day holiday in the U.S.A., so markets will be closed here), Mars will form a waxing square to Uranus, while the Sun will begin its 6-day trek of forming a T-square with Jupiter and Uranus. You may remember previously that this column suggested that big point moves and possible crashes tend to happen when Mars, Jupiter, and Uranus are all active. Accordingly, this period becomes vulnerable to a possible sudden and huge sell-off. On Friday and Saturday, September 7-8, both Pluto and Venus will turn stationary direct, which will behave like a heavy conjunction between those two planets. Venus rules the value of currencies, and Pluto represents a potential threat of danger to human life or costly damage. In earlier reports we also mentioned that so many aspects to Uranus can coincide with high winds, hurricanes, fires, electrical storms, and/or earthquakes. The thing is that with signatures like this, something sudden and unexpected could happen that disrupts the normal flow of human activity. It could be another financial panic, or a natural disaster, or something completely unexpected and shocking. But since we are focusing on the equity and financial markets of the world, don’t be surprised if events happen that cause sudden eruptions in these realms in the next 1-2 weeks.

Longer-Term Thoughts

 On a long-term planetary news note, Saturn will begin its 25-month trek through the tropical constellation of Virgo on September 2. This will bring into sharp focus the “working man’s” frustration, and possible revolt. The widening gap between the fat bonuses and pay of the management class, compared to the lack of equivalent gains in the working force, are likely to become the major theme in the political elections – and outcome - of the next two years. Class warfare will not only likely drive the populace in the voting booth, but also could be a leading cause of an sudden increase in strikes and work stoppages, to the extent that the distribution of necessary products may be severely impacted. It’s not that there is anything wrong with the economy. But if the workers of the world feel they are being compensated unfairly (compared to management), who is going to produce and distribute the goods that everyone has taken for granted? And then suddenly you find a crisis developing that no amount of intervention by the FED or Treasury Secretary can overcome. The world is entering a very critical point where the masses are likely to stand up and demonstrate their power over management and government. And if the later do not come to the table and rectify this huge gap that has been created between the rich and the middle class, a revolt of the likes that haven’t been seen since the mid-1960’s could erupt. Not only is Saturn going through Virgo, the sign of the working class, but during that transit it will oppose Uranus, planet of the large gatherings and signifier of revolt due to inequities in society. In fact, the first of five oppositions between these two powerhouses will unfold on the day of the U.S.A. election in November 2008. Is this revolution/revolt preventable? Sure. All it takes is fairness in the distribution of money and power to all who participate in the creation of that wealth and culture. The (newly) rich and powerful will have to make sacrifices and concessions to those who aren’t sharing the dream equally. That probably means more taxes, higher wages, and doing something about universal health care.