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Week of July 29

The financial and stock market panic referred to in the last couple reports may have culminated with a bottom on the Full Moon of Wednesday, July 24. Early that day, the Dow Jones Industrial Averages bottomed at 7532.70. By the close on Friday the index was back up to 8264.40, an appreciation of nearly 10% in only two days. This fits extremely well with our forecast stated in last week's column as follows:

A severe decline in prices is not likely to end until the Leo-Aquarius Full Moon period, which occurs this week, July 24-26. That is likely to be a climax of some type, maybe even the final climax (but not necessarily, because). It doesn't appear much better the following week, as the Sun then opposes Neptune on Thursday, August 1, followed by Venus square Saturn on Friday, August 2. After that, things might look up, as we move towards the Sun conjunct Mars. This signature alone (within an orb of 8 degrees) has probably a greater rate of frequency to 10% or greater reversals in stock prices than any other signature involving planets inside the orb of Jupiter. But the question remains: from what level?

We now know the level of support is 7500. Based on this week's lunar cycles, it appears another 4% or greater reversal is due from a peak on Monday or Tuesday. Thus we look for another decline by the end of next week, but not necessarily from a new low. And after that, the market could look upwards for a few weeks. But how long might it last?

The answer to this question depends upon the phasing of the 4-year (and even longer-term) cycle(s). Astrology is good. It is very useful. But when used in conjunction with the knowledge of cycles studies, it is even better. So let me spend a moment and review the longer-term cycles in this column, to give you an idea of where I think we are.

The longest-term cycle I know of in the U.S. stock markets (through my own research of the past 300+ years) is the 72-year cycle. It last bottomed in 1932. All cycles have an orb of about 1/6 of their median length. Thus the current 72-year cycle is due to bottom within 12 years of 2004.

Every cycle is comprised of either two or three sub-cycles, known as the phases of that longer cycle. The 72-year cycle is comprised of two 36-year sub-cycles. The first 36-year cycle bottomed with the last great recession in 1974. The next is thus due within 6 years of 2010. You can see that it overlaps the 72-year cycle between 2004 and 2016. I think the market will continue downward into this time band before the real end to the big bear market is over.

Now, that doesn't mean the market is straight down until then. It simply means that before we exceed the all-time high of 11,750 again, I think we have to reach this bottom (lower lows than we've seen so far) first. As a matter of fact, I think a very impressive multi-month rally is ready to begin—either with the low forming now, or with one that will form between this October and next January.

Within the 36-year cycle are two 18-year sub-cycles, or phases. The last one occurred during the "Great Stock Market Crash" of October 1987, just 4 months before the Saturn-Uranus conjunction, along with the Saturn-Uranus opposition, and is the most powerful geocosmic correlation to long-term stock market cycles. The next one comes up in 2008-2010 (opposition), which is right in time for the 36- and 72-year cycles. The 18-year cycle is around that time too, as it is due within 3 years of 2005. But it is possible the 18-year cycle could expand slightly, as that phenomenon (known as "distortion") is common when a cycle coincides with several longer-term cycles.

And finally, within this current 18-year cycle are three 6-year cycle phases. The last one occurred September 21, 2001. The next is ideally due within one year of 2007. But again, as it will coincide with the 18-, 36- and 72-year cycles, it might expand (distort). That's where astrology comes in, for it can more accurately identify where these longer-term cycles, which have rather large orbs, are most likely to culminate. Between 2008 and 2010, we will find Saturn, Uranus and Pluto all making a great T-Square witho one another, as each begins to ingress into cardinal signs. Hence the term "Cardinal Climax" that applies to this period. The last time these three planets formed a T-Square to one another was in 1930-1931, and it was at the end of cardinal signs (and beginning of fixed signs) then as well. As Yogi Berra once said, "It's déjà vu all over again!"

There are other cycles of note, too. For instance, there is a well-documented 4-year cycle. It's actually a 46-month cycle, with an orb of 10 months. It last bottomed in September-October 1998 as the impeachment proceedings against President Clinton were unfolding. The DJIA dropped to the 7400 area back then, a level that apparently is offering some support right now (7500). This 46-month cycle is thus due to bottom again between September 2001 and June 2003. Combine that with the mid-term presidential election year trough, which occurs 16-25 months past a U.S. presidential election (add from November 2000) and you can see why I think a bottom is forming right now or with the next 13-21 week primary cycle, due in October-December 2002. This also falls into the orb of influence of the Saturn-Pluto opposition (influence in effect until January 2003) and the Saturn-Uranus trine, which takes place three times starting this August. Historically, a 4-year cycle has occurred between the first and second passage of this aspect, which again places our best bet as October (+/- 2 months) for a final low before a substantial rally commences in U.S. stocks to the crest of the next 4-year cycle. That rally could last 5-24 months. Most likely, it will not make a new all-time high, and once the rally is done, another decline to lower prices than we are seeing now is likely, until the final bottom is in between 2008 and 2010. This is not a guarantee. It is just the roadmap I am working with, based on my current understanding of the market and geocosmic climate.

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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ABOUT THE AUTHOR

Raymond Merriman is a professional astrologer and President of The Merriman Market Analyst, Inc., an investment advisory firm specializing in market timing products and services. He is the editor of The MMA Cycles Report, an advisory newsletter used by banks, financial institutions, investors and traders. He is the author of numerous astrology books, and developed two financial astrological software systems: The FAR (Financial Astrological Research) program, and the SOS (Stock Optimizing Selector) Program, which enable traders to identify potential turning points in various stocks and/or financial futures markets. He can be reached by email, or visit his website.

For more information about Raymond Merriman, click here.


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