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The World At Large
Week beginning October 19, 2008
by Randall Ashbourne

Astrological conditions affecting stock markets combined with technical analysis

Click here for a full printable version of this report including technical charts in PDF format

Stock markets worldwide remain dangerous even for very short-term traders for as long as the mob mentality rules.

As I sit in Bangkok on Saturday afternoon beginning to write this report, this is the principal headline on the US Yahoo Finance site:

“Fallout from financial crisis hammers housing”

The cause of the chaos has suddenly transformed into its victim. We’ve moved from the fallout of the housing crisis hammering the financial system to its exact opposite.

In fact, neither is really accurate. The cause of the current crisis was simply a series of failures of common sense and sound management; failures now displaying themselves in the behaviour of stock indices.

Last weekend, I listed the good, bad and worse news and in defining the bad, said:

“There is a third scenario, which is really only a nuance of the primary themes – and it is that Wall Street found a bottom in Friday’s erratic trading, but it will produce a bounceback rally of only first or second degree.

If that is the case, the rally will fail by this coming Thursday, or by October 28th, and there will be another freefall.”

The problem with finding a “bottom” on the Friday was that it was not perfect timing. Had the American indices acted in a sound, common sense manner, last Monday would have been spent testing and probing Friday’s bottom.

That would have been reassuring because it would have set New York up for a cyclical rally lasting a minimum of 30 days and probably at least 45. But Wall Street wanted instant gratification. Chicken Little’s feather suit was thrown aside and Pollyanna’s party frock was back in vogue as the S&P 500 surged 12% in a day.

It left the index extremely vulnerable to another sudden freefall. Which didn’t take long to arrive as the Street shifted again from drag queen back to drama queen. We could be back in Pollyanna mode this week – but it may be almost as short-lived.

On the astrological level, significant aspects are still unfolding over the next two months which suggest continuing volatility; and on the technical level, the whole zone is littered with significant turn dates and Fibonacci clusters.

They are not the “reasons” for the turmoil, merely signposts.

So, let’s review the signposts to see if we can get a workable roadmap.

We’ll turn first to the Bradley Model turn dates. There were two in rapid succession in September – the 9th and the 20th. The first was a non-event, a very temporary down day.

The second occurred on a Saturday and the previous day, the 19th, marked the last significant High before this freefall started.

The next Bradley turn date does not arrive until December 14th.

In early September that date seemed too far away to mark a potential bottom turning point in the Bear.

With everything that has happened since, however, we need to consider it again; this Bear is breaking historical standards on an almost daily basis.

In the discussion we had about Bear markets a couple of weeks ago, I pointed out the normal behaviour of markets coming back to retest the Low a couple of months after the initial “bottom” was recorded.

At this stage, with the damage that has been inflicted, it seems unlikely that indices will be able to better their September high points before December – especially with major “translations” of the highly-negative Saturn-Uranus Opposition happening all the way into early December.

That Opposition becomes exact on US election day, but receives another huge boost of energy in the first two weeks of December when the Sun, Mercury and Mars set up a Tsquare formation.

The final near-term hit of the Saturn-Uranus Opposition coincides with the Bradley Model date, when Mars squares Saturn.

The possibility is then that the Bradley date will be significant – and that it may coincide with either a new Low, or a retest of the October 10 “bottom” … or whatever new bottom is recorded in the meantime.

If that is the case, the wild swings are going to continue.

In terms of significant Fibonacci dates, one is due this week – on Thursday – and another is due on November 20th. But there are other Fibonacci clusters between those periods – for the first three days of next week (when Mars sextiles Jupiter and we get a New Moon in Scorpio), and again around November 10th.

This weekend, Venus moves into Sagittarius, a sign which is less destructive and more optimistic than Scorpio; it’s also a sign prone to exaggeration, so the indication is we may see more mad Pollyanna days.

The other significant piece of astrological trivia is that Mercury is Direct again. The last time that happened, in June, stock markets resumed their freefall.

Volatility Index [chart]click to view this chart and download the entire PDF file.

Technical indicators are continuing to show negative divergence from the panic readings being recorded by the VIX, which measures the level of fear among traders.

Both the VIX, whose data goes back only to 1990, and its predecessor, the VXO, whose data goes back to 1986, are at record highs.

While the extreme readings combined with indicator divergence suggest the mood of
utter despair should ease up, the sheer size of the VIX bars over the past week paint an
uncertain picture.

The mood swings of the market are likely to continue – and as we review the patterns on
the charts of the indices in the following pages, we’ll see the danger signals.

Dow Jones Industrials
[chart] click to view this chart and download the entire PDF file.

All three technical indicators suggest there is plenty of room for more upside.

But the price chart itself is sending a different message – a contradiction likely to be resolved this week.

The long red horizontal is the minimum to which prices should rise. The blue downtrend diagonal is the minimum level that prices have to trade above before we have any real hope that the Bear is waning.

Now, while it would be unrealistic to expect the DJI to get back to the long horizontal level in one, unbroken rally, the fact that it tried and failed, leaving a “space”, has left it vulnerable.

The price now appears to be tracing out a small pennant – and that is bearish, leaving open a real possibility this downleg has not completed. There is a band of Support in the 7000/7300 range – 7181 being the bottom of the previous Bear in October, 2002.

CLICK HERE to view the rest of the charts - The S&P 500, Nasdaq Composite; European charts, London, Paris, Germany; Asian charts, India, Japan, China – Hong Kong; Australian ASX 200 - download the FULL version of this report with all technical charts and further comments. (PDF format)

The World At Large is delivered in advance to Astrological Investing Premium Member subscribers.  Randall Ashbourne is a former journalist and political strategist residing in Australia. *QHT Technical Charts created using Quick Harmonic Trader Software, by P.A.S. Astro-Soft, Inc. makers of Galactic Investor Astrology software.


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