Merriman Market Analyst

Review and Preview

This week’s a report is being issued before U.S. markets close, due to travel plans.

Most world stock markets continued their powerful rally following our last critical reversal zone of November 24, +/- 3 trading days. This corresponded with Uranus changing directions, and within 2 days or less, most of these markets made their new cycle lows, and have rallied substantially in the past 7-10 trading sessions. In the Pacific Rim, for example, the Japanese Nikkei market has now rallied nearly 10%. After making a new yearly low of November 22 at 14,669, it traded as high as 16,107 on Friday, December 7. During this same two week-period, the Hang Seng of Hong Kong rallied from 25,861 to a high of 29,962, for a gain of nearly 16%. India’s Nifty soared from a low of 5394 on November 22 to a high of 6042 on December 7, for a gain of nearly 12%. Australia’s All Ordinaries index also rallied from a low of 6373 on November 22 to a high of 6727 on Friday of this past week. Similar strong gains were noted during this period of time in European and U.S. markets, which are still trading as this is being written. The Dow Jones Industrial Average, for instance, bottomed at 12,724 on November 27, and by early Friday (8 trading days later) was up nearly 1000 points to 13,650.

Short-Term Geocosmics

We are now in the middle of another potentially powerful geocosmic reversal zone. On Friday, December 7, the Sun formed a waning square Uranus. On Tuesday, December 11, Jupiter will make its 13-year conjunction to Pluto. As stated in last week’s column, “Jupiter and Pluto come together only every 13 years, and together they can coincide with a sense of urgency, even hysteria due to the nature of Jupiter (it exaggerates whatever it contacts). In this case, it contacts Pluto, ruler of debt and fear of the worst. The sub-prime mortgage tragedy is a perfect example of today’s Jupiter-Pluto crisis…. to read all the solicitations by the financial expects, you would think that this crisis will never end. The aspect soon comes to an end, and just as it has in the past, such crises will come to an end too.” In the past week, we have already begun to see the government forge a plan to deal with this crisis.

Also starting this week, heliocentric Mercury (not geocentric) will starts its ingress of Sagittarius, December 8-19. Typically, at least the first 4-9 days of this ingress correspond with sharp moves in many markets, including precious metals. My observation is that about 65% of the time metals will be higher, 20% of the time sharply lower, and 15% of the time, just back and forth. It will be interesting to see what happens this time, for it is occurring during a Mars retrograde.

But perhaps even more important than the signatures of this week will be the period of December 18-31 when transiting Jupiter, the Sun, and the Mars retrograde will ingress over the 0 Capricorn and 0 Cancer points. In the process, they will conjoin the Sun and Pluto opposition at 0-1 degrees of Capricorn-Cancer in the Federal Reserve Board chart (founded December 23, 1913). Theoretically, this will correspond to important movements in the interest-related markets, like Treasuries and currency rates. For more on this, see below.

Longer-Term Thoughts

Last week’s column stated the following: “But one thing to keep in mind: the market community is looking for the Federal Reserve to make another interest rate cut. I agree with this outlook, for after all, as Jupiter moves into Capricorn in mid-December, it will oppose the FRB Pluto and conjunct its natal Sun. This is a signature of accommodation, or lowering rates. We should have this gift in time for the holiday season. And so as long as that belief is out there, there is no reason for the stock market to go back down to the levels seen a week ago.” That statement has proved correct as the stock markets continued their torrid advance, following the November 24th episode of Uranus turning stationary direct. Stock indices around the world bottomed within 2 days before to two days after Uranus changed direction, as suggested And a FRB easing policy – lowering of interest rates - is something that shows up in the Treasury prices. As Treasury prices go up, interest rates come down, and vice-versa.

The history of the only two times that this event has occurred since the first trade of the U.S. Treasury Bond market supports this astrological interpretation. The first occurrence of transiting Jupiter in conjunction to the FRB Sun-Pluto opposition took place January 19-24, 1984. On January 4, 15 days before the aspect occurred, T-Bonds made a significant low at 69/16 – its lowest level since August 1983. Between January 16 and February 2, T-Bonds topped out between 71/14-71/24, a new monthly high. It was the last high (low in interest rates) seen for quite awhile. By July 2, T-Bonds were near historic lows at 59/12. In other words, the FRB was accommodative, or at least not tightening, when Jupiter first went into Capricorn, as it conjoined the FRB Sun. This was reflected in the Treasury prices, which rallied during that period to important crests. But once it passed, Capricorn exerted its expected effect on T-Notes (and FED policy) as rates went up (or, as T-Bonds went down sharply).

The second and only other occurrence of the 12-year cycle of Jupiter in Capricorn was its last passage of January 3-8, 1996. Once again, 2-3 weeks prior to this transit, T-Bonds were making a trading cycle low of 117/29 on December 19, 1995. Once again, T-Bonds rallied sharply right into the Jupiter transit of the FRB Sun-Pluto opposition, topping out at 122/08, on January 4. Price didn’t break down immediately (they still traded as high as 121 on February 13). But they did top out January 4, and once they started falling, they did not stop until July 8 of 1996. By that time they were all the way down to 105/28. Lest one believes that FRB easing should only show in shorter-term maturities, the same pattern was reflected in the 2-year notes as well. So here too, Jupiter entering Capricorn corresponded with a crest. After that, rates went up and T-Bonds fell sharply for nearly 6 months.

Jupiter will conjoin the Sun-Pluto opposition December 19-23, 2007. Will a similar pattern happen again? Can the fact that the pattern was nearly identical in both prior cases, serve as useful trading or investment guide this time? Of course– as long as one knows how to use it as a guide. I would not bet against the street’s conventional wisdom that the FRB will lower interest rates this month. And if so, these studies suggest that this month may be the last chance to lock in these low rates of today for several months, for those thinking of re-financing.

Previously I have stated that it is not the purpose of this free weekly column to make such predictions. The purpose of this column is to educate the reader on the astrological environment coming up. In making market forecasts, I – like most of you – use several tools. Astrology is one of the factors, and the least understood of the tools I use. Hence this free weekly column. But my forecasts and recommendations are reserved for subscribers of my reports, and they are based upon at least three other tools (cycles, technicals, and chart structure, and even fundamentals). It is very seldom that you get all of these studies pointing in the same direction, but when you do, it has a high probability of unfolding, and therefore warrants a forecast and a recommendation. Some (very few) readers may sometimes lament that market analysis is much about “… if the market does this, then expect that,” instead of “the market will do this and that.” The fact is that over 70% of the time, these studies are not complementing each other, and it is simply a case of waiting for “this or that” to unfold to get them in synch. No analyst can control that, and certainly an astrologer cannot. No one can, and experienced traders know this. 70% of the time the market is in congestion or giving mixed signals, according to different tools an analyst uses. Sometimes an analyst’s recommendation to stand aside and be patient until the majority of studies are in place is the best recommendation he/she can give to a trader. In the case of T-Bonds and other treasuries, you may be getting such a set up by the end of this month, the kind that warrants a firm recommendation. And we will keep subscribers posted on that per our daily, weekly, and monthly subscription reports. But for this free column, understand that it generally analyzes only the astrological factor, and therefore readers should not view these thoughts as recommendations, but rather as educational discussions. It is not a case of “You get what you pay for,” because an education in Financial Astrology can be a very valuable adjunct to one’s trading methodology, especially in terms of identifying high potential “reversal” zones in any market. In fact, nothing is better for that purpose, in my sincere opinion, which is based upon my own personal experience.

By the way, I do not mind if readers send snippets of this free weekly report to their trader friends, as long as it is done in the spirit of good will and helpfulness, and proper credit is given.