Most stock markets of the world continued to fall to new multi-week lows last week. Several took out their lows of late March, and yet others did not, creating cases of intermarket bullish divergence as we now enter the central time band of an important geocosmic critical reversal date.

In Europe, all of the indices that we discuss held above their March 24 lows. The German DAX index fell to 3769.90 on Wednesday, which was above the 3692.40 low of March 24. The Swiss Stock Market Index fell to 5641.80 on Monday, May 10, which is well above the 5471 level of March 24. The London FTSE index fell only to 4395.20 on May 10, which is also well above the cycle low of 4291.30 registered on March 24. And even the weak Netherlands AEX index held barely above its March 24 low with last week’s decline. The low of March 24 was 323.73, and the low last week occurred on Wednesday at 325.36, effectively forming a double bottom chart formation. In each of these cases, not only did the lows of March hold, but also the momentum indicators have reached oversold levels, indicating a rally of some significance is ready to begin shortly. Thus, in European markets, there is still a strong argument that the 50-week cycle was completed in late March, and the lows of last week may have been the first major cycle phase of the new primary and 50-week cycles. And thus lows were higher than the prior lows, a bullish sign until there are taken out.

But the same patterns did not follow in the Far East or the United States, or even South America, where almost all major indices fell below their lows of March. In Australia, the All Ordinaries fell to 3348.40 on May 11. The previous cycle low on March 25 was 3375.80. In between these two lows, the All Ords had made a new all-time on April 23 at 3472.50. After posting a new yearly high at 12,195 on April 26, the Japanese Nikkei Index fell to a new multi-month low at 10,739 on Friday. It appears that the a Nikkei is now in a bearish trend until its 18.5-month cycle low comes due, which is yet another 2-9 months away. Yet we could see a strong 2-5 week counter-trend rally start at any time. In Hong Kong, the Hang Seng fell to 11,331.70 on May 11, well off its recent high of 14,058 on March 1. The cycles we observe in Japan and Hong Kong are different lengths than those of Europe and United States. But in both cases, momentum indicators are very oversold, suggesting a strong 2-5 week rally is due to commence at any time.

Both the Dow Jones Industrial Average and NASDAQ Composite penetrated below their lows of March 24 last week. On Wednesday, the DJIA fell to 9852.20 before snapping back above 10,000. The low on March 24 was 10,007. The NASDAQ Composite fell to 1878.80 on May 12, slightly below its prior low of 1896.90 on March 24. This is particularly significant to us from a cycles’ point of view, for it appeared that the lows of March were 50-week cycle troughs. They were due then. In fact, their time bands have a range of 38-62 weeks, and are still in effect through May. But the rally that followed March 24 seemed to have the amplitude of a new 50-week cycle. This is troubling, for if March 24 was the 50-week bottom in U.S. stocks, that low has now been taken out. That would mean the trend is now down until this new 50-week cycle bottoms, which would not be for another 30-50 weeks.

Making new lows after the month of May would not bode well for George Bush according to the “Pre-Presidential Election Year Trough” cycle. This cycle shows that there is usually a 50-week or greater cycle trough between October and May preceding the U.S. presidential election. If that low is taken out prior to the election, and the high that preceded it is not taken out, then the incumbent usually loses. The only exception I have found to this pattern has been Ronald Reagan in 1984. In that year, the trough occurred slightly above 1100 in February 1984. The rally that followed did not make a new high (above 1300), and in August of that year, the DJIA fell to 1079, slightly below the “Pre-Presidential Election Year Trough” of February. Yet Ronald Reagan still won. The market did manage to come all the way back to almost 1300 by the time of the election. Can George Bush do the same? Can the stock market do the same? Or will he follow the same path as his father. There are a lot of eerie similarities to many markets – especially currency markets – in 2003-2004 as we witnessed in 1991-1992. And of course, the similarities with political and military problems concerning Iraq are also notable. It is also a fact that I am on record for forecasting that George Bush will win this election. But based on this “Pre-Presidential Election Year Cycle,” I would hedge that forecast now, especially if the DJIA makes a new low after June 1. I didn’t expect the March low to be taken out.

But the geocosmic picture offers some hope for the U.S. stock market, and in fact, for all of the world’s stock indices. Both Venus and Neptune turn retrograde May 17, along with a powerful trine formation between Mars and Uranus. All of these are Level 1 (most powerful) geocosmic signatures, indicating a high probability of a major change in direction within ten trading days of May 17. That’s Monday, so we are there right now, and in fact we note that all of these indices are making multi-week declines into this time band. Not only that, but also all are exhibiting very bullish-looking technical patterns, whether one consider intermarket bullish divergence or technical oscillator divergence. As stated earlier, European stock indices are not making new lows (below March lows), while the Far East and U.S. markets are (intermarket bullish divergence). And all markets show oversold momentum and oscillator levels as these new lows are being made. Many also show double “looping formations” at these oversold levels, and that is a technical pattern indicating that a major rally could be about to commence. I don’t know what it is going to take to move the market sentiment from bearish to bullish, but the retrograde of Venus alone suggests that it can occur. Usually Venus retrograde correlates with a shift in central banking policies. Since the fear has been of rising interest rates, maybe that attitude is given reason to change back again. After all, falling stock markets create concern about the future direction of the economy. Maybe the FED will now offer greater assurances that if there are to be any increases in rates, they will be minimal and perhaps even temporary. There may be messages that interest rates will not necessarily start a whole new cycle of successive increases as many of us previously feared. At least not between May 17-June 30, the period in which Venus will be retrograde. Or maybe that is already built into the market at this time, so if rates do increase, stock prices actually start to rally, for investors already know that the rate increase is the last for a while, and not the beginning of more to come.

In other markets, we note that grain prices have fallen sharply in the past week, especially Soybeans and Wheat. Venus also rules Soybeans, and Neptune rules rain. As the rains came (Neptune retrograde on May 17), the prices fell hard. But late next week (May 25), Mars will conjunct Saturn. This is a signature that oftentimes is present during spells of hot and dry weather. Let’s see if these signatures coincide with another sharp turn around in Soybeans in the next week or two.

On a geopolitical level, Mars conjunct Saturn usually coincides with threats of war and aggression. The conflicts are not over yet. The Mars-Saturn conjunction occurs in Cancer, sun sign to both the United States and President George Bush. Progress towards peace may go very slowly this week, as the tensions and accusations surrounding the abuses of both Iraqi prisoners and retaliation of beheading of U.S. citizen(s) continue high. Saturn on one’s Sun indicates that harsh criticism is likely to continue this week, as will demands for accountability, ala Donald Rumsfeld, another Cancer.

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.

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