Merriman Market Analyst

Review and Preview

The second of three passages of Jupiter in square to Uranus (May 10), and trine to Saturn (May 6), has come and gone. And still the Dow Jones Industrial Average (and some other world indices) continues making new all-time or multi-year highs. What gives? The subject of this week’s column is to explore astrological factors that pertain to this “blow-off” pattern, and what we can learn about astrology from such types of markets.

First of all, we once again witness the explosive and unpredictable quality of Jupiter and Uranus, especially in a hard aspect. One would have expected this signature to coincide with a big reversal, and perhaps it still will as it has a historical orb of 9 trading days. But it is interesting that this signature has done exactly what was expected of it in Japan, where the Nikkei index completed a probable primary cycle crest exactly on May 10, and then fell below some important support levels last week.

But what we have here in the U.S. stock market (well, the DJIA and S&P, but not the NASDAQ Composite yet) is what is referred to in market terminology as a “blow-off.” When you get such strong rallies that seem like they will never correct, and when technical sell signals seem like one failed signal after another, the market is not acting “rationally.” Should you assume (as many do) that “the markets have changed?” That they are different now? Or worse, that your methods (or your analyst) has “lost it,” and these studies don’t work anymore? Well, yes you do think that way (especially if you are relatively new to markets). But you do that only at your own future peril.

During “blow-offs,” no coincident (or leading) technical, cyclical, or geocosmic signal will work, except if you are a “trend following” technician. And astrology’s value is as a market timing tool – a tool that pinpoints reversals. In “blow-offs,” you don’t have reversals of any significance. You just have one break-out after another to new highs or lows– until that market exhausts itself. But here is the thing to note: “blow-offs” are rare. They happen less than 10% of the time. When they are in effect, all market timers are goats, and all trend followers are heroes. And once the “blow-off” ends, those 80+% correspondences between cycle highs and lows to geocosmic and/or cyclical and/or technical timing signals return to their historical rates of frequency. Astrology can be useful in timing the start or end of a “blow-off.” But during the “blow-off” itself, the reversal indicators are not going to work in that market as you would normally expect. They will work in others markets (i.e. like the Nikkei and grains right now), but not the “blow-off” market (like DJIA and S&P right now).

OK. So what is the astrological correlate to this? When something acts “out of the ordinary,” what do you think it is? If you have been reading these columns, or study astrology, then you know the answer is Uranus. And when it goes much higher or lower than anyone expects, you can also anticipate it is the exaggerated influence of Jupiter.

And just to check, you can look back to the last time Jupiter formed a hard aspect to Uranus. That was the opposition of August 29, 2003. You may remember that was the last time when it seemed that we waited forever for the 50-week cycle trough to unfold. It didn’t happen “on time,” in October-November, as we expected (one year after the 4-year bottom of October 10, 2002). Like today, the U.S. stock market was in one of those “blow-offs,” where every correction was mild before returning to the never ending bull run. But once the “blow-off” ended in February 2004, the cycles and the astrology signals returned to the same reliable correspondence as observed over so many decades (and even centuries). From February 2004 through September 2006, the correspondence between astrology and the U.S. stock market was impressive, Once this “blow-off” ends, I have no doubt that the pattern of reliable correspondence between stock indices and astrological turning points will resume. In the meantime, just trade markets that do respond to these indicators. There are always plenty that do. But stay away from “blow-offs,” for these timing studies don’t work as well during those periods.

Short-Term Geocosmics

We are entering another pre-holiday week, ahead of the Memorial Day holiday of Monday, May 28. This week will also find Neptune turning stationary retrograde on Thursday, May 24. It is hard to think that the investment community will suddenly turn cautious and rational under these conditions. More often than not, stocks continue higher prior to a holiday, and if the market has been acting delusionary, Neptune stationary isn’t likely to change that. Neptune is the principle of fantasy, wishful thinking, and idealism. It also rules rumors and misinformation.

Long-Term Thoughts

Speaking of Neptune… we will continue with our analysis of the Saturn-Neptune opposition, and its correspondence to collective psychology as we witness today’s current events unfolding in world politics (and mostly USA politics). This 36-year cycle last unfolded in 1971-72, when the Watergate burglaries took place that ultimately led to President Nixon’s resignation in disgrace, some two years after the event. As we look back on any hard aspects between Saturn and Neptune (approximately every 9 years), we observe periods in which major political leaders (or their administrators) were under intense scrutiny regarding their honesty and trustworthiness. It is a time of being ethically challenged. Many leaders get involved in scandals and the consequent pressures to resign. At first there is denial, but failure to resign does not stop the witch-hunt and the apparent public desire for some blood-letting. It seems that the longer the object of the public’s wrath tries to avoid resignation, the greater the pressure and the scandal becomes.

Today we see this dynamic at work in the case of U.S. Attorney General Alberto Gonzalez. There was more scandal this week as Gonzalez’ former deputy attorney general James Comey “…. stunned Washington Tuesday with his account of a March 2004 confrontation with Mr. Gonzalez, then White House counsel,” according to Thursday’s Wall Street Journal. It seems that on that day, Gonzalez and White House Chief of Staff Andrew Card tried to pressure then Attorney General John Ashcroft into reauthorizing Bush’s warrantless domestic eavesdropping program. The confrontation took place in a hospital where Ashcroft was in seriously ill condition with pancreatitis. He was not suppose to have visitors, but Gonzalez insisted on seeing Ashcroft anyway, and having him sign off on this matter. Ashcroft would not do it. The revelation of this event has led to more congressmen (and women) demanding Gonzalez’ resignation. It has also created further suspicion of a President who oversteps his powers (again) with this domestic spy program. In other words, there is yet another scandal as we enter the Neptune stationary week.

But there is another level of psychology that is going on with this Saturn-Neptune opposition. Members of both parties are experiencing great inner turmoil on what to do about the Iraqi situation. Such turmoil is consistent with the contradictory nature of these planets, where Saturn wants to be accountable and make others accountable, and Neptune seeks to find a path of peace and forgiveness, or a “politically correct middle ground” that will not hurt one’s political standing. Columnist Brian Dickerson (Detroit Free Press) expressed this personal crisis very well this week, where he wrote, “(some) believe the United States, having reduced Iraq to virtual anarchy, simply cannot afford to leave until a stable government friendly to U.S. interests is in place, whatever the cost… (Others) are convinced that the U.S. occupation has become pointless (and) believe the only way to support our troops is to fund their doomed mission indefinitely.” He concludes, “… there are no good options for policy makers in Iraq, only a choice between confronting the futility of the occupation now and ignoring that futility for another week, another summer, another hundred American lives… Better a horrible end than horror without end.”

This is the dilemma tearing Americans apart, just as it did the last time Saturn and Neptune were in opposition to one another. In the early 1970’s, America was also trying to come to grips with its role in a conflict in Viet Nam. Eerily similar combinations of issues were present then as today: an unpopular war that eroded the nation’s confidence in its leadership, followed by a series of scandals involving that leadership. And yet as the scandals mounted, the stock market continued higher and higher, to new all-time highs even. It wasn’t until the investigations began into what Nixon’s staff was doing, and the testimonies of that staff started to reveal a pattern of questionable accountability for these activities, that the market began to break. And within 23 months, the Dow Jones Industrial Average lost 46% of its value (January 1973 through December 1974). And of course, by then, the President had resigned. Perhaps there is a reason why this administration does not want its staff to be subject to testifying under oath. Maybe they know the history of what has happened before in these types of circumstances. Maybe we won’t be know until after the next election, when another party possibly holds the office.

I don’t know where or exactly when this market will top out. No one knew back then either. But many of the causes for the break in equities that eventually occurred took place under the Saturn-Neptune opposition. And they were related to “lack of confidence” issues in the leadership of the government. The same opposition is in effect again, 36 years later, August 2006 through June 25, 2007. I am inclined to believe the final top will not happen until Saturn and Uranus come into opposition, November 2008 through July 2010, +/- 9 months either side. For now, with Neptune so prominent through June, you still can’t believe what you hear or read about “the government and its leaders.” Both sides are likely manipulating the news.