Stock markets around the world have rebounded strongly following their primary cycle lows recorded on Friday, August 13 or the following Monday. Those lows were well within the allowable time frame for the August 12 critical reversal date, +/- 3 trading days, as reported herein and to our subscribers. And as expected, stock prices of US equities have risen nicely as the Republican National Convention approaches, beginning this week, August 30.

Not only have the stock markets rallied smartly, but George W. Bush and the Republicans have also rebounded smartly in the polls from 2 weeks ago. Back then, it seemed that the negative campaign ads against John Kerry’s war record were backfiring, as Kerry built a comfortable 4-7 point advantage. But in two short weeks, Bush has narrowed that deficit to anywhere from down one point, to up three points, depending on which poll you read. As stated many times before, the polls will likely lead the direction of the US stock market. As the incumbent’s popularity increases, the stocks will rise. As his popularity declines, so too will US stock prices.

However, our correlation of stock prices to the results of this year’s presidential election still favors Kerry at the moment. That is because the lows of August 13 were below the “Pre-Presidential Election Year” cycle troughs of May 12-17. When that happens, the probabilities favor the challenger, which in this case is John Kerry. In order for Bush to regain the lead based on this study, the Dow Jones Industrial Average will have to exceed 10,450. Actually, that only brings him back to a break-even chance. It will take a new yearly high – above 10,753 - to tilt the scales solidly in his favor.

The stock market correlation is not the only study that favors John Kerry. According to an article this past week by Steven Thomma of the Free Press Washington Staff, all 5 of the presidents who won re-election had higher approval ratings at this point than Bush does. However, of the three incumbents who lost their bids for re-election, each had lower approval ratings than Bush does at this point. “With an approval rating of 51% and a disapproval rating of 44%, Bush straddles the middle ground…”

But according to my understanding of astrology, there is a chance that Bush could still win this election, much like Ronald Reagan did in 1984. Reagan is the only incumbent in the last 50+ years to win re-election when the “Pre-Presidential Election Year” trough was broken, as happened this year. On September 15, the Sun will form a conjunction to Mars. According to the studies reported in The Ultimate Book on Stock market Timing Volume 3: Geocosmic Correlations to Trading Cycles, this conjunction has a very high correlation to 10% or greater reversals in stock prices within 27 calendar days. There is a very good chance that the low of August 13 begins this reversal from a reading of 9783 in the DJIA. If it rallies 10% from there, the DJIA will be up to 10,760. But of course the question is: will the stock market rally that much this time? I tend to think it is possible.

Last week’s stock markets performed very well in all parts of the world. In Europe, the German DAX rebounded from a low of 3618.60 on August 13 to a high of 3856 on Friday. The London FTSE rallied from a low of 4283 on August 16 to a close and intraday high of 4490 this past Friday. The Netherlands AEX index rallied to 326.90 intraday Friday, up sharply from the 307.30 low of August 16. And the Swiss stock market rallied from a low of 5264.50 on August 16, to as high as 5466.90 on Friday. All closed at or near their highs of the week, suggesting that prices could trade even higher early this coming week.

In the Far East, the Australian All ordinaries soared to yet another record all-time high ion Friday, as prices touched 3574.90. Just a few days ago (August 16), they were down to 3479.30. The Hang Seng (Hong Kong) continued its upward progress from the low of May 17 when it was down to 10,918, and a secondary low of 12,151 on August 16, reaching a high of 12,898 on Friday. In Japan, the Nikkei was down to 10,546 on August 16, but climbed back above 11,200 by the close this past Friday.

I don’t have Friday’s results of the Argentina Merval stock index. But as of Thursday, it was holding its own between 925 and 945. In the USA, the Dow Jones Industrial Average continued moving higher from its 9783 low of August 13. On Friday, it had traded back above 10,200 for a brief time. It closed the week at 10,195. The NASDAQ Composite was back over 1860, after recording a low of 1750 on August 13.

Although all of these markets closed rather strong for the week, they are almost all in a temporary overbought condition. On top of that, Monday is the midpoint of yet another cluster of geocosmic signatures extending August 27 through September 2. The first of these signatures is the Sun in opposition to Uranus on Friday, August 27. This is not really a very strong correlation to stock market reversals, as reported in the Volume 3 book referred to earlier. It is only a Level 3 (weakest) type. But it does have a rather strong correlation to greater cycles in T-Bonds, Notes, and Wheat prices. And, as it so happens, T-Bonds are in a time frame when a primary cycle crest is due, and Wheat may be making a double bottom. On a mundane level, this signature can coincide with hurricanes, storms, earthquakes, and a whole host of unexpected and chaotic events.

On Monday, August 30, Pluto will turn stationary direct. All Pluto stations can coincide with periods of tensions and threats to the existing status quo. It represents the potential for destruction, man-made or natural in type. This by itself does not bode well for the Republican National Convention. Extra safety precautions would be advised. On Tuesday, August 31, Venus will form a conjunction to Saturn, another Level 3 type of signature. Usually this signature coincides with a buying opportunity for any market that is declining into it. This might be good for grain prices, which have been declining, but I doubt that it will give a buy signal for stocks. More than likely, it would coincide with a short-term crest in many stock indices in this occasion. This too is not favorable for the RNC because it refers to a state of exhaustion and low energy. It is probably a good thing the republicans didn’t schedule George Bush to speak this day. And then on Thursday, Mercury will turn direct, another Level 3 but very welcomed signature. I think this is the day that George Bush will formally accept his party’s nomination, and make a very important (we hope) speech on his vision for America’s future.

Following that, the United States will begin its Labor Day holiday weekend. There will be no U.S. markets open on the following Monday, September 6, in observance of the holiday. Longer-term, our focus remains on the period September 22-28, when Sun, Mercury, Mars, and Jupiter all ingress into Libra, the sign of peace. If the polls are still close, and the DJIA still below 10,450, don’t be surprised if the White House makes a major announcement regarding world peace. Maybe they will having something to announce regarding Bin Laden. It is a time when someone just might “pull the rabbit out of the hat.”

Please note that the next edition of the SOS World Stock Market Cycles Report, by Raymond Merriman, will be released this week. This newsletter comes out 8 times per year, and covers the long, intermediate, and short-term outlook for the DJIA, NASDAQ Composite, the stocks markets of Germany (DAX), England (FTSE), Netherlands (AEX), Australia (All Ords), Hong Kong (Hang Seng), Argentina (Merval) and the XAU Gold and Silver Mining Index. For more information, please go to our website at www.mmacycles.com, under “Services.”

Disclaimer and statement of purpose: The purpose of this column is not to predict the future movement of various financial markets. However, that is the purpose of the MMA (Merriman Market Analyst) subscription services. This column is not a subscription service. It is a free service, except in those cases where a fee may be assessed to cover the cost of translating this column from English into a non-English language. This weekly report is written with the intent to educate the reader on the relationship between astrological factors and collective human activities as they are happening. In this regard, this report will oftentimes report what happened in various stock and financial markets throughout the world in the past week, and discuss that movement in light of the geocosmic signatures that were in effect. It will then identify the geocosmic factors that will be in effect in the next week, or even month, or even years, and the author’s understanding of how these signatures will likely affect human activity in the times to come. The author (Merriman) will do this from a perspective of a cycle’s analyst looking at the military, political, economic, and even financial markets of the world. It is possible that some forecasts will be made based on these factors. However, the primary goal is to both educate and alert the reader as to the psychological climate we are in, from an astrological perspective. The hope is that it will help the reader understand these psychological dynamics that underlie (or coincide with) the news events and hence financial markets of the day.

No guarantee as to the accuracy of this report is being made here. Any decisions in financial markets are solely the responsibility of the reader, and neither the author nor the publishers assume any responsibility at all for those individual decisions. Reader should understand that futures and options trading are considered high risk.