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The World At Large
Week beginning October 5, 2008
by Randall Ashbourne

Astrological conditions affecting stock markets combined with technical analysis


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

The Dow Jones Transport index and the Russell 2000 have collapsed, removing the potentially Bullish set-up of positive intermarket divergence in the main United States indices.

American markets may bounce briefly early this week, but severe technical damage has been done to charts worldwide since the last World At Large report on September 21.

In that report, I indicated the conditions were ripe for the rally to continue and laid out two primary scenarios – and two alternatives.

I also indicated that narrowing Bollinger Bands on the weekly chart of the DJT “is a sign of an approaching sudden move”. Displaying the DJT’s monthly chart for further analysis, I indicated the most recent price Highs “were not endorsed by new highs in any one of our three indicators” and that the move was likely to be down.

The first of the two Alternatives to the primary scenarios I outlined was this: “The first of these is that we’ve just witnessed a massive blip going into options expiration and that the rally is a first degree countertrend (1 to 4 days) which will fail by Tuesday and the markets will resume their freefall.”

As it turned out, it failed on the third day – massively – and took down the Transports and the Russell 2000 with it. And worse was to come, not only in the US, but also in Europe where a bank a day has been collapsing for the past two working weeks.

We now appear to be within the final downleg of this stage of the Bear and the risk of a crash-like decline is extremely high.

Given Wall Street’s manic mood swings, frankly anything is possible.

The primary downside target for the Dow Industrials is a mere 600-or-so points below Friday’s close – and the timing target for a bottom is only 5 to 11 trading days away.

However, given the irrational and emotive plunges and bouncebacks and the fact the DJI is swinging around by almost that much in a couple of hours, it could overshoot to the downside by another 1000 or 2000 points.

The panic on Wall Street and Capitol Hill verges on hysteria with otherwise sane columnists and analysts screeching “socialism”, “fascism” and “moral hazard”.

Frankly, some of us who Out Here watching American Congressmen vote down the Club Fed bailout on a “principled” position to protect the taxpayer from rorts and then watching them change their votes as the Bill swells from 9 pages to 400 to include such
rort-protection measures as a 39 cent tax relief for toy wooden arrows, millions more for Nascar race track owners, and millions more for Alaskan fishermen who suffered from the Exxon Valdez disaster almost 20 years ago, harbour deep suspicions that the words “moral hazard” are spoken with a forked tongue.

This must be a particularly difficult manoeuvre when the snout is buried so deeply in the feeding trough! Moving to “socialism” in return for a 39 cent saving on toy arrows from Oregon must have the likes of Hugo Chavez and Fidel & Raul peeing their pants from laughing so much.

In fact, even the Mexicans are laughing:

The Wall Street Financial Crisis
1929 vs 2008

Wall Street Financial Crisis by El Fisgon of La Jornada-Mexico City

 

Geopolitics & Economics

Of course, none of it is a laughing matter for those awaiting retirement, or trying to continue operating a business. Everyone is affected worldwide.

The seriousness of the global impact emanating from a small area of Manhattan seems to have eluded the illustrious Congressmen facing election in a few weeks.

Global credit markets have been frozen for the past two weeks. Banks will not lend to each other – and there’s little wonder in that with another one falling over every day.

But the real point of this crisis is that they will not lend to anyone else either, even to good and solid companies and individuals. Some companies with a cyclical cash flow, for example, rely on short-term credit during the down months to help them pay bills and meet payroll. They can’t get the money.

Many others, including mining companies and manufacturers, have been forced to put expansion plans on hold midstream because the cost of financing has gone through the roof – if they can get it.

The crap has to be removed from the banking system for two reasons – to ease the capital reserve requirements and to make the banks feel more confident about lending, not just to each other, but to solid customers who need extra capital for legitimate
reasons and who are capable of not defaulting.

What the financial system needs is time – and it may be several years. The point about CDO’s is in the first word “collateralised”. While the paper itself is currently next to worthless, it is actually backed by real stuff in the real world. The paper may be
worthless because no-one can find a buyer, but the land and buildings are not. True, they may be worth less than they were two years ago.

But the hope is – if the system can be stabilised – that they will be worth much more in five or ten years. Thus, the plan to get the crap off the books and into an entity which can sit and wait for a full recovery, even if that is a decade away.

The other interesting aspect is Warren Buffett’s moves. In the past few months, the Oracle of Omaha has been buying quite heavily into selected banks and railroads.

The central tenant of Buffett’s philosophy is not to buy good businesses at great prices, but “to buy great businesses at good prices”. The pattern of Buffett’s buying seems to indicate a tendency to buy on the way down, rather than waiting for the bottom and buying in during the bounceback when there is stronger competition for the stocks available.

While the bailout package has now passed, the volatility and uncertainty continue because everyone is unsure of exactly how the measures will work – or, indeed, whether they’ll work at all.

However, we are now getting very close to the bottom of this Bear – but with the very real likelihood of retests in early November and December.

Two scenarios now seem likely.

· We have a brief bounceback early this week before the rapid downtrend resumes and a solid Low is reached during the period from October 10th to 20th, probably around the Aries (Cardinal) Full Moon and Mercury resuming Direct motion in the
middle of next week.

This would fit the time frame for the final downleg in Bear campaigns, which I’ve explained before tend to run 42 to 54 calendar days. The starting point of the countdown would be the High price on September 2nd.

There is, also, a significant Fibonacci turning point scheduled for early next week and, on top of that, various cycle analysts have the second or third week of October pencilled in as a likely bottom for the 6-year cycle.

· The second most likely scenario is that markets turn around almost immediately for a second degree countertrend (7 to 12 trading days).

This scenario would fit the more standard pattern of Mercury Rx periods, where the price of the indices goes back close to the starting point of the Retrograde period.

Astrologically

Of great significance here is the Cardinal nature of the current Lunar pattern – with the start at the Libran New Moon late last month followed by the Arien Full Moon on October 14th.

Statistically, most Full Moons occur very close to stock index Lows.

However, this pattern can invert and, instead of being a Low, the Full Moon can coincide with a temporary High.

Also of significance during the next few days is a relatively high-energy astrological burst which is drawing in Jupiter, Saturn and Uranus.

Let’s deal firstly with Venus, the money planet. It starts the astrological action this week by making a sextile to Jupiter, then one to Saturn, and closes out the week with a trine to Uranus.

The principle of Jupiter/Saturn connections relates largely to patience, perseverance and long-term strategic planning. The appearance of Venus at the midpoint adds charge to the Jupiter/Saturn Earth trine, which has still to make the last of its three hits.

By closing out the week with a trine to Uranus, this tends to suggest the possibility of a rally. Or, in other words, the sextile from the Lesser Benefic (Venus) to the Greater Benefic (Jupiter) brings an opportunity for acceptance of the US bailout package as a
measure which could boost stock indices (the trine to Uranus).

We also have this week the Sun and Mercury coming into conjunction as they both square Jupiter – a second boost to expansive energy, even if Jupiter’s capacity to generate good times is very severely hampered within Capricornian constraints.

The following week brings the Full Moon and the Mercury Direct station.

But, it is the Venus action this week we need to monitor closely to try to get some sense of what will happen late in October and into early November.

Because that is when this Jupiter/Saturn midpoint is going to get a real hit … and it’s going to happen just as Saturn is making the first of its exact oppositions to Uranus, the negative energy of which has been unfolding all year as it got fired into action by transits of the Sun, Mercury, Venus and Mars.

We’ve been discussing this one all year and the fast planet transits acting as a trigger show just how deeply nasty this Saturn/Uranus energy is. I have a longtime trading friend in Australia who has always avoided stocks undergoing a Saturn/Uranus transit.

Her interpretation of the pattern has always been a very blunt: “sudden death”.

Late in October, the action planet, Mars, will conjunct the Jupiter/Saturn midpoint and repeat the Venusian trine to Uranus.

The weekend after next, Venus will move into Sagittarius, a sign with a distinctive capacity to exaggerate the good times. Big moves occur in stock indices with planets in Sagittarius, even the temporary passage of the Moon each month.

But there is potential danger looming in early November when this “exaggerated” Venus suddenly squares both Saturn and Uranus, just as Saturn’s opposition is becoming exact for the first time.

And in early December that pattern will be massively reignited when the Sun, Mercury and Mars all align in Sagittarius to give the Saturn/Uranus opposition a massive charge of energy.

By that stage, Venus will be out of Sagittarius – but, by no means, “unexaggerated” because it will be conjuncting Jupiter.

In short, even though various technical indications such as Fibonacci time zones, cycle turn zones and the historical evidence of Bear trend patterns all suggest we are now very near a potential bottom-of-the-Bear, we know there are a couple of very negative astrological periods coming in early November and early December.

These tend to suggest the final downwave is still developing, rather than being close to an end … or that we will at least get two further retests of whatever bottom develops in the coming weeks. Wall Street holds the key, of course, and its reaction and (probably) over-reaction during the next two weeks.

The point of going through the astrological energy unfolding over the next two to three months is simply to serve as a warning that any V-shaped looking bounce is ultimately likely to become a W or, Heavens forbid, even a VW – a Beetle recovery.

UNITED STATES
Philadelphia Banking Index Monthly[chart] click to view this chart and download a printable PDF file.

Let’s start our technical review by examining the US Banking Index, since it is the banks which caused the problem and which need to be refloated higher before confidence can be returned, not merely to stock markets but to the wider economic outlook.

[charts and comments follow...CLICK HERE to view the charts and download the FULL printable 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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