Weekly column: Trickster timing and sudden market reversals

Review

U.S. stocks posted their biggest monthly gains this year in November, as chip stocks rallied on Friday. The S&P 500 and Dow Jones Industrial Average rose modestly to close at records in a holiday-shortened session, with the Dow finishing just underneath the 45000-point milestone. The Dow and S&P 500 delivered their biggest monthly percentage gain of 2024, according to Dow Jones Market Data.

—Chelsey Dulany and Jack Pitcher, “S&P 500, Dow Notch Records to Cap Best Month of the Year,” www.wsj.com, Nov 29, 2024.

Stocks are up, signaling an economic boom. Oil is down as if we’re headed toward a recession. Home prices are up as if rate cuts will continue. Gold is up, suggesting inflation is back. The dollar is strong as if Europe, Canada and China are ailing (spoiler alert: They are.) Still, something’s got to give. Long bonds are signaling that the Fed needs to stop cutting rates. Right now, the Federal deficit stands at 6.4% of GDP. The few times it has exceeded this level were the pandemic, after the financial crisis and during World War II. Fine company. Bondholders won’t stand for inflation. And don’t you dare let Treasury Secretary Scott Bessent weaken the dollar. If Mr. Trump doesn’t trim deficits, watch out below. His legacy will be destroyed by the bond market.

Andy Kessler, “The Market’s Mixed Signals,” Wall Street Journal, Nov 25, 2024.

The Trickster strikes on time!

A new Mercury retrograde cycle began on Monday, November 25, and either on that date or one day away, several financial markets made sudden reversals. Typical of Mercury retrograde, the reversals may or may not last very long.

A perfect example was in Gold where prices rallied to 2723 early on November 25, prices were up sharply from their probable 50-week cycle low of 2541 on November 14. But just like that, in the next 24 hours the Road Runner suddenly switched course, and Gold fell to 2605, a decline of $118. And then it reversed again, rallying back to 2690 on Friday, November 29. On top of that, Silver fell to a new 11-week low on Friday, and then reversed up over $1.30 by the close. That low was not accompanied by Gold, which creates a case of intermarket bullish divergence, the kind of Mercury retrograde trick common for this three-week planetary cycle (the Mercury retrograde ends December 15).

Global stock markets were also in conflict. Some made new all-time highs, as in the DJIA, S&P, and Australia ASX. The German DAX came close on Friday, falling short just 34 points off its all-time high of October 17. Yet others didn’t fare so well. On Friday, Brazil’s Bovespa fell to its lowest level since August 5. On Thursday, India’s NIFTY Index plunged to its lowest mark since June. China’s Shanghai Composite and Hong Kong’s Hang Seng Index dropped to new multi-week lows in the middle of last week. Unlike the DJIA and S&P, the Nasdaq failed to make a new all-time high last week, thus exhibiting yet another case of intermarket bearish divergence in the U.S. equity markets.

Intermarket bearish divergence was also evident in the crypto markets as Ethereum soared to its highest level since June 10. However, Bitcoin, failed once again to break the 100,000 mark, and even fell short of its previous all-time high of 99,830 posted on November 22, one trading day (in futures) before Mercury turned retrograde. Crude Oil also reversed from a trading cycle high on November 22, one trading day before the Trickster appearance, and fell all week into Friday’s low. Markets may not exhibit any more consistency in the days ahead as Mars will turn retrograde next Friday, December 6.

Short-term geocosmics

The Russian economy, surprisingly resilient through two-plus years of war and sanctions, has suddenly begun to show serious strains. The ruble is plunging. Inflation is soaring, and President Vladimir Putin told the Russian people this week that there isn’t any reason to panic.

—Georgi Kantchev and Chelsea Dulany, “Russia’s War Economy Shows New Cracks After the Ruble Plunges,” Wall Street Journal, Nov 29, 2024.

The Trickster may continue this pattern of intermarket divergences and sudden reversals every 1-4 trading days. But bigger planetary cycles are about to unfold by the end of this week. We already mentioned Mars turning retrograde on December 6, which will last through February 23. Mars is the warrior. But when the warrior also acts as an aggressor and starts conflicts, things don’t go very well for the initiator. Typically, the aggressor loses when starting new conflicts under Mars retrograde. Think of the Falkland Islands and Argentina’s surprise attack on Britain’s overseas territory in April 1982. In markets, international conflicts may cause sudden but temporary movements in some financial markets, like stocks, currencies, and precious metals. Mercury (commerce and trading) will also form a square to Saturn that day, while retrograde, which could also coincide with a poor strategic decision.

It doesn’t get any better the next day, December 7, when Neptune (the planet of confusion and misinformation) turns stationary direct. It might be bullish for Gold, as Gold seems to like Neptune stations, but Mars turning retrograde the day before adds uncertainty to many markets. Traders and investors aren’t sure what to make of news stories at this time. Are they true? Are they false? Is it intentional or propaganda? Who is the source? Everyone wants to be anonymous and invisible, so rumors may be planted with the intent to capitalize on false market moves (buy the rumor, sell the fact, or vice-versa).

As important as these three planets changing direction close in time to one another, the most significant geocosmic signature taking place (historically-speaking, for markets) is the Sun/Jupiter opposition of December 7. These two fiery planets (they rule fire signs), combined with the third fiery planet (Mars) being highlighted, suggest possible large price swings unfolding. Sun/Jupiter opposition is one of the strongest historical correlations to reversals of primary cycles (highs or lows) within ten trading days, and usually four or less.

With both Jupiter and Neptune highlighted, we would also expect strong reversals in Crude Oil. Psychologically, these signatures indicate the heightened temptation to act aggressively, overestimate one’s strength, and make major blunders in strategic decisions. This is not the best of times to act aggressively or with arrogance and overconfidence. Learn the meaning and value of “IMHO” (in my humble opinion). Practice moderation, humility, and patience in the next two weeks for the best results in the longer-term.

We will have more to say about that next Saturday, December 8, at our special MMA Options Webinar, where we will discuss limited risk, high potential profit opportunities, and option strategies for traders. Yes, I know Mercury will be in retrograde, and this is a time we do not usually recommend position trading. But this may be an exception due to the even stronger signatures unfolding December 6-7 that override Mercury retrograde. That’s why we are looking at options then. Stop-losses on open futures contracts may be too risky. With certain option strategies, you can afford to wait it out or even take some quick profits if the markets get extremely volatile, as these signatures suggest they might.

Have a great week, and remember: don’t get unruly and overly aggressive. It will not pay to act like a bully or even be in the vicinity of one who does. Stay in your lane. We will be back with this column in two weeks. And to those who plan to join us next weekend, we look forward to going over options on at least 3-5 markets with you that we think are setting up for sudden and potentially large moves.