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Breakout – or breakdown – is now imminent
on all the world’s major stock indices. In the next few days,
prices must break to one side or the other of the containment lines
which have been pressuring them into an increasingly narrow range.
It is possible we could have as much as another
week of range-trading, but that time span is getting towards the
outside edge of what is likely.
If the break is to the downside, we are likely
to see a retest of the January Low and it is possible we could see
a marginally lower spike. If that occurs, the recovery is likely
to be sudden and explosive.
If the break is to the upside, the rally will hit
some rough patches, but it is likely to continue for at least 30
days and may go as long as 90.
There are valid technical and astrological reasons
for believing January may have marked The Low.
The spike hit key long-term Fibonacci retracements
of the entire Bull campaign. It was a once-in-a-generation panic
sell-off. And as stocks began hitting the bottom, the turnover was
massive – a record 7 billion shares changing hands in New
York.
Important point that. Somebody was buying …
buying massive numbers … which is why the candlesticks for
January 22 and 23 show such long tails. Buyers came out with huge
order books, which forced the indices to close those days way above
the intraday lows.
Legendary US investor, Warren Buffett, whose motto
has never been to buy good companies at a cheap price, but to buy
great companies at a good price, had his chequebook out last week.
Reportedly, Buffett has put almost $1.6 billion
into Swiss Re, the world’s biggest reinsurer; bought heavily
into BNI, the number two US railroad; increased his stake in Wells
Fargo to 9.4%; and also taken stronger positions in Kraft Foods
and the British
drug firm, GlaxoSmithKline.
We have to be clear that what stock markets loath
most is uncertainty. Once something is actually known, it can be
more easily factored into the consensus thinking.
What has caused the turmoil in recent months is
uncertainty – about the spread of the US sub-prime fallout,
about whether the American and European economies are heading into
recession and, if so, how deep and long that recession will go.
At the moment, most Western stock indices appear
to be discounted down to what is virtually a worst-case scenario.
If the hard evidence continues to mount suggesting
the mid-term outlook has been unduly pessimistic, markets will rebound.
And that evidence does continue to mount. Retails
sales have not been as bad as many expected, bank credit to both
consumers and businesses continues to hold up, regardless of TV
tales of tighter lending conditions, and the Baltic Dry Index which
tracks global bulk shipping rates has climbed 24% since January,
pointing towards a resurgence of strength in the world economy.
And the other factor which has to be taken into
account is inflation, which has climbed back above 4% globally,
despite the artificial figures used by Central Banks which attempt
to minimise the impact of rising food and transport costs.
In last week’s report, I showed a chart of
the Dow Transports and indicated the price pattern we saw in that
index’s daily chart would confirm the start of a strong rally
if it were to be repeated in the industrial indices.
There is a significant turn date indicated for
the first week of March. Interestingly, it is not just the astrology
which points to this as an important period. Three different types
of technical barometers also produce likely turning points from
March 3 to 6.
Overall, we continue to see signs that the financial
crisis will continue for some time and there will continue to be
questions about how far its impact will spread. But, we also see
signs it is not an outbreak of economic Ebola.
Pointing out the contrarian behaviour of the Transports
a few weeks ago, I asked the question of whether truckies were now
being paid to carry air. Now we have firm figures that global shipping
rates are recovering fairly strongly.
BNI has indicated no fall-off in freight within
the US – and is projecting there will not be in 2008.
And we have Berkshire Hathaway buying not millions,
but billions of dollars worth of stock … and a very big chunk
of it has gone into financial companies.
Neither, of course, is a guarantee that general
stock prices will not suffer further. But, it certainly raises the
question of whether the Oracle of Omaha would be buying quite so
heavily if he believed we’ve only just completed the first
downleg of a long-running new Bear market.
We will take a closer look at the technical indicators
as we study the individual charts. It is, however, interesting to
note that while many indicators gave new Buy signals in the early
part of last week, they had reversed the call to a Sell by the end
of the week.
This is often the case when Mercury is Retrograde.
Computers do funny things, communications go awry, and even technical
indicators can give false readings.
Astrologically
Well, that period is about to end because at 12.57
(Sydney time) on Tuesday, Mercury resumes Direct motion from a geocentric
perspective.
Before that, on Monday, the Lesser Benefic, Venus,
moves into Aquarius … the planet which symbolises money moves
out of restrictive Capricorn and into the sign which rules stock
markets and company profits.
And it’s followed the next day by Mercury
going Direct. Effectively, the symbolism here is that communications
regarding financial conditions and profits is about to become clearer
and subject to less revision.
These are the two most important astrological indicators
for the coming week, although the Full Moon at 13.32 (Sydney time)
on Thursday is also a Lunar Eclipse. This should reemphasise the
energies unleashed at the Solar Eclipse on February 7, when the
ASX came down strongly in the couple of hours leading towards the
aspect and began recovering strongly as it became exact.
This week will finish with the Sun heading towards
an opposition to Saturn, to be followed on the 25th with a Mars
trine to the Node, which will also re-emphasise the eclipse energy.
However, it is the first seven days of March when
we should have a very clear signal of a significant market turn.
On March 4, Mars changes signs to Cancer. The first degree of all
four Cardinal signs is indicative of an extreme high-energy point.
A few days later, on March 7, Mars will oppose
Pluto.
It is this period – March 3 to March 6 –
that also throws up many technical turn indicators, ranging from
Phi dates, to Fibonacci dates, to Gann dates, to cycle dates.
This could mean we should not place too much reliance
on the direction of the markets until the first week of March.
Ideally, the early-March aspects will coincide with
a Low because the combination of technical and astrological energies
would give us a fairly clear signal of the start of a sustained
and strong rally.
It would also fit the pattern … that at this
stage of the American Presidential cycle, markets tend to make a
strong Low in the first quarter of the year before relaunching into
a significant rally phase until later in the year.
Now, let’s turn our attention to the charts...CLICK
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The World At Large, by Randall Ashbourne 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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