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Week of February 10
As
anticipated in several precious columns, the threat of war is increasing as we
now enter into the transiting Mars conjunct Pluto and opposition to Saturn period.
These aspects will be at their peak between February 15-22, along with Jupiter
in opposition to Neptune, Sun conjunct Uranus , and Saturn turning stationary
direct in Gemini. Any one of these signatures can have a correlation to a major
reversal in world stock indices. All of them together indicate something of a
great magnitude on a fundamental and mundane level that is likely to trigger very
large price movements in many financial markets. A war would do that. So, too,
would some sort of betrayal or deception, or a lie on a grand scale. One wonders
if Saddam Hussein will be revealed as that great deceiver if war commences? Maybe
we will find out that he really has been building up a program involving weapons
of mass destruction, despite his claims to the contrary. Or might it mean that
someone the United States thought was an ally turns out to betray them? Or, might
it even mean the U.S. has only a fraction of the support from the world community
it thought it had, and so the result is that the U.S. betrayed itself through
its own self-delusion? Any one of these conditions could unfold during this period,
as well a few more that are simply unpredictable, due to the presence of the Sun-Uranus
conjunct, or the Full Moon, in Aquarius, on February 17. Uranus, Aquarius and
Full Moons are all known for their high energy and unpredictable nature. The
increasing threat of war caused most world stock indices to forego their recent
gains made since January 29-31. Almost all indices closed the week down, near
their weekly lows, and in many cases, their lowest levels since October 10, 2002.
In Europe, the German DAX index closed at 2569.30, just 50 points above its low
of October 10. The London FTSE, Netherlands AEX and the Swiss Stock markets all
closed barely off the lows of the prior week, which were lower than the lows of
last October. All of these indices are oversold, and starting to firm interesting
patterns on their daily stochastic oscillator readings. These are indicative of
an important bottoming process, from which a very healthy rally is likely to follow.
But the weekly readings suggest the lows are not yet in. In
the Far East, the Hang Seng Index of Hong Kong closed at 9151, after a weekly
low at 9073. That was its lowest level since the October lows. The same happened
in Australia, where the All Ordinaries closed at 2886.10 with a weekly low at
2864.30. In Japan, the Nikkei held the lows of the previous week, but closed rather
weak at 8448. It is only 250 points above its 20-year low, recorded on October
10, 2002. If it breaks, the whole Pacific Rim could experience a mini-panic as
prices drop swiftly, perhaps down to test even 7000 quickly. But like the European
markets, these too are very oversold, and forming some interesting stochastic
patterns, suggesting a very big rally is in the not too distant future. In
America, both the Dow Jones Industrial Average and the NASDAQ Composite dropped
to their lowest prices of this New Year. The DJIA closed at 7864 and the Composite
at 1301.70. Both are extremely oversold on the stochastic oscillator. Prices could
fall more, but not for much longer. My bias is that a low could be realized within
the next two weeks. And if the DJIA holds above 7300, you get a chart formation
developing known as a "reverse head and shoulders." The "neckline"
of this pattern is around 9000-9100. A close above there then confirms that the
4-year cycle bottom is in, and a run to 10,000-11,000 is probably underway. My
bias is that this could happen, and be completed by June, before the longer-term
18, 36, and 72-year cycles resume their downward pressure into the end of this
decade. Many
readers are also concerned about interest rates and the housing market, the last
big "bubble" of this glorious economic boom we have experienced since
the early 1990's. My belief is that the housing boom is close to peaking, along
with the low interest rates. Maybe it will last until Saturn (depressive) goes
into Cancer (housing) on June 4. Maybe it can last through this summer and into
the early fall, until Saturn goes retrograde in Cancer on October 24 conjunct
the USA Sun and square its Saturn. Regardless of when it happens, the domino effect
I see goes something like this: stock prices undergo a false rally, the appearance
of a new bull market that is short-lived, but enough to cause interest rates to
stop their slide down. As interest rates rise, so do mortgage rates, and sales
of new and existing homes starts to slow. New home sales start to slow down because
labor and construction costs are going too high. Before long, all these property
development initiatives realize they can't afford to complete their projects.
Banks that provided loans demand their payments, but don't get them. As banks
foreclose, they soon realize that they too cannot sell these properties whose
values are beginning to depreciate. At first, the amount of foreclosures is minimal.
But it grows and grows until it peaks in 2007-2008, and that is when the real
"deals" in real estate will abound, because it will take until then
for pressures to enter into wages as well. People will need cash, and those who
have cash will be in a fortuitous position to buy real estate at more favorable
prices than exists today. Saturn
will be in Cancer for 25 months, until July 2005. For an understanding of just
how important this ingress is for the United States government and economy, just
go back and look at the past historical examples of this 29-year transit. In the
very last instance, President Nixon was the first president in history to resign
from office. The U.S. was immersed in its worst recession since the Great Depression
of the early 1930's. Nixon was a Capricorn, the sign ruled by Saturn, which was
in opposition to his Sun. George W. Bush is a Cancer, with his natal Sun just
about conjunct the U.S. natal Sun. The next few years look very challenging. And
yet, in all environments there are speculative or investment opportunities. With
the world in the downside of the Saturn-Pluto cycle for the next 7-17 years, this
is not an investment climate. That occurs only in the upside of the Saturn-Pluto
cycle, which correlates with the phase of lowering interest rates that may be
nearly over now. This is now a trader's, or saver's, phase of the long-term cycle.
It is best to save and protect your capital, and not enter into an investment
program involving bonds and stocks. Typically this next 7-17 years or so is a
period when inflation-adjusted values of stocks and bonds go nowhere. If you think
investing in the stock market always brings forth favorable returns during any
given ten-year period, as some brokers are fond of telling us, just ask anyone
in Japan about this An investment made 10-15 years ago has yet to turn a profit,
and in fact the Nikkei is down nearly 80% from the highs achieved in 1989. So
what can one do? Consider diversifying into money markets denominated in foreign
currencies for one thing, especially on the next 5-10% reversal in currencies
(rally in Dollar, decline in Euro, Swiss Franc or Australian Dollar). Ask your
broker how to do this, rather than finding a new mutual fund of stocks to get
lost in. Most of your brokers at the large firms can help you to do accomplish
this feat. And for traders, this is not a bad climate at all. There will still
be many intermediate-term opportunities to trade stock indices for the potential
of considerable profit, but it is not a "buy and hold" climate that
investors prefer.
Once
again, we would like to remind readers that our Forecasts for 2003
book is now available, and for further information, please visit our website.
Disclaimer:
Past results are no guarantee of future results. Therefore no guarantees are made
by either the author or publisher of this report. You are solely responsible for
any action you initiate in the market, and the author and publisher assume none
whatsoever. Information is provided with sincere intent, and according to our
own proprietary studies and methodologies.
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