Review:

Once again most of the world’s stock indices rallied to new multi-month highs in last week’s holiday-market trading. It is not unusual, for the 10 of the last 13 years have now exhibited impressive rallies in the final two weeks of the year, making it a fairly reliable seasonal indicator. In this case, the bullish seasonal indicator has proved to be a stronger factor than the bearish technical picture that was in effect, an important issue that was discussed in last week’s column.

In Europe, the German DAX and Netherlands AEX index soared to new multi-month highs on Friday. The DAX reached 4253.68 and closed at 4251.62, with technical indicators now looking bullish for this coming week. The AEX closed at 348.33, just off its new 5-month high achieved earlier in the day at 348.70. The London FTSE and Swiss stock index also rallied, but not to new multi-month highs. Thus there is still a case of intermarket bearish divergence present.

In the Pacific Rim, the Australian All Ordinaries soared to yet another record new high, hitting 4043.70 on December 22. But perhaps the most impressive move occurred in the Japanese Nikkei, which is now into important resistance around 11,400. If it can break through this week, it will probably confirm a new bull market is in force, and prices could reach 14,000-16,000 in 2005. The Hang Seng of Hong Kong is struggling a bit to give similar bullish signals. Its high of 14,259 last week fell shy of the 14,339 high on December 2. But its technical picture looks positive, and seasonal factors are still bullish, so perhaps it too will make a new cycle high this week.

In America, the Dow Jones Industrial Average broke through a new 3-year high on Thursday. It closed the week at 10,827, which is now in its price target for a reverse head and shoulders pattern that developed back in 2002. The NASDAQ Composite, however, fell short of making a new multi-month high last week. It got to 2168.30, and closed at 2160.60. This is just a little off its recent high of 2171.30 on December 15. But in Argentina, the Merval stock index do soar last week to a new multi-year high, hitting 1358.97 on Thursday.

Each of these markets appears poised to go higher this coming week.

Short-Term Outlook:

The bullish seasonality of this holiday period comes to an end this week. And as it ends, a very powerful – and potentially dangerous – Level 1 geocosmic signature takes place. This is the Mars-Uranus waning square aspect of December 31, which has a 77% historical correlation to primary or greater cycles within 13 trading days (and 64% correlation within 11 trading days). It also begins a series of signatures that lasts through January 13, making this a legitimate “cluster zone.” Clusters of signatures are the basis for our critical reversal dates. Thus, the holiday rallies may be coming to a screeching halt in the first few days of the New Year.

Mars in a square aspect to Uranus can be an explosive situation, both figuratively and literally. It is considered an accident-like dynamic in astrology. Mars can be reckless, impatient, or combative, and Uranus can be shocking and surprising, an unexpected event. The square is usually problematic. On a positive side, it can be a time of sudden inspiration, a flash of insight. But also it can relate to sudden, disturbing and upsetting events and/or accidents. At the same time, Mars is now ingressing into Sagittarius, December 25 through February 6. Historically this has coincided with increased dangers and hostilities in the Middle East, especially in regards to Israel and her neighbors. Amidst such signatures, crude oil prices are vulnerable to sudden and sharp spikes up in price.

Long-Term Thoughts:

Let’s see: how many readers wrote me last week, trying to explain how I must be missing the point behind the Bush proposal for handling the Social Security crisis? That the basis for his concern about social security crisis is really about his desire to privatize the program so that the financial community will personally reap the trillions of dollars in fees that would come their way by adopting his plan? Duh! It was one of the reasons why I wrote the column of two weeks ago, explaining why privatizing social security is a bad idea. It’s not because of all the fees that would go to the financial community – which would no doubt be substantial. It is because with the help of the financial community, a great number of individuals would make a mess of their accounts. Just observe how many individual investors invested their retirement accounts wisely in the year 2000, when the technology bubble broke. And for that matter, how many mutual funds outperformed the market that year (or any year)? It was a disaster, with untold numbers of people ruining their retirement investment accounts. The vast majority of individuals do not outperform the broader market, nor do the majority of investment professionals. Privatizing social security could be a disaster waiting to happen if not handled correctly. And if it does turn out to be a disaster, the government will be called upon to bail out everybody, and that too will lead to the need for higher taxes.

This is of concern, because we are now in the down side of the Saturn-Pluto cycle, which is force 2002-2020 (with a peak in either 2008-2010 or 2018-2020). This is a period when western countries tend to experience higher federal deficits (which Bush promises will be reduced in half in the next 5 years), higher taxes (which Bush has said will not happen on his watch), higher interest rates, and a struggling economy (which Bush obviously doesn’t want). But I am also certain that if privatization is passed as a segment of the Social Security “solution,” stock markets (especially in U.S.) will soar. After all, that will mean a lot of money coming to Wall Street to invest. And it will take time to uncover the large losses that I believe could follow. If that plan passes, the stock market will likely explode to new all-time highs this decade, and maybe even this New Year. So, instead of seeing 2008-2010 represent the end of depression, we could be on the verge of yet another explosive bull market in stocks, which would then be more likely to peak in 2008-2010. Remember: the geocosmic signatures do not tell us if the market will be a new cycle high or low, but only that the trend in effect at the time will reverse. Saturn in conjunction or opposition to Uranus is the only geocosmic signature that has a 100% correlation to 4-year or greater cycles, as reported in The Ultimate Book on Stock Market Timing Volume 2: Geocosmic Correlations to Investment Cycles. And it has a 90+% correlation to 18-year or greater cycles. It next appears in 2008-2010. So we anticipate that this will either be the end of an18-year cycle trough or crest. If the all-time high in 2000 is not exceeded, then it makes sense (to me) that Bush’s plan for a social security overhaul involving privatization will not be passed. But based on the performance of the U.S. stock indices this month, it seems that Wall Street is expecting his plan to pass, in which case there will be ton of money coming into the markets – via social security – and that will surely drive stock prices to new all-time highs in the next few months, but possibly lasting into the end of this decade.

So once again, one of the truisms about the market may be about to unfold: people who invest based upon the possibility of a crisis historically do much worse than those who invest based on the hope of expansion and increase of abundance. Over time, people of free societies have always worked out their problems, and evolved to greater and greater states of economic freedom. So even though I foresee the great possibility of major economic crisis in the next couple of years, or the following decade, I also foresee that the world - and yes, Americans too - will overcome this crisis. I know this may disappoint many of the pessimists out there, but of this I am certain: the natural force of human evolution is creative and expansive, and not destructive and contracting. When we create or desire destruction and contraction, it is because we are centering our attention and efforts on our individual selves, and not upon That which created us. It is a terrifying choice everyone is confronted with in this life, and the choice we make determines the basic difference between … good and evil.

Happy holidays to everyone, and best wishes for a prosperous and joyous New Year.

Announcement: Forecasts for 2005 books are still available at $39.95 (plus $5.00 postage USA and Canada, or $12.00 elsewhere), while supplies last. These may be ordered through our website at www.mmacycles.com (click the banner on ORDERS or BOOKS). Or you can order via email at ordersmma@msn.com, or by fax at 1-248-427-1994, or by phone at 1-248-626-3034. This unique overview of each year covers forecasts and critical reversal dates for the Dow Jones Industrial Average, Gold, Silver, T-Notes, Euro, Swiss Franc, Japanese Yen, Corn, Soybeans, Wheat and Crude Oil markets. It is already proving to be true with Gold and Silver as of last week. Order now and lock in your copy of the 2005 Forecasts Book.

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.