Review and Preview

I am back from 2+ weeks of presentations in Amsterdam, Moscow, and Zurich. For a synopsis of what I learned on this trip, feel free to visit my web site and read my comments at http://www.mmacycles.com/the-news/about-mma/my-forecast-2010-european-winter-tour/.

It was quite a stunning period since I left two weeks ago. Many stock markets of the world made new yearly highs between January 11-15, in concert with the Saturn and Mercury stations of January 13 and 15. Since that time, many have plummeted.

In Asia and the Pacific Rim, the Japanese Nikkei made its yearly high on January 15 at 10,982. Two weeks later, on Friday, January 29, it closed at 10,198, a loss of 7.14%. Australia’s All Ordinaries index made a new yearly high of 4984 on January 11, and declined to 4592 on Friday, January 29, a loss of 7.86%. It was even worse in India and Hong Kong. The NIFTY index of India topped out at 5310 on January 6, but then fell 10.25% to 4766 on Friday’s low. The Hand Seng fell from 22,671 on January 11 to a low of 19,916 on Friday, January 29, a loss of 12.5%. That high in January did not take out the yearly high of 23,099 on November 18, made under the first passage of the Saturn-Pluto square. Now we are entering the second passage of this same aspect on Sunday, January 31.

In Europe, similar declines were noted in some of the indices. For instance, the German DAX fell from a yearly high of 6094 on January 11 to a low of 5540 on January 28, a loss of 9.1%. London’s FTSE fell from its yearly high of 5600 on January 11 to a low of 5145 on January 28 and 29, a decline of 8.1%. Russia’s MICEX index also had a sizable decline, falling from a new yearly high of 1491 on January 20 to a low of 1363 just one week later on January 27, for a loss of 8.6%. Much more benign were the AEX of Netherlands and SMI of Switzerland. The AEX lost 6.26%, falling to 323.95 on January 28 after achieving its yearly high of 345.46 on January 11, along with the other Euro indices. The SMI was even milder, falling from 6666 on January 11 and 21 to a low of 6386 on January 26.

In the Americas, Brazil’s Bovespa took the biggest hit, falling 9.18% from its yearly high of 71,068 on January 11 to a low of 64,541 on January 28. Argentina’s Merval index was rather quiet and didn’t make a new yearly high or multi-week low during this period. The NASDAQ Composite fell from a yearly high of 2326 on January 11 to a low of 2140 on Friday, January 29, a loss of 8%. The Dow Jones Industrial Average dropped 6.39%, from its yearly high on January 19 at 10,729 to a low of 10,043 on January 29. The most important factor here is that almost all of these indices made their yearly highs within a couple of days of the Saturn and Mercury stations of January 13 and 15. But there was a lot of divergence, with some topping out just before the stations, and others topping out only a couple of days later. This is known as “intermarket bearish divergence,” and when that happens nearby to a critical reversal date (as in this case), it is usually a powerful reversal indicator. It worked very well this time.

Reversals were not only evident in stock indices around the world. The precious metals also fell hard from their secondary highs of January 11 through Thursday, January 28. Gold topped out at 1163 on January 11, then plummeted to 1072.20 on Thursday, January 28, for a loss of 7.72%. But Silver’s fall was spectacular. After making its secondary top at 1892 on January 11, it collapsed to 1602 on Thursday, January 28, for a loss of 15.33%. The loss in Crude Oil was almost as dramatic. From a yearly high of 83.95 on the same January 11 date, the nearby contract plunged 13.72% to a low of 72.43 on January 29. All of this may be related to the strength in the U.S. Dollar, which rose against most currencies during the past two weeks, which means other currencies declined against the Dollar. The Euro currency, for instance, fell below 1.4000 last week for the first time since July. In fact, it fell below 1.3900. It is not that the Dollar fundamentals are so attractive, but rather because the debt situation in many countries within the Euro union are much worst than thought just a few weeks ago. The European Union may be in jeopardy as the credit rating of several counties is now vulnerable to be downgraded, another victim of the Saturn waning square to Pluto, in effect October 2009-August 2010.

Short-Term Geocosmics

This week will be highlighted by the second passage of Saturn square Pluto, which takes place on Sunday, January 31. This is following Venus and Sun in opposition to the Mars retrograde, which took place January 27 and 29 respectively. As we have seen in recent days, the focus of political and economic leaders has switched, with their full attention now on to the world debt situation. This is a perfect theme for Saturn square Pluto, especially with the Saturn-Pluto cycle in its waning phase (2001-2020), a time when debt is almost always a huge concern. This particular Saturn-Pluto square is taking place under a full moon this weekend. In fact, it is nearly a lunar eclipse, which simply intensifies the themes of the other planetary signatures unfolding. It is quite possible that we could see several markets reverse their short-term trends now, or collapse in a serious free fall. However, the polarity and bickering between political parties is not apt to reverse. To the contrary, under such signatures, the divisiveness is likely to become more acute in the weeks ahead. And along with that, the frustration of populations who just want their government leaders to do the right things, and act as if they truly care about the welfare of the people they serve, rather than solely their own political careers. With Pluto in Capricorn, the collective psychology seeks a return to basic values of Capricorn, like honor, honesty, integrity, responsibility, and personal accountability. What they don’t want is the opposite – projection and blame of others, without taking on genuine responsibility for their own contribution to the collective angst, and the tendency towards hypocrisy where they say they believe in one thing, but then their actions don’t compliment their words. It seems lately to be a choice between two negatives: one party that always says “no” to any change, and the other that promises change, but then qualifies or reverses each proposal immediately afterwards to render it as a disappointment or broken promise.

Longer-Term Thoughts

In the last column two weeks ago, I indicated that Jupiter was moving into Pisces January 17 through June 8. As stated at the time, “With Saturn and Pluto involved, it always has the potential to pertain to matters of debt, and the problems that increasing debt causes. Since three planets are changing signs this week, it will be interesting to note the new approaches to solving the debt crisis that may be introduced over the rest of this month. I am not sure that any of them are credible, however, with Jupiter (exaggeration) in the sign of Pisces (fantasy). My guess is that it will be more tough talk followed by actions that are exactly the opposite of the promises and tough talk. In other words, spending will increase, deficits will increase, and consequently so will risk-taking and speculation.”

Well, this is starting to materialize. At a panel a week ago at the Swiss Symposium in Zurich, we (panelists) were asked, “If Obama asked for your suggestions on what to do right now, what would you tell him?” My answer was: 1) put a 2-year freeze on any new spending programs and seek to reduce the deficit, and 2) put a two-year freeze on any new taxes for small businesses, so that they could enact plans that would involve hiring new people – outside of government — without the uncertainty as to what the tax situation will be. Lo and behold, I return home a couple of days later and the Obama administration announces a three-year freeze on new spending programs, and a new tax reduction incentive for small business. Maybe there is hope yet for this White House! But then a day later it is announced that the spending freeze won’t be for all government programs, only about 1/6 of them. And it will not take effect until 2012, not immediately when it is most needed. In the meantime, the Senate just announced it wants to raise the debt ceiling not from just $9 trillion to $12 trillion as reported in December, but now to over 14 trillion, with another shot at raising it again right after the mid-term elections in November 2010. This is plenty of time before the spending freeze is to take effect in 2012. I mean, how can one take the word of these people seriously when they first state exactly what you want to hear, and then invalidate it with the qualifications they impose a day later? A 3-year spending freeze sounds great! But what is the use of such a freeze if you first of all allow Congress to raise the debt ceiling for borrowing by over 50%? That is like saying I am going to stop smoking cigarettes in three years. But first I am going to increase my smoking habit by two packs a day.

Spending more than you have – creating debt — is like an addiction. Breaking addictions requires a painful sacrifice of your routines, of your very life style. No one wants to do it, and politicians simply don’t have the will power to even try it before giving themselves a large cushion to work from that protects their own self-interest. Is it any wonder that in a recent Gallop poll, more people rated used car salesmen higher in the issues of honesty and integrity, than members of Congress? This is what has to change, and this is exactly what will change as Pluto purges all the corruption, dishonesty, and hypocrisy out of government, business, and bank leaders in this new decade. That’s the nature of Pluto, and that is the arena of Capricorn. It’s a return to basic Capricorn principles. It is not about Democrats and Liberals, and it’s not about Republicans and Conservatives. It is about trust, and being connected to the values of the people who elect you. That is why there are populist uprisings all over the world today, but especially in the United States. If you want to succeed in politics, it requires only a couple of primary attributes now: truthfulness, authenticity, and the willingness to govern well, and not just campaign well.