Well, actually it is a combination of events. Yes, Mr. Bernanke did say that he has plans to reduce the stimulus, but he gave himself some wiggle room by saying his decision would be data driven. No great shocker there. We have all known for some time that the Fed cannot buy $85 billion of bonds each month ad infinitum. The stimulus has to stop sometime. So, why the global sell-off in equities? Even Bloomberg yesterday was quick to point out that there was nothing startling in his speech to warrant the sudden drop in the markets. ( evidently Adam Johnson and his side-kick Trish Regan do not follow astrology…).
The answer to the sell-off, or rather, the correlation to the sell-off, lies with an aspect that I watch for. That is, the Sun and Jupiter being in the same sign separated by 0 degrees. Somehow this aspect affects human emotion which in turn affects decisions to buy or sell. This aspect has occurred 5 times since early 2009, with this week being the 5th event. With this week’s event, human emotion has led people on balance to be net sellers and the markets are falling.
The embedded chart herein shows these past events. Note how each of them was closely associated with a pivot in the markets. And that is exactly what we are having right here and now – a pivot in the trend of the market. from here, the markets likely will not crash. But a pullback of many hundreds of Dow points would not be out of the question. After we get through this tough aspect, who knows ? The markets may resume an upward trend. Or then again, we may just drift sideways until the next emotional trigger.
In my book, The Bull, the Bear and the Planets I talk about the importance of the Sun-Jupiter conjunction. I also introduce the reader to other heavyweight aspects including Sun-Saturn.
I continue to be amazed with the power of how well the Sun-Jupiter 0 degree aspect correlates to the markets. I shall be on high alert for the next one………