Did our eyes deceive us last week? The Dow Jones industrial averages rose a record 499 points on Thursday, March 16, just one day after a 320-point rise. It was the largest two-day point gain in the over 200 year history of the U.S. stock market. And it wasn't only the DJIA that went on a torrid rally. The Standard and Poors futures rose an impressive 67 points, while the rally in the NASDAQ 100 June futures contract rose 237.50 points.

Was this rally totally unexpected? Or was March 16, 2000 destined to go down as a significant date in the U.S. stock market?

What Happened?

If astrology is your guidepost to understanding market climates, then March 16, 2000 sure makes a lot of sense in understanding what happened in the markets. This was the date Jupiter made an exact 90-degree square  to the planet Neptune, the third square in a series of three for 1999-2000. Lest you think that this cosmic event happens very often, consider again.

Jupiter and Neptune have a planetary periodicity of approximately thirteen years. That is, these two powerhouses align in a conjunction about once every twelve to thirteen years. What is also important are those times when these two planets form their quarter "phases" (squares and oppositions) with one another.

In other words, Jupiter and Neptune form these "hard aspects" (difficult angular relationships) to one another rather rarely. Did markets behave in the past like they did last Thursday under this same planetary alignment? It’s easy enough to find out.

The Three 1999-2000 Squares

This series of three Jupiter-Neptune squares began on Tuesday, July 21, 1999. That same time was important astrologically because Saturn was also forming its first of three squares to Uranus on Friday, July 17, 1999. Picking Monday, July 20, 1999, as an important critical reversal date for financial markets was thus a "no-brainer." It was the day midway between the two trading days of these powerful aspects.

Monday, July 20, was indeed the then all-time high for the Dow Jones industrial averages, which topped out at 11,409. The U.S. stock market then began a bearish spiral that was not to end until October 18, just one week after the second passage of Jupiter square Neptune. During the three-month bear market, the DJIA declined to 9976, which represented a loss of 1433 points, or 13.76 percent in value.

That second passage was interesting because the market had at first appeared to have bottomed on September 28, 1999, as the DJIA traded around 10,080. Over the next two weeks, it surged to about 10,720 on October 11, 1999, the exact date Jupiter formed its second square to Neptune.

The trading community was euphoric as Jupiter squared Neptune, representing a gain of over 600 points in only eleven trading sessions, or an increase in value of over 6 percent. In the five sessions immediately following Jupiter square Neptune, however, the market plunged all the way down to 9976. This loss of 744 points in just five sessions took back all the gains that were made over the previous two weeks—and more!

The U.S. stock market then embarked on a dramatic increase between October 18, 1999 (one week after the past Jupiter-Neptune signature), and January 20, 2000, when the DJIA made a new all-time high of 11,750. This represented an appreciation of 17.8 percent in value in just three months.

Of course, the NASDAQ was even more spectacular. Between October 18 and the high of last Friday, March 10 (one week prior to the third and final passage of the same two planets), the NASDAQ 100 futures advanced close to 2300 points. When you consider that it was trading at slightly under 2400 at that time (October 18, 1999), you can see that this index appreciated nearly 100 percent in the last four months.

To say that this is "spectacular" by any form of historical measurement is an understatement. But then again, records are made to be broken when Jupiter and Neptune enter into aspect. After all, in the world of astrology, Jupiter represents BIG, and Neptune is the principle of "no boundaries."

History of the Jupiter-Neptune Cycle

Does the history of this planetary cycle tell us anything about the importance of last week's market behavior? I think so.

In The Ultimate Book on Stock Market Timing, Volume 2: Geocosmic Correlations to Investment Cycles, published in January 1999, I wrote the following in regard to the history of Jupiter forming a square to Neptune:

"The waxing square has a definite correlation more to troughs than crests. In eight of these nine cases studied since 1930 (89 percent), a long-term cycle trough unfolded within six months. There were three instances in which the aspect occurred in a series of three contacts. In each case, the market fell hard into the middle, toward the end of this series. In two cases there were crests right after the first passage."

Here we have the same historical pattern occurring again. That is, the market makes a long-term cycle crest within one day of the first passage, then suffers a powerful decline to a significant cycle trough into the middle and again toward the end of this series (the low of October 18, 1999 one week after the second passage, and the low that appears to have formed last week, close to this third passage).

What Should Traders Do?

Was that the bottom last week, from which stock prices will now advance for many weeks or even months? Or will the market behave like last October, where it tops out right around the Jupiter square Neptune in a burst of “irrational exuberance,” only to be followed by a very quick and steep drop in which it gives everything back before commencing the next wild ride upward?

Either way, Jupiter-Neptune suggests that a low is close at hand, and traders are advised to adopt bullish trading strategies. That is, look to buy on dips now, if not already long. There may or may not be another sharp decline within the next five to ten sessions.

There doesn't have to be, as the minimum criteria for this signature has already been achieved, just as it has been achieved every time in the past 64 years. But even if there is a sharp decline in the immediate future, it's most likely to be short-lived, and thus offer another buying opportunity for traders. Once the low is in, the high of the next cycle is not due for at least two to eight weeks afterward.