Merriman Market Analyst

Review and Preview:

Due to travels in Europe and the all-day Saturday Symposium in Cologne, Germany January 20, this report will be written before markets close on Friday. Even so, it is proving to be an interesting week, as we are in the midst of the first significant time band of important multiple geocosmic signatures for this New Year, January 8-22. And within this time band, the most important signature is the Jupiter-Uranus square of Monday, January 22. Historically this aspect has a 71% correlation to the culmination of 50-week or greater cycles in U.S. stock indices, within an orb of 15 trading days, according to the studies reported in The Ultimate Book on Stock Market Timing Volume 3: Geocosmic Correlations to Trading Cycles.

Many of the world's equity markets were strong again last week - but not all. In Europe, the Swiss Stock index soared to yet another new all-time high as of Thursday, reaching 9151. Both the Netherlands AEX and German DAX indices also made new multi-year highs last week, with the DAX hitting 6748 on January 16 and the AEX up to 508 as of January 18. But the London FTSE failed to surpass its recent high of 6322 recorded on January 3, for yet another potential case of Intermarket bearish divergence within a critical reversal zone (January 15-22).

In the Pacific Rim, the All Ordinaries index of Australia soared to another new all-time on Thursday, reaching 5678. The Japanese Nikkei also attained a new 8-month high on Thursday at 17,409. This is important resistance, because of a long-term monthly trend line that shows much resistance at 17,300-17,600. If it can close above that trend line area, it could commence a very explosive upside breakout. But in Hong Kong, the Hang Seng has so far failed to exceed its all-time high of 20,554 back on January 3. It did manage to rally back to 20,297 on Thursday, so perhaps it will make a newer high yet before the geocosmic critical reversal period ends next week. If not, we will have a case of Intermarket bearish divergence for this region too.

The countries of America also show signs of Intermarket bearish divergence in this critical reversal zone. The Dow Jones Industrial Average made another new all-time high on January 17 at 12,614. The NASDAQ Composite also made a new 6-year high last Tuesday, right in the middle of this geocosmic cluster, at 2508. However, that is still more than 50% off the all-time high of 5132 recorded back on March 10, 2000. Once that high was posted last Tuesday, the Composite fell quite hard as of Thursday. This fits last week' comments, stating, “.but that (rally) could change as we get closer and closer to the powerful Jupiter-Uranus waning square of January 22. With Uranus, one would expect the upward surge - and reversal - to be led by the tech stocks (NASDAQ Composite.” In South America, neither the Bovespa nor Merval indices of Brazil and Argentina were able to make new highs last week. In fact, they continue falling rather hard from their all-time highs posted in the first two trading days of this New Year.

The big story last week was again in Crude Oil, which broke below the important 50.00/barrel level for a brief time on Thursday (it dropped to 49.90). We are within 9 trading days of that important Jupiter-Uranus square that we discussed previously as another time when Crude Oil could be forming a long-term cycle low. Gold and Silver had wide price swings the first four days of last week, but no confirmation of its trend. But the foreign currencies and Treasuries (T-Notes) did give signs of a bottom, close to January 16, which was the date that Mars ingressed into Capricorn, conjuncting the Sun of the Federal Reserve Board chart, and opposing it natal Pluto. And once again Corn prices soared to another new 10-year high, touching $4.20/bushel last week.

Short-Term Geocosmics :

There is one very important geocosmic date this week: Monday, January 22. That is the date when Jupiter will form its first of three waning squares for the year to Uranus, and at the same time, Venus will form an opposition to Saturn. Both of these are considered Level 1 signatures, the strongest correlation (71%) to primary of greater cycles in U.S. stock indices, within 9 trading days in the case of Jupiter-Uranus, and 12 trading days in the case of Venus-Saturn. It is obvious that if a primary or greater cycle is forming now, it will be a crest.

Other than that, there are some interesting ingresses that occur on Friday, January 26. Geocentric Venus moves into Pisces, while heliocentric (as seen from Sun) Venus ands Mercury both move into Aries. This combination usually has relevance to reversals in some currency prices, like the Yen to the Dollar or Euro. ?

Long-Term Thoughts :

As stated earlier, this week will witness the first of three passages of the Jupiter-Uranus waning square. The next two will unfold on May 10 and October 9. This is a 14-year planetary signature. The last time it occurred was in a one-passage event on September 16, 1993, which was just three days after a 50-week cycle trough in the DJIA. That was also the year of the "Great Flood," when the Mississippi River overflowed and destroyed much of the grain crops in the USA. I found out this week that the Rhine River also flooded that year in Cologne, Germany.

This signature represents a major theme for the year, for it was present in a T-square to the Moon in Gemini as the New Year began three weeks ago. Jupiter is in its ruling sign of Sagittarius, which - by itself - is considered very favorable, even lucky. It is a principle suggesting optimism, hope, and confidence. Indeed, if we look back at the twelve-year intervals when this occurs, we will see that equity markets have been far more often bullish than bearish (1995 and 1983 as recent examples). But Uranus is in a square aspect to Jupiter this time, and the nature of Uranus is not follow tradition, but rather to break away from that which is expected. Uranus represents surprises, and the unexpected. In terms of markets, it can coincide with either breakouts of support or resistance areas, or sudden and dramatic reversals.

In aspect to one another, Jupiter and Uranus can represent unexpected reversals of a large price swing. Jupiter tends to exaggerate. Uranus tends to be without respect for tradition or levels of support-resistance. These are not principles of markets that will trend smoothly in anyone direction. Thus there is still reason to think that the U.S. (and other) stock markets could experience a very sudden 20+% decline out of the blue, sometime this year. Everyone is focused on the economy and claims that it is strong, so there is no sign of such a decline on the horizon. But as students of market history, we know that declines are not always led by economic fundamentals. To the contrary, sudden reversals in stocks indices lead to changes of trend in the economic fundamentals. When the great stock market crashes of 1987 and 1929 happened, it wasn't because of problems in the economy. The problems were within the mechanics of the markets themselves. Speculators were overleveraged in “good” economic times. When they failed to make their margins, then problems extended to the lending institutions, and then chaos began to happen.

I bring this up, because in spite of the favorable presence of Jupiter in Sagittarius, its square to Uranus is a signature when chaos can suddenly break out, and without much warning. And if it happens, the exaggerative nature of Jupiter-Uranus can turn a little dangerous and ugly, especially given that this aspect is happening within the greater 36-year cycle of Saturn in opposition to Neptune, an aspect that can indicate depression. If the market were subject to a psychological evaluation this year, I would say it could exhibit qualities of manic (Jupiter-Uranus) and depression (Saturn and Neptune). It could be a year of many gains and new all-time highs. But it can also be a year that witnesses a sudden 2-8 month decline in which prices drop over 20% to the four-year cycle troughs. The time band for that 3-5 year cycle trough is still in effect in 2007, as measured from the last 4-year cycle trough of October 10, 2002 in the USA, or March 12, 2003 in Europe, or even April 2003 in some Asian countries. Perhaps it starts - and/or ends - nearby to one of these Jupiter-Uranus squares of 2007.