(21 December 2022) US stocks have rebounded this week as
recession fears have receded and traders look forward to a possible
year-end Santa Claus rally. The Santa Claus rally describes the
seasonal tendency for stocks to rise in the second half of December, and
especially from the first trading day after Christmas until the second
day of the New Year. Buyers this week are therefore anticipating some
follow through after Christmas which could carry on into early January.
But how likely is a Santa Claus rally this year? Certainly, some
upside this week was fairly likely given how oversold stocks had become
after last week’s sell-off. And the surge in the Japanese yen after the
BOJ shift in its bond policy may also be seen as generally positive for
stocks since it undermines the dollar. The rally in the greenback has
been one major reason why liquidity has dried up this year and stocks
have trended lower.
And yet the planets do not very bullish next week. Not only is the
worrisome Saturn-Neptune alignment tightening further, but Mercury turns
retrograde on Thursday, Dec 29 at 4.31 a.m. EST. The condition of
Mercury, the planet closely associated with matters of trade and
commerce, can directly influence the stock market. As we saw last week,
the double affliction of Mercury by malefics Mars and Rahu (North Lunar
Node) coincided exactly with a significant late week decline. When
Mercury is weakened or damaged in this way, stocks tend to fall.
The retrograde station of Mercury is another such negative condition
that is broadly correlated with declines. Of course, Mercury isn’t
actually stopping and reversing in its orbit; it only appears that way
in the sky from our vantage point on Earth. Nonetheless, this apparent
reversal of its motion is often coincident with problems and unexpected
developments related to communication and transportation, in addition to
temporarily worsening market conditions.
But we should note that not every Mercury retrograde station is
equally bearish. Some Mercury stations are relatively benign, and a few
may even be bullish when Mercury aligns with a benefic planet like
Jupiter. But when Mercury aligns with a bearish planet at the time of
its station, then the odds for a pullback significantly increase.
This particular Mercury retrograde station on Thursday is an
interesting mix of influences. On one hand, its near exact conjunction
with Venus is very bullish and could help support some kind of rally.
But as it happens, Mercury is also aligned with bearish Mars through a
135-degree separation. While this is not a traditional Vedic aspect, it
nonetheless deserves our attention since all three of Mercury, Venus
and Mars are conjunct in the 8th divisional chart or Ashtamsha (D-8).
It is tempting to think that the blend of both positive influences
(Venus) and negative (Mars) on Mercury could produce a somewhat neutral
outlook late next week. And yet the presence of Mars in the equation
increases the overall downside risk since Mars aligns and afflicts both Mercury and Venus.
Given this Mars influence, there is good reason to be skeptical about the prospects for a Santa Claus rally after Christmas.
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