As I wrote in last week’s forecast, “Doubt and increasing volatility looks to be slowly seeping into the bullish outlook.” Last week began with the Moon (emotions) in analytical Virgo Monday and Tuesday. A research note by CLSA’s Mike Mayo on “The Seven Deadly Sins of Banking” and comments by Meredith Whitney on CNBC got the week off to a negative start. Both analysts estimate that the bank’s valuations of loans on their books do not reflect permanent impairments.
When the market opened Wednesday with the Moon in Libra, negative sentiment was weighed with a variety of factors that could be viewed in a more hopeful context. (Libra energy tends to gloss over anything unpleasant.)
Libra energy also can be indecisive. The SEC met Wednesday to consider five different proposals that would reintroduce some type of “uptick rule” to curb abusive short selling. The uptick rule was instituted during the Great Depression and abolished by the SEC on July 6, 2007. Mercury was retrograde* in Cancer, indicating a high probability that the SEC will re-establish some type of breaker to prevent traders from slamming a stock.
The abolishment’s Mercury conjoins the USA’s natal Venus (nation’s wealth). Transiting Venus and Pluto are currently impacting these placements. Pluto-ruled hedge funds and private equity are for the most part against the SEC reinstating any type of restriction on shorting. Venus conjoining Saturn in Leo at the time the rule was abolished reflects the loss (Saturn) of money, particularly in bank stocks (Venus) that has occurred since the rule was abolished. Clearly there must be a Libra balance struck between shorting and deliberate efforts to destroy companies.
Summary Of This Week’s Influences: Mercury entered Taurus at the time of last Thursday’s Full Moon. Taurus rules banks, and banks and the overall market rallied after Wells Fargo (WFC) CFO Howard Atkins said the TARPed bank expects to earn a first quarter profit of $3 billion. The market focused on the bank’s big boost from its FDIC-arranged acquisition of Wachovia. However, much of that boost is probably due to the “kitchen sinking” of Wachovia’s balance sheet.
A couple of weeks ago Wells’ Chairman called the government’s stress testing of the 19 largest banks “asinine.” The government is expected to announce the results at the end of the month after these banks have reported earnings. Mercury will be in Taurus until April 30 and again from May 13 to June 13 due to Mercury being retrograde May 7-30. This correlates to the time when the government will tell some or all of these banks to either raise more capital or face an additional government injection.
Taurus is ruled by Venus. Since Venus went retrograde on March 6, the indices have largely reversed their sentiment. Yesterday Venus moved back into Pisces where it last sojourned at the beginning of February, close to where the DJIA and S&P500 are now.
Venus moves direct on Friday and will remain in Pisces until April 24. Pisces and its planetary ruler Neptune can create confusing and misleading conditions that make it difficult to accurately assess what’s really happening. Jupiter and Neptune are about to conjoin next month, which explains why President Obama sees “glimmers of hope” across the economy, and 53 out of 54 economists surveyed April 3-6 by The WallStreet Journal expect the recession to end in September. Andrew Wilkinson, a senior market analyst at Interactive Brokers, describes the current market sentiment as “contagious euphoria,” one way to describe the Jupiter/Neptune alignment. The key phrase of this planetary pair is overblown hype (which can go in either direction).
As I’ve written before, I look at Jupiter/Neptune as a hot air balloon that is likely to get punctured. Late summer to September at the latest is when the market is likely to break through the March 6 lows.
Mars conjoins Uranus in Pisces early Wednesday, increasing the potential for accidents, rebellious behavior, and surprise military action. This alignment can manifest severe weather conditions, earthquakes, and tsunamis. Power outages, computer systems, and all kinds of electronic devices have a greater tendency to malfunction now.
Unsettled and uncertain could be the best way to describe the stock market this week.
Monday, April 13, 2009 Negative trend bias could show improvement and even reverse later in afternoon.
Tuesday, April 14, 2009 Negative to choppy/mixed; strongest in early afternoon. Could weaken in the final hour.
Wednesday, April 15, 2009 Markets volatile and could move in either or both directions, but most likely sell off.
Thursday, April 16, 2009 Negative trend bias.
Friday, April 17, 2009 Choppy/mixed to positive trend bias. (Options expiration.)
*Planets do not really move backwards, but appear to from Earth’s vantage point.