Saturday, July 6, 2013

Beware Merc Rx spurt-and-reverse

Randall Ashbourne, an associate of Astrological Investing, posts a weekly market report on his web site, The following is this weekend's Eye of RA report: Week beginning July 8, 2013

from an astrological viewpoint the next downleg is due to start
"..long as Big Bird - monthly, weekly, or daily - fluctuates ABOVE
the +100 line, your Long positions are reasonably safe."

The Idiot & the Moon,  Randall Ashbourne
We should find out in the next couple of days whether the bounce in stocks is over.

There is a strong chance, at least from an astrological viewpoint, that the next downleg of the multi-week correction is due to start.

We'll look at why that might be the case in a moment. Before we do, a brief recap. In the May 27 edition, I indicated there was a strong chance stock indices had gone into a multi-week correction.

Then, in the June 24 edition, I highlighted the potential for a bounceback. There is some chance the correction is over and the bounce will continue. July tends to be a stronger month for the Wall Street indices than June.

However, there are several things happening. We are now at the midrange of the current Mercury Retrograde phase and we have discussed in the past the general tendency of markets to start a trend at the Rx date which goes into reverse halfway through the cycle, to end the period within about 1% of where it all started.

On top of that tendency, we kick off with a New Moon ... Venus trining Uranus ... and Saturn changing from Rx mode to Direct.

However, it's the combination of the potential high point of a New Moon and the Mercury Rx spurt-and-reverse tendency which poses the biggest risk to further gains in the next week or two.

Venus trine Uranus is an important aspect since Venus rules money and Uranus rules stock markets - and the trine suggests a peak of money flow into the markets.

However, it's an aspect that occurs a couple of times a year and, on its own, doesn't regularly and reliably turn markets. Nor does Saturn changing to Direct mode.

The chart below shows past behaviour of the SP500 in the weeks following Venus-Uranus trines (the blue bars) and Saturn Direct (the red bars).

There are a few instances where the trines have produced a near-term low ... a few more where they've coincided with highs ... and some which seem to have virtually no impact on the prevailing trend direction. And I'm not sure, from an eyeball glance, we can expect the Saturn change of direction to have much impact at all on stock prices.
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Should we get the "normal" behaviour - a New Moon to Full Moon stall or decline and a reversal halfway through the Merc Rx phase - the correction should complete in the next couple of weeks.

I'll just go briefly to the ASX200 Weekly Planets chart. I used this late in May to outline what I expected would happen and, for the most part, many stock indices have followed the general pattern. Some, like Pollyanna, didn't go deep enough fast enough to convince me that the correction ended a fortnight ago.

So far, the ASX seems to be repeating the same pattern it made during the correction in early 2012 - a fast plunge south followed by several weeks of bouncing around within a relatively narrow range.

There was negative divergence in the oscillator peak at the index price high and we're now seeing it start to record some positive divergence. But we can't be sure the correction is finished until we see a clear weekly close above the Saturn line in the mid-4800s.
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I've put the opinion in the past few weeks that I think this correction IS a correction ... and that it's the last major one before Western stock indices make their final price high before a Bear market resumes.

And the reason I think the final Bull high is not yet in is the state of the oscillators in the chart below. Last year, I had expected markets to top out with Jupiter in Taurus. That has been a very strong tendency for many decades. But I did indicate there was what I called an "elephant in the room" threatening to poop all over my Bear rug.

It was the lack of negative divergence in the Big Bird ... the long-range Canary ... the 50CCI. It is the blue line in the oscillator panel and I highlighted the negative divergence obvious at the 2007 highs with the complete lack of such a signal during last year.

However, we are now seeing what is probably the start of such a set-up ... and I do emphasise the word "start" because topping tends to be a process, rather than an event.

The blue line Big Bird has started to roll over and there is a strong chance now that a new price high would occur with a lower peak in that oscillator. We're already starting to see it with the two faster Canaries. The medium-range Bird, the red line, actually peaked in March ... and the short-range green line peaked-out in January.
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 We're also starting to see the same signatures in other indices. Below is the long-range planetary price chart for Germany's DAX. Price has fallen into a Neptune/Pluto range which put a stop to the two previous Bull runs ... and the Big Bird oscillator is rolling over quite distinctly.

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And it's pretty much ditto with London's FTSE in the chart below. The important point to remember here is that the danger of a new Bear getting underway is relatively muted until the Big Bird loses the +100 upper red horizontal in the oscillator panel.

Check it out for yourself in each of these charts - including the ASX200 Weekly Planets. So long as Big Bird - monthly, weekly, or daily - fluctuates ABOVE the +100 line, your Long positions are reasonably safe. But! Once that barrier is broken to the downside, any plunge has a tendency to accelerate sharply.
click for larger image

And that's why I've been nagging you lately to go through your portfolio stocks very closely and, at the very least, put rigid loss stops in place.

I think the danger sirens are starting to wind-up. I seriously doubt we're at the stage where we need to run for the bomb shelters ... or get the hell out of Dodge. But, as we can see on the Pollyanna chart, two of the Canaries have started to croak. They're very much the early Birds.

But that's why we keep them ... to give us early warning that the internal strength of the Bull is starting to wane much more obviously than appears on the surface.

Safe trading - RA

Randall Ashbourne
Astrological Investing's associate, Randall Ashbourne, author of the eBook, The Idiot and The Moon, and The Idiot and the Moon, Forecast 2013, writes a free weekly column titled, The Eye of Ra on his web site in  which he explains the potential impact of astrological aspects and the current state of technical conditions. Ashbourne's charts are revealing illustrations of exactly what has occurred in the market and the probability of what to expect.
Important reading:  Randall Ashbourne's The Idiot and The Moon, Forecast 2013 , Jupiter's cycle and its effects on Wall Street and a posting of the weekly Eye of Ra report in this blog, titled A look at the Venus Retrograde effect
(Disclaimer: This article is not advice or a recommendation to trade stocks; it is merely educational material.)
Copyright: Randall Ashbourne - 2011-2013

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