Merriman...
MMA Ciomments for the Week Beginning July 19, 2010
Written by Raymond Merriman
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We never said it would easy. And we always stated that this would be volatile time and markets would be difficult to trade.
Last week started out positive for equity markets around the world. After making a new low for 2010 the previous week (July 2-6), many stock markets soared into last Wednesday, July 14. Then, just when it looked like they were about to explode to the upside, they sold off again sharply on Friday. Welcome to this next layer of the Cardinal Climax, a new portal of reality where the old rules no longer work, and no one knows for sure what the new rules are. For the past few weeks, it’s been all about Uranus.
Yet despite the fact that technical levels of support and resistance seem to get violated at least once a week now, one factor remains the same. Since the yearly high of April 26, when Saturn made its fourth of five oppositions to Uranus, every decline has been to a lower low, and every rally to a lower high. Lower lows and lower highs of the same cycle type is the very definition of a bear market. Yet the rallies are always more than the normal corrective variety. They are stronger than most analysts would expect in a bear market. This is Uranus in action.
For example, after the low of June 8, when Jupiter and Uranus made their first of three conjunctions at 9757 in the Dow Jones Industrial Average, the index rallied over 800 points in just a few days to nearly 10,600 on June 21 That was when the summer solstice squared Uranus and made a grand square to all the planets in the Cardinal Climax. It broke important resistance areas along the way, suggesting it was a new bull market. But then in the next two weeks, it lost all that and more as prices sank to a new low of 9614 on July 2 (July 6 in the S&P) as Uranus then changed directions from direct to retrograde. This created a resistance area around 10,250-10,350. That was easily broken last Wednesday as prices traded above 10,400, creating a new support zone around 10,250. That was then broken on Friday as prices plunged over 260 points. And now we head into the fifth and final Saturn-Uranus opposition next week. Uranus obeys no rules and has no respect for any support or resistance level. It can exceed both in quick fashion, and after doing that, it can either reverse or accelerate its downside breakout, since every cycle low and high are lower than the preceding one.
The extremes of price swings through support and resistance were also noticeable in precious metals. Both Gold and Silver rallied nicely from lows of the first week of July into the middle of last week. But by Friday, they too (like stocks) sold off sharply – even though currencies rallied strongly and the Dollar fell. This too is typical Uranus breaking the rules, for when the Dollar falls, isn’t Gold suppose to rally? About the only sectors that kept rallying were Treasuries, as investors are frightened of risk, and the grain markets, in accordance with our forecast for hot and dry weather. The drought is not only starting here in the USA, but very much so in Russia. That too is part of this Cardinal Climax, especially as Mars heads into its conjunction with Saturn on July 31.
Short-Term Geocosmics
We are now entering the fifth and deepest layer of the Cardinal Climax, July 21-August 21, and maybe lasting into early October when Venus turns retrograde. You remember the last Venus retrograde, right? That was on March 6, 2009, which was one of the two potential dates for the 18-year cycle trough. The other possibility was October 10, 2002. That was also a Venus retrograde, and every eight years, it repeats it’s retrograde from the same sector of the zodiac (this time Scorpio, as in 2002). It is a good time to look for this current bear market to end if the DJIA cannot exceed 10,800 first.
But this week is important for many other reasons as well. On July 23-24, Jupiter will go stationary retrograde, in exact square to Pluto. Pluto rules debt and the potential of loss through destruction (i.e. drought, for example), and Jupiter exaggeration. On Monday, July 26, Saturn will make its fifth and final opposition to Uranus, a 45-year cycle that coincides with sudden, unexpected events and a possible crisis. Uranus with Saturn also rules things like earthquakes, tornadoes, hurricanes, and natural acts of destruction when Pluto is also involved – as it is in this case. I would love to tell you with confidence that this means the market will be wildly up or down. But with Uranus, you never know which, and oftentimes it is both in a short amount of time, as we have already witnessed as of late. Anyone who thinks they really know, simply doesn’t know. There are far too may scenarios possible to make this a high confidence trading environment. Sometimes the most valuable thing an analyst can advise is step aside, avoid the risk, and wait it out. But no one wants to pay to hear that.
So let me say it really simply. We are entering a time band of perhaps the most powerful geocosmics signatures of a lifetime. We’ve never seen anything quite like what we are about to witness in the next month. So we don’t really know what to expect, except the unexpected. Normally we might think the Saturn-Uranus opposition would be a crash, and it might be. The previous four times in this series, it has correlated with a crest (not a trough), and after three of those times, the DJIA fell over 1500 points within the next 3-6 weeks. If you want to trade, you have to be nimble and ready to reverse quickly, perhaps on an almost daily schedule. If you cannot handle the stress of risk, stay out and watch this cosmically historical pattern unfold, and watch with amazement at the types of human activities and financial market movements that will likely unfold – assuming they don’t do the unexpected and absolutely nothing of note happens.
Longer-Term Thoughts
“One of (Nikolai) Kondratieff’s principle conclusions was that capitalism was self-correcting and not headed for destruction, a view that should dispel some of the gloom coming from arch-pessimists of today.”
-J. Anthony Boeckh, “The Great Reflation,” 2010, published by John Wiley & Sons, New Jersey.
Is Pluto in Capricorn (2008-2023) the start of a death march for capitalism? Many people think that the system of capitalism that was the root cause of the recent Panic (2008-2009). And therefore the “old” system of capitalism must be retired and replaced by a “new” economic system in order to prevent these types of painful panics in the future. But as Nikolai Kondratieff - the world’s most noted cycles’ analyst – suggests, the problem is not the economic system of capitalism, and the solution to cyclical downturns is not to replace capitalism. Capitalism is self-correcting, and downturns are cyclical, reoccurring, characteristics pertaining to human activity.
The cause behind all financial collapses is seldom the “system.” More often it is the abuse, neglect, or corruption of the system or its rules by individuals who are more driven with taking advantage of systems for personal gain than operating with integrity under basic principles that benefits the greater society. For instance, anti-capitalists tend to believe it is capitalists – especially leaders of big businesses – that corrupt society by buying favors from the regulators or administrators of the federal, state, or local governments. They believe these large firms will bribe – or lobby – in order to get around these barriers to greater profits. This may be true and certainly fits into the themes of Pluto in Capricorn, especially as it is being squared by Uranus in Aries through 2015. Only the strong and aggressive (and perhaps corrupt) will prosper.
But business leaders – especially of small businesses – don’t willingly pay bribes (or anything) in order to escape the rules and regulations of the community’s laws. Just as often it is the rogue regulator or administrator of the government who expects to be paid a fee in order to allow the enterprise to carry on business without a hassle. The corruption isn’t initiated by the entrepreneur (capitalist) anymore than it is by the government administrator, and in order to keep his business alive, the businessperson has to pay this additional “tax” to the regulator, or he will be found in defiance of a law he never knew existed. He will soon be out of business.
This is not to say that many government workers are corrupt, anymore than it is right to say that many - if not all – business leaders are corrupt. Most government workers and business leaders are honest. But when an economic crisis hits, people look for scapegoats, and the first place they look to is business and all enterprises that come under the banner of capitalism. Many look to government too as a cause, but government has the advantage of being able to divert attention to the evils of business over government, especially when the government leader him/herself attacks business as an evil empire. That’s news, it gets air time, and it affects the collective attitude towards business.
This is the poison that Pluto in Capricorn is rooting out over this 15-year period. Society won’t function efficiently unless business, banks, and the government all work in tandem with one another, and according to basic Capricorn rules of honesty and integrity. It doesn’t help when violations are ignored and become part of the accepted way of “doing business.” That leads to excesses and debts which finally topple the structure. It leads to sharp economic downturns, with the accompanying panics and loss of confidence in the government, banks, and businesses.
As Jupiter will soon be stationary and in exact square twice to Pluto (July 24-August 3), the destructive effects of debts and corruption may come more fully into view. Yes, this may have an orb of up to 6 months (we are already in the period of influence, and we see this already manifesting). But as these revelations come to light, the opportunity for corrections can be applied. That is the “self-correcting” nature of capitalism, and not necessarily its death.
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