Merriman Market Analyst

Review and Preview

When we hit it, we hit it big. And when big signatures unfold in the heavens, we are usually right there to witness something big unfolding in the financial markets. The end of last week was such a period, and one of the four periods listed on page 41 of  “Forecast for 2007” when something significant would likely happen in stock markets, based on transits to the New York Stock Exchange chart (founded May 17, 1792). The dates given therein were: February 15-26, March 27-April 4, June 13-25, and July 26-August 2. On Thursday and Friday, the DJIA fell 311 and 208 points respectively. In our Wednesday night letter to daily subscribers, we wrote, “It is looking more like another sell off into at least Friday based on the transit of Mars to 23 fixed signs… There could be another steep decline by Friday’s close... Aggressive traders may want to sell for a 1-2 day decline. I would look for the break to start in China. Friday could be nasty.”

But the end of this past week (and early next week) is not solely the domain of a Mars transit. It is also the time in which Venus turns retrograde and the full moon takes place with the Sun in Leo. As stated in last week’s column: “On July 27, Venus will reverse its apparent direction through the heavens from 2 degrees of Virgo. It will remain in retrograde through September 8. Within 12 trading days of Venus turning retrograde, the U.S. stock market has had a 78% correlation to primary or greater cycles from which prices reversed substantially. But it is not only equities that are affected by this geocosmic event. All markets can experience major turns around this time, for Venus rules values and assets of all kinds.” Indeed, it wasn’t only stock indices of the world that went ballistic. Precious metals also took a big hit, with Silver falling nearly a whole dollar from its monthly high on Tuesday at 1358, to its low on Friday at 1265. Gold fell from a two-month high of 688 on Tuesday down to 657 intraday on Friday. Crude Oil, on the hand, soared to 77.24 on Thursday, just slightly below its all-time high of 78.40 attained one year ago. Likewise the Treasuries also soared last week, with T-Bonds and Notes reaching their highest level in two months.

Short-Term Geocosmics

Venus rules relationships, but it also rules correlations, or associations between areas which appear to have an affect on one another. For instance, it is said that the precious metals have a relationship to currency prices. Since they are traded in U.S. Dollars, the conventional wisdom holds that Gold and Silver prices appreciate as the value of the Dollar depreciates against other currencies. When Venus turns retrograde, as we note is happening now through September 8, it is oftentimes assumed by astrologers that relationships of love from the past re-appear. Or, we note that psychologically inhibiting patterns that have their roots in the past in regards to how we behave in relationships arise again. We may have thought we transcended these issues, like jealousy. But something happens, and we start to exhibit those same types of behaviors again that led to problems in previous relationships. But in terms of markets, we notice something different: the correlations that we have come to expect between various financial markets, like precious metals and currencies, may no longer seem to work. They seem to operate independently of one another. Traders need to be aware of this possible switch in association between previously related markets over the next 6 weeks. Otherwise, this period can be extremely frustrating, for things just don’t seem to “make sense.” Markets don’t behave like we thought they were supposed to behave. We may already be seeing this in the concept of the “Yen Carry-Trade,” which has basically been a “free lunch” for traders who have been buying U.S. stocks and selling the Japanese Yen to take advantage of a discrepancy in interest rates between the central banks of the two countries. In fact, one of the common occurrences noted historically during the times of Venus retrograde is that (some) Central Banks suddenly reverse their policies, and start floating messages that they will switch from being accommodative to restrictive, or vice-versa.

So where does this leave us in terms of cycles in stock indices? Has the 4-year cycle finally topped out? Or is this just another “fake out,” to be followed by another rally to new highs in the next few weeks? Time is running out for the 4-year cycle. It has to happen in this primary cycle, or else I will have to concede that for the first time since I have been a market analyst (approximately 30 years), I missed the 4-year cycle. If we don’t get a 10+% decline by the end of this November, then we will have to re-label our cycles to reflect that the 4-year cycle bottomed in either October 2005 or July 2006. If that is the case, it will be the first time in the history of the DJIA that the index did not fall at least 12%. Those two lows represented declines of only 7.5% and 8.5% respectively. In over 85% of 4-year cycles dating back to 1893, the decline has exceeded 20%. It is still my bias that this market will fall at least 10%, and perhaps more than 20%, by the time this new primary cycle ends. For the short-term, the high of the 4-year cycle could very well have been put in on July 17 when the DJIA topped out at 14,022. That was within 12 trading days of Venus turning retrograde, when primary or greater cycles unfold with 78% regularity (that’s huge!). However, this is a geocosmic reversal zone right now, and a rally is likely to unfold. If the rally is powerful and carries into Venus direct, we could still see new highs before an even more powerful decline unfolds. But if the rally is only corrective in nature, the decline to the 4-year cycle trough is already in process and probably won’t end before October-November, when this currently primary cycle is due to expire.

Long-Term Thoughts

Personal judgment cycles. When are we more apt to make errors in judgment? When is it more likely that our assessment of a situation – of what will happen – is completely wrong? What does astrology say about that, and how might this issue affect financial markets and the political landscape over the next few years?

In last week’s column, I wrote about the forthcoming transits to the chart of FED Chairman Ben Bernanke. I can now confirm that he was born December 13, 1953 in Augusta, Georgia, around noon, thanks to colleague and market analyst Garrett Jones. I pointed out that in 2008-2009, Uranus would cross his natal Moon, in a T-square to his natal Sun-Jupiter opposition at 21 Sagittarius and Gemini respectively. Around the time of the U.S.A. presidential election in November 2008, transiting Saturn will be in opposition to Uranus, and thus form a grand square to these three natal planets (Moon, Sun, and Jupiter). The point that I wish to add to last week’s column is that such transits from Uranus can indicate a period of time in one’s life where things do not unfold as expected. It is as if one is completely surprised by the way things are developing, and sudden changes in direction are necessary, or even forced. In the end, it appears that one completely misjudged the situation. As astrologers, we say this is usually an exciting time in one’s life, and things can work out well if one is completely flexible and willing to change quickly. But in reality, as astrologers, we know this is usually an unstable time when one’s plans have to be altered quite significantly. Consider that Uranus rules earthquakes and divorces.

Uranus is not the only long-term transit that correlates with either poor judgment or inaccurate assessment of a situation. Transiting Neptune in hard aspect to sensitive natal points may be even more troubling. Here one is more prone to wishful thinking, over-optimism, or even delusional thinking. As an example, note that Mr. Bush has been under one hard aspect of Neptune after another to his natal planets ever since February 2001 (Neptune opposite Ascendant), and they don’t end until January 2009 (Neptune in opposition to his Venus). In other words, the nearly entire term of his Presidency has been under hard Neptune transits. Although his idealism and patriotism may be applauded by many, his judgment in decision-making, and his assessment of current and future situations, has been under constant criticism as being “wrong,” and is the source of his extremely low approval ratings. The concern is this: will Mr. Bernanke go through a similar experience when his natal chart is hit by transiting Uranus? And if so, where did he misjudge the situation, and how will this be reflected in financial markets? Mr. Bernanke is one person we really don’t want to see make a serious misjudgment.