Dow makes new all-time high while Main St. struggles

(10 March 2013)  Investors were all smiles on Wall St. last week as the Dow Jones Industrial Average climbed to an all-time high on the steadily improving US employment picture.  It seems incredible that the stock market should have achieved this milestone in such a fragile economic environment.  There is no boom, jobs are still scarce and wages are not keeping up with inflation as the average American continues to struggle just to get by.  What gives?  

The short answer is that the stock market has completely detached from the real economy.  Wall Street and Main Street have become two separate realities.  This is possible through the actions of the Federal Reserve which has endeavored to keep short term interest rates at zero and has engaged in an unprecedented program to buy trillions of dollars of US government debt.  In its effort to keep rates low and thereby punish savers and reward spenders, the Fed's QE program has freed up a lot of institutional money to seek out greater returns in the stock market.  

The Fed's intervention in the economy has therefore created an artificial floor underneath the stock market.  In a sense, then, one could say that the stock rally is "fake" since it is the direct result of Ben Bernanke and his printing press.  But no matter how contrived it may be, the current rally in the markets could conceivably continue for a long time, or as long as the Fed wants to keep up its intervention in the bond market.  Bernanke is on record as saying that the Fed could continue to buy bonds as long as the US unemployment rate is above 6.5%.  Since we're at 7.7% now, it could be many months before we reach that level, assuming of course, that the economy continues to improve. 

To be sure, this latest rally in March has been somewhat surprising since I had thought the market was more likely to weaken once Saturn turned retrograde on February 18.  While some global markets suffered losses in February, the US was down only modestly and then bounced back to new highs.  Normally, Saturn defaults to a bearish influence but it seems that there are enough offsetting positive influences in the mix here to push prices up.  We can see that there is an alignment of several slow moving planets (from Jupiter out) which is often the case when markets rise.  The Jupiter-Uranus aspect in January was one reason why stocks rose early in they year.  Saturn is in aspect with Pluto but it may be close enough to Jupiter and Chiron so that the negative Saturn energy is being overshadowed by the more positive energy of the other planets.  Both Jupiter and Chiron are more clearly positive energies and may be seen as taking the reins here in the month of March.  It will be interesting to see what happens to the markets once Jupiter completes its aspect with Saturn, Chiron and Pluto over the next two weeks.  As Jupiter moves on, there will be one less available source of bullish energy.  (N.B. Some readers may be unfamiliar with the planetoid Chiron, discovered in 1977, whose orbit lies between Saturn and Uranus.  Although our understanding of this newly discovered planet remains partial, Chiron appears to have a benevolent nature and may be correlated with favourable outcomes when in aspect with benefics such as Jupiter as is the case now.)






One intriguing celestial artifact of the new highs in the Dow (and the global rally elsewhere) is the high number of planets occupying the same degree in their respective signs.  Mercury, Venus, Saturn, Pluto as well as Chiron were all sitting at 16 or 17 degrees of their respective sign when the market pushed higher at midweek.  One of the widely accepted notions in financial astrology is that markets tend to rise and then reverse direction when many planets are in a degree-wise alignment such as we saw last week.  This doesn't necessarily mean that the market will suddenly reverse course here.  There will be other opportunities for similar multi-planet alignments in the coming weeks as Jupiter will form an exact aspect with Saturn, Pluto and Chiron.  Despite the use of clearly observable geometric patterns in financial astrology, there remains important sources of uncertainty that make simple predictions difficult.  Even with a substantial amount of interpretation, forecasting is only probabilistic at best.




Transits for Monday 11 March 2013 9.00 a.m. Mumbai

 

This week lacks any strong short term aspects and therefore becomes harder to interpret.  The Moon makes a number of very brief aspects which could coincide with some market moves, however.  Monday's Moon-Venus conjunction could be seen as bullish perhaps, although on Tuesday, the Moon conjoins Mars and Uranus which may increase volatility.   Friday's Moon-Saturn opposition would seem be lean bearish, although with Saturn in that larger alignment with the likes of Jupiter and Chiron, the outcome is less clear than one would like.


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