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.The World At Large
Week beginning November 9, 2008
by Randall Ashbourne

Astrological conditions affecting stock markets combined with technical analysis

Click here for a printable version of Week beginning November 9 report including all QHT planetarty line charts and technical charts in PDF format.

The Obama Ascendancy has made four dramatic changes to the way we must now view what is likely to happen in world stock indices.

What it means is this … there will be no further rallies deliberately engineered by the PPT in an attempt to prop-up the Republican Party’s political chances … and, perhaps even more importantly, there will be little or no PPT intervention to prevent a downside collapse on Wall Street.

We are about to find out what investors and traders really think of the state of stock markets – without massive intervention by the PPT.

It means the rallies and the declines will now be real … that rallies which break out to higher highs can actually be trusted.

It does not mean high volatility will suddenly disappear, but upside moves in Wall Street indices are now likely to become more subdued, but perhaps more sustained and consistent.

The problem, especially over the past 14 months, has been that the PPT intervened to force short-covering rallies, only to face a sudden new collapse immediately the support was withdrawn.

The downside, of course, is there will be no intervention safety net in place to stop the indices from dropping to new lows.

Nevertheless, what we should now start to see is the real state of the markets.

The next “bottom” should be solid and reliable; rallies should start to occur without wild, intraday spikes; massive daily ranges should contract towards more normal levels; and uptrends should begin to move at a measured, sensible pace, rather than one massive Up day followed by days or weeks of uncertain sideways shenanigans.

These are the two changes likely to have the most immediate impact on performance of Wall Street, and therefore world, indices.

There are two other dramatic changes also now likely to begin unfolding – one is the impact of the restoration of “hope” and “confidence” and the other is related to Democratic ideology.

Socio-Economic Overview

The single most vital component of an “economy” is not a fact or a figure … it’s an emotion; it’s a social condition.

And that factor relates overwhelmingly to how people “feel” about the future. What rules … hope and confidence … or pessimism and angst?

More than the economic data, it is the mental/emotional mood change that must occur before there can be any real chance of an economic turnaround.

We’ll come back to this in a moment, because it just might shift the pendulum away from the Doomsday Scenario we’ve been discussing for the past few months … even if the effect only lasts from a few months to a year.

The fourth dramatic change is how, and to what extent, Democratic ideology replaces the Republican version.

There are certain impacts, like changes to personal and capital gains taxes and the threat of “windfall profit” taxes, and there are still-uncertain impacts, such as opposition to free trade agreements and the stance the incoming administration might take against Chinese
imports and exchange rates affecting the Chinese currency.

The initial indications are that Obama is leaning towards a centrist, moderate view, one designed to help steady the boat rather than rocking it even further in storm-tossed seas.

Now, returning briefly to the third Obama impact … we should never underestimate the potential power of the “feel good” factor.

We have been assuming, since the dramatic collapse from the May highs, that the Doomsday Scenario has lurched onstage – that this entire freefall from last year’s highs is nothing more than the first leg down in a huge, multi-year Bear.

And that is still very, very likely.

But the assumption that we took off the table in the past few months was the possibility of stock indices breaking out to new all-time highs before the final Big Bear crash into multi-year lows sometime around 2010 to 2014.

Depending on exactly how the Obama administration performs, especially in its first few months, that is an assumption which may need to be reconsidered.

Just not yet.

Because we have some awful astrological conditions to survive in the first two weeks of December.

However, before we come to a consideration of the astrological conditions, there is some more political/historical/economic evidence which has to be given at least a small space on one side of our thinking.

Conventional “wisdom” dictates that Republicans are better for the economy and for stock market performance.

Believing it is so doesn’t make it a fact.

  •   Wall Street has jumped 10%, on average, in the first year of a Democratic Presidency, compared with less than a 2% rise   during   Republican periods.
  •   From 1948 to February, 2006, stock markets rose 15.3% a year under Democrats, as opposed to 9.5% under Republican   administrations.

Those figures are outlined in a study by Zero Alpha Group, details of which can be found at this website - http://www.zeroalphagroup.com/news/102908_release.cfm

They are bald figures and ZAG’s study goes into a lot more detail about individual factors which had a significant impact on those returns.

And the obvious caveat is that it’s not a long-term study; there haven’t been many new Presidents since 1948.

However, on October 14, the New York Times published a much longer-term study under the heading: Bulls, Bears, Donkeys and Elephants.

It goes back to 1929, during which time White House residency has been split fairly evenly between Republicans and Democrats.

The conclusion:

$10,000 invested in the S&P index in 1929 would, on Friday, October 10, 2008, be worth:

  • $11,773 if invested under Republican Presidents only
  • $300,671 if invested under Democrat Presidents only

The Republican Presidential performance would improve to a sum of $51,211 if Herbert Hoover’s reign during the Great Depression were excluded from the calculations.

The difference between a $1773 profit over 80 years and a $290,671 profit under Democrat Presidents tends to suggest that while Republicans sure talk-the-talk, they fall down a bit when it comes to walking-the-walk.

It is not my intention here to get into a political polemic. But this history of stock market outperformance must now enter our thinking, especially if the Obama Ascendancy inspires a mood change in the American public-at-large.

There is just a chance that the whole Doomsday Scenario has receded a little, become just a tad less likely to occur; we can begin putting a little more optimism into the sustainability of any rallies which develop, knowing they haven’t been engineered artificially – and to get the hell out of the way when another downtrend develops because the safety net has been withdrawn.

Astrologically …

Uranus continues to be activated in major ways for weeks to come. As we all know, it is the Shock! Horror! Surprise! factor which has symbolised the wild price swings of the past few weeks.

Remember the good old days when a 300 point swing in the DJI was a massive move?!

In the past couple of weeks, the Hang Seng and the Sensex soared over 43%, before plunging 10%; Japan’s Nikkei jumped 36%; the German DAX 32%; London’s FTSE 26%.

The ASX 200 and the Nasdaq Composite also had large swings – but not anywhere near these levels – and we’ll discuss that in more detail later.

This week: We have a Full Moon, the Sun sextiles Jupiter, trines Uranus, sextiles Saturn and squares Neptune. Venus conjuncts Pluto and shifts out of exaggerated Sagittarian mode into more stable Capricorn; and Jupiter makes the last of its current sextile patterns to Uranus.

Next week: Jupiter will make the last of its Earth trines to Saturn; Mars will change signs out of its second home base in Scorpio and into exaggerated Sagittarian mode; Mercury will trine Uranus, sextile Jupiter and Saturn and square Neptune; and the Sun and Mercury will join Mars in Sagittarius.

The final week of November: Pluto returns to Capricorn the day before Uranus goes Direct.

Technically …

We have minor turn date on Monday, which might have started Friday; there is a possible cyclical turning point on Friday this week, or Monday of next week – and we have a major Fibonacci turn due on the 20th.

Overview …

The aspects to Uranus over the remainder of the month lean towards the positive. The Venus/Pluto conjunction occurring close to the Full Moon points towards a likely shortterm trend change on Wednesday or Thursday, though it may be short-lived with the Mars sign change.

We should then, expect the markets to remain jerky while Wall Street adjusts to its new political environment.

However, the next period of highly negative astrological energy does not unfold until the first two weeks of December when the Sun, Mercury and Mars all reignite the Saturn/Uranus opposition.

It’s a pity that PPT intervention forced Wall Street to a High during last week’s first exact opposition, as we’ll see on the S&P 500 chart, rather than a Low because we could then be a little less concerned about the possibility of a retest of the October Lows during early December.

Volatility Index [click for complete printable PDF report including all charts]
(Note: charts can be zoomed in for larger viewing in the PDF format)

Volatility Index November 9, 2008

Despite the crazy 20% and 40% upswings and almost-as-wild downswings over the past two weeks, the VIX is beginning to stabilise.

We are not seeing the wild, intraday mood swings in the size of the bars. Of course, they still have a long way to contract and decline before they move back to anywhere near a “normal” mode.

Nevertheless, all four of our technical indicators point to a continuing decline in volatility. In short, we remain within dangerous market conditions until this fear gauge declines into its normal daily range and falls below 30 … and stays there.

Political reading: Be aware of the danger that might bring on a “scorched earth” policy in a bid to limit Barack Obama to a single-term Presidency.

Dow Jones Industrials[click for complete printable PDF report including all charts]

(Note: charts can be zoomed in for larger viewing in the PDF format)Dow Jones Industrials November 9, 2008

The rapid two-day slump following the election has not inflicted major damage on the technical indicators for the DJI.

On a purely technical level, the index remains vulnerable to another slump, perhaps even a resumption of the downtrend.

I opened last week’s report by saying both Bullish and Bearish scenarios remained alive in the short-term – and we were treated to a display of both.

The index still remains vulnerable to Bear moves because it has failed to take out and hold the early October spike High.

Nevertheless, the Bullish case also remains open – because we did put in a higher closing High, we may be forming a lower Low, and uptrend lines in the indicators have not been damaged too significantly.

S&P 500 [click for complete printable PDF report including all charts]

(Note: charts can be zoomed in for larger viewing when veiwing in the PDF format)

I indicated last week when showing the planetary price crossing charts that if the 500 rose to 1010 on Monday or Tuesday and could not break through, there was a danger for anyone holding Long positions.

On Tuesday, the index hit just above 1007, which is within the three points regarded as a precise hit – and withdrawal from – the exact planetary price crossing (the “A” point). Interestingly, only the 500 hit the price crossing because it put on a slightly higher percentage gain than the DJI or the Nasdaq Composite.

I have marked the Venus/Pluto conjunction price point at “B”. The 500 must not close decisively below this on the day, or it would tend to suggest the index will continue following the 1st Harmonic Venus mirror downwards.

I have put a 3 and 14 day RSI indicator on this chart – simply because the RSI 3 is a good guide to very short-term direction. Note, that both it and the more normal RSI 14 are following a rising trendline, despite the sharp downward price moves.

It suggests further rally days – at least into a possible short-term trend change at the Full Moon.

Nasdaq Composite[click for complete printable PDF report including all charts]

(Note: charts can be zoomed in for larger viewing in the PDF format)
Nasdaq-Composite

While the DJI and the 500 clearly broke above the lower High of mid-October, the Nasdaq Composite did so only marginally.

We’ve discussed many times how reading the Nasdaq and the ASX 200 as ‘leading’ indicators points to whether upside, or downside, moves are really valid. The underperformance of both during the sudden rally from late October was clearly a warning the rally was not to be trusted.

I know arguments can be made the ASX is unduly influenced by resource stocks and the Nasdaq has its own limitations. But, the performance of these two indices at key points in market movements is just too reliable to ignore.

No significant damage to the techs here – and gaps to aim for, depending on the strength of future rallies. One possible early-warning sign of weakness, however, is that the short-term blue CCI dropped deeper, despite the higher prices, than it did on October 24th.

Australia

ASX 200 [click for complete printable PDF report including all charts]

(Note: charts can be zoomed in for larger viewing when viewing in the PDF format)ASX-200


Last week, I indicated all technical indicators on the ASX 200 had turned to Buy signals and there was an unfilled gap at 4156 … filled when the index bolted out of the gates last Monday.

And, unfortunately for the index, leaving another hole behind at 4018, which the index spiked down to fill on Friday as it bounced off the Support line at 3964, which has been emphasised on our weekly charts for some time now.

We now have another hole further down – and two to be filled on the upside. The one at 4144 is likely to be filled Monday.

The CCI uptrend line continues to hold, and the points marked as “B” and “C” are reasonable targets for any medium-term rally.

ASX 200 price crossings[click for complete printable PDF report including all charts]

(Note: charts can be zoomed in for larger viewing in the PDF format)ASX 200 Planetary Price Crossings

I suspect the Venus/Pluto conjunction crossing is too far out of range for the 200 to hit by Wednesday. Both the normal lines and the “mirror” lines are close to each other.

Because it is a conjunction, the Venus/Pluto price crossing also shows up using “trine” lines. It may not be hit either if the index rallies for a day or two. However, the price is 3895 and if the index comes down into that on Wednesday and bounces up from it, it would suggest the short-term shift indicated by the Full Moon is up. If it closes decisively below that point, the downtrend may be resuming.

Also of interest are the Jupiter/Saturn trine lines. The aspect becomes exact again late next week. The prices outlined on the chart are a couple of dollars off exact – but those two price points will need to be watched for either Support or Resistance if the index hits them on Friday week.

This week they need to be watched for any potential upside limit, assuming the lower line is broken above on Monday/Tuesday as the index closes the price gap.

ASX 200 Weekly[click for complete printable PDF report including all charts]

(Note: charts can be zoomed in for larger viewing in the PDF format)ASX 200 Weekly

For the moment there is no need to change this chart.

As we can see … it still leaves both Bullish and Bearish scenarios alive. We’ve had three huge spikes higher that left the bar with a negative close … and one spike lower that left the bar with a positive close.

And we are still, after a month, no closer to a clear resolution of this pattern.

What positive divergence had been building for many months in the CCI has been broken and the red line could be turned down from the underside of the former uptrend line.

The Stochastics are trying to climb out of the Bearish zone – but are not giving a clear signal they’re about to break free.

And while the MACD signal is showing some indication of turning higher, there is no such lead from the slower, red line.

Europe

FTSE [click for chart - and the complete printable PDF report including all charts]

And despite the markets’ wild rides, the FTSE continues to behave impeccably. Last week, it managed to break free of the downtrend line to challenge Resistance inside the “spacing” zone which kept the downtrend intact after the rally out of October 10
could not rise into it.

Not only that, it managed to do it with all four key indicators confirming the push north.

I’d have more faith in the FTSE’s performance if it had any history of acting as a “leading” index. But, it doesn’t.

Nevertheless, none of the uptrend lines on the indicators has been breached – and price itself has made a higher High and may be about to put in a higher Low.

We are getting early signs of a shifting mood change … clear signs of weakness are starting to emerge in the Bearish outlook....

Click for complete printable PDF report including all text, European and Asian charts:

Further report includes Germany (DAX), France (CAC), India (Sensex), Hong Kong (HSI), Japan (Nikkei)

Short-term pessimism and medium-term optimism

Let’s just recap a little …

The political situation in the United States has compounded the short-term dangers and potentially improved the medium to longer term outlooks.

The Plunge Protection Team operates as an arm of the US Federal Reserve and is now having a big sulk.

Non-US readers need to understand the Federal Reserve is not a central bank as it is in other countries. It is a privately-owned institution created as a way of getting around the US Constitution prohibition against paper money.

USA paper currency is not produced by its government; that would be illegal and unconstitutional. It is created by the Federal Reserve, which is owned by a couple of the big Wall Street banker/brokerages.

It acts as a quasi-government authority, its membership is government-appointed and it is subjected to Congressional oversight.

Nevertheless, it is not the same sort of independent national guardian as are the government-owned central banks of most Western countries, most of which were established with extraordinarily strict rules against interference by the government-ofthe- day.

And that means the US Federal Reserve quite often displays all the characteristics of a political animal; the appointments are political; and pressure can be applied with a single phone call from the White House or the Capitol.

During the transition period, the PPT cannot be relied on to engineer rallies or throw out a safety net.

There is, therefore, a very strong risk of sharp downside moves on Wall Street in the weeks ahead. The economic data in the US is awful – and the astrological conditions in the period to mid-December feature an overwhelming number of hits to Uranus, the ruler of stock markets and company profits.

Uranus hits, as we’ve seen in the past few weeks and over the past few months, tend to provoke extremely wild price swings. Without PPT intervention likely, the wild swings are more likely to be to the downside, since rallies are now more likely to become step-bystep,
slowly-sustained movements, unaided by a massive splurge of PPT money into futures markets.

Overall, though, technical indicators are starting to show real positive divergence from recent price action, a sign the internal conditions are slowly recovering. Coupled with a potential worldwide mood change flowing from a sense of relief that there will not be another four years of the Bush/Cheney/Rove/Rumsfeld style of decision-making, early 2009 is beginning to look like a significant rally phase.

It may, or may not, take the Doomsday Scenario off the table. But it does change the game that was being played.

RA

Click to download the World Week Beginning November 9, 2008 Report with all charts and comments. (PDF format)

*NOTE: Jeanne Long, professional trader and a leader in the research of financial astrology, was a student of the works of W.D. Gann. She has authored several books on financial astrology and developed the principles used in all the Galactic Investors Astrology software.  Randall's technical charts and the planetary price line charts included in this report are created using the Quick Harmonic Trader Software, by P.A.S. Astro-Soft, Inc. makers of Galactic Investor Astrology software.

The World At Large is delivered in advance to Astrological Investing Premium Member subscribers.  Randall Ashbourne is a former journalist and political strategist who trades the Australian market..

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