Mercury’s presence should help the week begin on a positive note

Stocks moved higher last week as the RBI held interest rates steady and the flow of cheap money continued.

The Sensex rose by 1.1%, closing at 19,864, while the Nifty finished at 5948.

This bullish result was somewhat surprising as I had expected the Mercury-Mars-Pluto conjunction in the early week to take prices lower.

As it happened, the early week saw gains with a decline only occurring on Wednesday.

Overall, it was evidence of the approaching Jupiter-Uranus conjunction as the bulls appear to be flexing their muscles.

As we approach the exact conjunction of Jupiter and Uranus on January 4, 2011, we may well ask how long the current optimistic outlook can last.

Usually, this planetary pairing has coincided with rising prices and increased risk appetite as investors’ faith in the future runs ahead of fundamentals.

The previous Jupiter-Uranus conjunction in September saw prices rise sharply as the Fed announced another round of stimulus. More liquidity meant lower bond yields and this pushed more FII money into stocks.

While stocks have risen on the greater tolerance of risk through this activation of Jupiter and Uranus, there is a danger that the story may end soon. The September conjunction was arguably stronger — and hence prices rose faster — because it was the penultimate conjunction.

Due to the peculiarities of their retrograde cycles, Jupiter and Uranus remained in fairly close proximity for many weeks afterwards and this provided the upward thrust for the rally that lasted into November. But this time, the situation could be quite different since this conjunction will be the final one in the current series.

The next conjunction will not occur until 2024.  So it seems likely that this final conjunction of Jupiter and Uranus may have less positive effects, both in terms of magnitude and duration.

To make matters more interesting, we are now entering an eclipse period. We will have a lunar eclipse on Tuesday this week, while a solar eclipse is due on January 4 — the very same day of the Jupiter-Uranus conjunction!

Eclipses are often correlated with periods of bearish instability and trend change as the status quo (Sun-Moon) is interrupted by the shadowy influence of Rahu and Ketu. We should therefore be more alert to the possibility of a major change in sentiment over the coming weeks.

Ahead of the eclipse, Monday’s Sun-Mercury conjunction may induce some buying activity, especially early in the day.

Bullish sentiment is also a more probable outcome into the mid-week period as Mercury is in aspect with both Uranus and Jupiter. The late week period looks more unstable, however, as Venus moves into aspect with cautious Saturn.

Last week, crude oil finished mostly unchanged near $88 as supply concerns were offset by dampened growth expectations in China. The choppiness is likely to continue this week, although we could see larger price moves. The latter part of the week looks bearish again.

As expected, gold futures slipped further last week, closing around $1,375. Paradoxically, most of the declines occurred later in the week, just as the Sun-Jupiter aspect was exact. The outlook for gold continues to look somewhat difficult this week as the Sun approaches its conjunction with Rahu.

The writer is a neo-Vedic astrologer specialising in predictive astrology. He runs the website www.modernvedicastrology.com