Merriman Market Analyst

Review and Preview

The powerful rally that began in world equity markets within two trading days of the Uranus stationary direct point of November 24, reached its peak early last week as the 13-year Jupiter-Pluto conjunction unfolded on December 11. This was right into critical reversal zone as described in last week’s column, and in our recent subscription reports. It was also the day that the Federal Reserve Board did what we expected – it lowered the Fed Funds rate by a quarter point and tacked on a cut to the discount rate too. The Dow Jones Industrial Average promptly began a sell-off of nearly 300 points by the end of that day. Other world indices followed. Stock traders clearly were not impressed with only a quarter point cut, and showed their displeasure with Bernanke and company accordingly. In fact, it might be an indication of the street’s disappointment in Mr. Bernanke as of late. In the wording that followed, the FED seemed to indicate that the concern about inflation was moderating. The risks of inflation were now balanced against the risk of an economic slow-down. By Friday, that type of guidance by the FED proved about as useless as a stock tip from your neighborhood bar patrons. The CPI inflation report on Friday morning showed a much higher-than-expected rise of .8% for the month. Once again, the FED seemed to demonstrate that it is not interested in doing anything about preventing inflation, except to talk strong about it. All their actions in the past year have been pro-inflationary, or at least not anti-inflationary. It is clear their primary intent is to try to avoid a recession and continue fueling growth in the economy (and confidence in it), and hope that strong warnings and words alone will fight off inflation. But it appears the Street is getting wise to this game. I don’t think they like Bernanke and team much after this week.

As the stock markets promptly started to give back a big chunk of their gains, many indices now find prices testing their 25-day moving average already. This week thus begins a critical juncture for world indices. Will they complete a corrective decline this week and resume their new up trends started in late November? Or is the Jupiter-Pluto conjunction such a powerful reversal force that these indices will continue falling even harder, and even past their lows of last August and November?

Stocks indices weren’t the only markets to experience a pullback last week. All foreign currencies (vis-à-vis) the U.S. Dollar also declined. Most significant may be the fall in the Euro currency, which as explained in our recent newsletters, was due to make a top and begin a noteworthy decline into its 26-month cycle trough, due shortly. Silver also fell hard. After posting a multi-week high at 1497 on December 12, the March contract fell all the way down to 1389 the next two days, its lowest level in two months.

Short-Term Geocosmics

We just left one powerful geocosmic reversal zone of December 7 through December 11. And now we begin another that lasts much longer: December 18 through January 12. This reversal zone may be compromised a bit due to holiday markets. The volume is apt to be low during the central part of this reversal period, and in fact many days will find markets closed altogether. Still, some of the signatures have strong historical correspondence to primary or greater cycles in stocks and commodities, and deserve to be treated carefully. One of the more important signatures in this cluster happens this Wednesday as Saturn turns retrograde. Saturn stations, along with Venus and Uranus stations, have the highest correlation of all planetary stations to important reversals in U.S. stock indices, as reported in “The Ultimate Book on Stock Market Timing Volume 3: Geocosmic Correlations to Trading Cycles” (it makes a great holiday gift for that special trading friend). As demonstrated therein, Saturn retrograde has a 65% correlation to primary cycles within an orb of 11 trading days, and a 70% correlation to 4% or greater reversals within only 4 trading days. That’s the statistics. The astrological observation is that any financial markets that are declining into Saturn stations have a high probability of bottoming and turning right back up again within a couple of trading days. And as one can see, there are a number of financial markets that are declining right now, including precious metals, currencies, treasuries, and stocks. Yet as we know from our studies of astrology, Saturn and squares are not always bearish, nor are trines and Jupiter always bullish. And thus those markets that have been rising may peak out now too, like grains, which have been soaring again as of late. Wheat is again making new all-time highs, Soybeans are making new contract highs, and Corn is back at its ten-year high recorded last June.

The following week will find the Sun and Jupiter conjunct, and both in a rare opposition to Mars during the same week. As indicated before, Jupiter has tendency to expand or exaggerate things whenever it is in force, especially with Mars. So, even with the holidays talking place then, we might see large price swings. These signatures indicate the potential for either euphoria or panic. And since Jupiter and Sun conjunct the Federal Reserve Board’s natal Sun (and opposite its natal Pluto), and since the stock market is clearly showing its displeasure with the FED by declining, we may see yet another surprise rate cut before the holiday season is over. That would make everyone euphoric and in the holiday mood. And wouldn’t Bernanke, the Sagittarian, be the perfect person to be cast in the role of Santa Clause – especially after what happened this week?

Longer-Term Thoughts

The last two weeks have not been good for President George W. Bush. This station of Saturn is taking place right on his natal Mars. Mars is the planet of action, of wanting to something and do it now – especially if it involves combat. His progressed Mars is conjoining his natal Moon and Jupiter in Libra, a signature I reported in last year’s Forecast Book would indicate expanding U.S. military involvement overseas, and not withdrawing forces as the special Baker-Hamilton Commission he appointed suggested. And in the past two weeks comes an intelligence report (NIE) that states that in 2004 Iran stopped its nuclear development program that the White House was so concerned about. And this past week comes another report that the CIA “… destroyed videotaped interrogations (that) could permit defense lawyers to raise the specter of a CIA coverup to cast doubt on evidence,” according to the Wall Street Journal, December 8, 2007.

You may remember that the most significant long-term planetary aspect in effect this past year was the Saturn-Neptune opposition. And you may remember that this aspect has a historical correlation of leaders being questioned (“special investigations”) as to “what they knew and when they knew it,” as the public becomes increasingly suspicious of whether or not it is being told the truth. Think of Watergate in 1971-72, the last time this aspect unfolded. But it wasn’t until 1973-74 that the matter was raised to the public’s awareness and the consequences took effect. Or even the quarter cycles that occurred in 1989 when George Bush Sr. was president and promised not raise taxes, but did just that after being elected. Or Bill Clinton in 1998 (another quarter cycle of Saturn-Neptune) saying right on television that “I never had sex with that woman,” only to find out a few weeks later that wasn’t exactly true (depends on what the meaning of “is” is). What happened in 2006-2007 may not be fully known right now. But chances are it will be coming out within the next two years, and maybe even few months. The thing is, American don’t like to be lied to by their leaders. They don’t like to be duped into entering wars either without verifiable intelligence that supports the threat their leader tells them is present.

Is Iran a threat? Is the leader of a country who claims that Israel needs to be wiped off the earth a potential threat? I tend to think so. But the credibility of those who oppose this leader is severely hampered when their own words – or the words of the highly regarded intelligence agencies - are found to be wanting in accuracy. And when that happens, it is not surprising that one’s desire to do what he wishes is severely curtailed by his opponents. And that is not uncommon when transiting Saturn sits right on one’s natal Mars for a few weeks. The good news for Mr. Bush is that this aspect leaves in about a month. The bad news it will return again in a couple of months. The consequence of what is being learned now is not over.