Merriman for market timers Jan 10
mmacycles.com
MMA COMMENTS FOR THE WEEK
BEGINNING JANUARY 10, 2005
Review:
Last week was about as volatile and extreme as one would expect under the Mars square Uranus aspect that anchored the critical reversal period of January 3.
In the mundane world of astrology, this coincided with the worst natural disaster ever in terms of human lives lost in the recent Tsunami of many Pacific Rim countries. But it also coincided with a deadly fire in a Buenos Aires nightclub in Argentina that killed 188 people and led to the resignation of the city’s security chief after it was learned that all exit doors were locked. And during this same time window, the Iraqi insurgents have escalated their pre-election reign of terror as more soldiers and civilians are killed every day now.
During this same powerful geocosmic time frame, many equity markets made new cycle highs – and even multi-month and multi-year highs – early last week, right on schedule per the critical reversal date described on this column for January 3, +/- 3 trading days. It was a good call. Not only was that reversal zone notable for equity markets, but currency, precious metals, and grain markets also made significant cycle lows or highs.
In the U.S., the S&P futures index and NASDAQ Composite cash index made a new 3-1/2 year high on Monday, January 3. However the Dow Jones Industrial Average and the NASDAQ futures index fell slightly short of a new high, which resulted in an Intermarket bearish divergence signal. And, as this occurred right on a critical reversal date, each of these markets commenced a sharp sell-off in to the end of the week, closing near their weekly lows.
The same pattern of an early week new cycle high, followed by a sharp sell-off, was also noted in Hong Kong, and to some degree, in Japan and Switzerland. The Nikkei, for instance, formed a new multi-week crest on Tuesday, January 4, the first trading day of the year, at 11,547. This strongly suggests that the 10,575 low of October 25 was a longer-term 18.5-month cycle trough, and the trend is now up for many months. However, like the S&P, NASDAQ, and DJIA, a corrective decline is due first before the market resumes its bullish trend.
But in Europe and Australia, the rallies to new all-time or multi-month highs in equity indices continued right into the end of the week. There was no sharp correction.
The Euro and Swiss Franc topped out 1-2 days before our January 3 critical reversal date, and promptly began selling off sharply as the New Year commenced. From a high of nearly 1.3700, the Euro is now testing 1.3000. This is a major move in currencies, and fits with last week’s observation that, “Looking at past years, there are several instances where currencies rallied to new multi-year highs into the end of a year. In almost all cases, those rallies ended between the last week of the year, and the first two weeks of the New Year, and were followed by substantial declines.”
And in tandem with the sell off in currencies, Silver and especially Gold also sold off sharply. Gold dropped below 420.00. Just a few days ago, it was over 450.00. Our initial target was – is – 410-420, and eventually down to 350-375. We are now at the first target area.
Short-Term Outlook:
This coming week begins with a New Moon on Monday, forming a T-square to Jupiter, and Saturn. The square between Sun-Jupiter occurred on January 7, and the Sun-Saturn opposition will occur on January 13. It is therefore possible that a temporary end to the recent moves down (or up) could be realized between these dates. However, since the stronger reversal signal was the January 3 critical reversal date +/- 3 trading days, it is most likely that any pause here is only temporary. Supporting this argument is the fact that both Mercury and Venus leave the mostly bullish sign of Sagittarius and begin their multi-week treks through the more conservative and cautious sign of Capricorn, on Sunday, January 9. Mercury will remain in Capricorn through January 30 and Venus through February 2. I think that more significant cycle troughs will be completed during that period than right now. After all, Capricorn is a “worry” sign, and when investor sentiment tends towards “worry,” aggressive buying usually is absent. In its place come more selling, and a wish to capture profits before prices fall further. However, it is my opinion that the worry will give way to hope again amongst investors by the time we enter February.
Long-Term Thoughts:
As the Sun enters into a T-square with Jupiter and Saturn now, concerns about the Social Security system in the United States continues to grow. And so do the mixed messages coming from the White House. President George W. Bush has said raising taxes will not cure Social Security. He has promised to cut the Federal Deficit in half within the next 5 years, so that implies he won’t be in favor of issuing more debt to pay for the changes he proposes in Social Security. And he says he will not cut benefits. Well, it seems his solution to this crisis that he insists we will have to confront involves privatizing a small part of the social security program. But if you study this concept of privatization - of what? 3-6% of the funds? – it is very obvious that this will not do the job either. In fact, the cost of privatization of that small of a percentage of the program will probably lead this country into exactly the type of historical cycle indicated by the downside of the Saturn-Pluto cycle. That is, from opposition to conjunction (2001-2020), debt increases, along with taxes and interest rates, and the economy tends to go through many more recessionary periods. The danger of this phase of the Saturn-Pluto cycle is debt, debt, debt, and more debt.
Still, if the White House succeeds in transforming social security by passing privatization as a solution to a system that is not that broke, there will probably be a huge rally in stocks. It will mean trillions of new dollars coming endlessly into the U.S. stock market for an infinite number of years. At first, the financial community will celebrate this “golden goose egg.” Stocks will likely soar, especially as Jupiter in Libra trines Neptune in Aquarius through the summer of 2005. It would be like a fairy tale, a dream come true, for that community. There will be no end to the amount of monies that individuals and companies involved in handling these transactions could accrue. But it would also mean taking on greater debt by the government, for the estimated cost to implement this idea is $1-2 trillion. So after the initial euphoria wears off by late 2005, and the program starts to be implemented, and debt starts to accelerate, there will possibly be a terribly painful period to both the economy and the equity markets of the Untied States, probably around 2008-2010 as Saturn-Uranus-Pluto all move into cardinal signs, forming a T-Square to one another. The last time this happened was 1930-1931. The year 2008 will be when the first segment of baby boomers will start to retire, and expect to receive their social security and Medicare benefits. But will they receive what they think they will receive, once this new program starts? Possibly not. Despite Mr. Bush’s promise not to cut back on social security benefits, an article in the January 6 edition of the Wall Street Journal states, “The White House, in a private memo to conservative allies, strongly argues that Social Security benefits paid to retirees must be significantly reduced.” Despite Mr. Bush’s promise that he will not raise taxes, it is hard to conceive how he will pay for this transformation otherwise… unless he issues more Treasury Bonds and Notes, which in turn would not support the promise to half the federal deficit in 5 years, and would lead to higher interest rates.
The ideas bandied about by our political leaders still don’t add up. And until they do, the idea of employing “collective choice and free will” in order to overcome this 72-75 year cycle of economic pain, doesn’t seem likely. The 16-20 year phase of Saturn moving from opposition to conjunction (2001-2020) seems right on target as it has in the past, from 1966-1982, and 1930-1946. And if history does repeat itself, we are soon to embark upon a very chaotic and painful journey with our stock markets, precipitated by debt, debt, and more debt. As individuals, this is the time of the cycle that we need to protect our capital. We do this by saving, and not be accumulating more debt or investing in markets whose values are subject to the increasing debt being accrued by our leaders.
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Disclaimer and statement of purpose: The purpose of this column is not to predict the future movement of various financial markets. However, that is the purpose of the MMA (Merriman Market Analyst) subscription services. This column is not a subscription service. It is a free service, except in those cases where a fee may be assessed to cover the cost of translating this column from English into a non-English language. This weekly report is written with the intent to educate the reader on the relationship between astrological factors and collective human activities as they are happening. In this regard, this report will oftentimes report what happened in various stock and financial markets throughout the world in the past week, and discuss that movement in light of the geocosmic signatures that were in effect. It will then identify the geocosmic factors that will be in effect in the next week, or even month, or even years, and the author’s understanding of how these signatures will likely affect human activity in the times to come. The author (Merriman) will do this from a perspective of a cycle’s analyst looking at the military, political, economic, and even financial markets of the world. It is possible that some forecasts will be made based on these factors. However, the primary goal is to both educate and alert the reader as to the psychological climate we are in, from an astrological perspective. The hope is that it will help the reader understand these psychological dynamics that underlie (or coincide with) the news events and hence financial markets of the day.
No guarantee as to the accuracy of this report is being made here. Any decisions in financial markets are solely the responsibility of the reader, and neither the author nor the publishers assume any responsibility at all for those individual decisions. Reader should understand that futures and options trading are considered high risk.
Copyright MMACycles 2004
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