October is not often a good month for the stock market. But in a market that is overvalued and long overdue for a correction, combined with fears over war and infectious diseases, American optimism hit a new low this week with a precipitous plunge in the markets.
The (Sibley) astrological chart for the US has Sagittarius rising, and Sagittarius likes to do everything in a bigger than life fashion. Americans are famous for overreacting (witness the current hysteria over ebola) and there has been plenty of bad news to react to. While it’s true that Mercury retrograde periods often bring reversals, they are typically not so dramatic as the one we saw yesterday. This was a highly reactive and emotional “freak out” that brought added drama to what would normally have been a pullback from inflated markets.
This chart tells the story:
You can see that the Dow began its rapid decline on October 8th, the day of the lunar eclipse. Eclipses are known for heightening emotion, and this eclipse, with the Sun at 15 Libra and the Moon at 15 Aries, sat right on the Sun/Saturn square in the US chart which would have activated the inherent anxiety in the US national consciousness. As if that weren’t enough, transiting Saturn is approaching a square to the Moon in the US chart which will be in exact alignment in mid to late November of this year. So don’t expect the anxiety level to decline, and in a global world where everything is connected, this will affect markets the world over.
The big news, though, should be the small-company Russell 2000. Not only was it far less volatile than the its big-cap brethren, it finished up on the day. And not just a little bit up, but up 1% at 1,072.45. For an asset class that was busy getting beaten up as recently as last week, that’s quite a turnaround.
It might also be good news for investors. I spoke with Richard Bernstein ofRichard Bernstein Advisors today and he pointed out that the fact that small caps have been outperforming could be a sign that “the healing process has begun.” The reason: “We’ve gone from the emotional ‘let’s short every beta we can find’ to looking at fundamentals again,” he says. In this case, the fundamentals are that of the U.S., which still look relatively strong despite disappointing retail-sales and Empire State manufacturing data this morning, versus Europe, which could be sliding back into recession once again. Small caps have the less exposure to Europe than large caps, Bernstein says.
This favoring of small cap stocks and smaller companies is interesting in light of the square of Uranus in Aries – the individual – against Pluto in Capricorn – the corporation. I wrote recently that this planetary cycle is fostering the “freelance economy,” and it’s possible that we will see the breakup (Pluto) of larger corporations (Capricorn) into smaller ones that are more agile and more easily able to adapt to changing times.
Smart investors take advantage of market declines to snap up undervalued stocks, so there are opportunities here. THIS IS NOT FINANCIAL ADVICE, but I know that I will be prowling the bottom, looking for good buys.