ASTRO ECONOMICS® STOCK MARKET NEWSLETTER
Volume 14 - Issue 3 Published by Astro Economics, Inc. March 1, 2009
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HOUSING CYCLE – BOTTOM AUGUST 2009
The current down cycle in real estate values should bottom in August of this year. Using the 22-year Nodal Cycle, the highs in the cycle occur about 11 years after the low in the cycle. During the Great Depression of the 1930s, real estate values hit bottom in February 1935, moving to a high in June 1944. An example of how real estate values actually work: If you had purchased a house in 1960 for $20,000 near the high in the cycle and you wanted to sell it 10 years later in 1970 near the bottom of the cycle value of the house would still be only $20,000. But by 1980, near the top in the cycle, that same home would have increased in value to $80,000. Using these cycles can be very profitable if home-buying is more than just a place to live. The last top was about May 2000 moving to a bottom this year. The next top in the cycle will be in 2020. When is it time to buy and when is it time to sell? Those buying in the next few years will be reaping the profits in 2020.
DEFLATION
In the previous issues we talked about deflation and what it means to the value of money. Instead of salary increases, there will be cuts in pay. Goods and services will not increase in price nor will housing prices rise. We are repeating the 1944-1956 planetary cycle when Neptune was in an air sign, Libra. Currently Neptune is also in an air sign, Aquarius. Low inflation and low interest rates were part of the success of rebuilding the economy after the Great Depression and World War II.
THE STOCK MARKET DIRECTION
The stock market’s direction is not necessarily in direct correlation to the direction of the economy. In fact, the market is usually ahead of the economy. In last month’s newsletter we said, based on the Bradley Model, that the market most likely will start to move up after late February. Then most likely we will see a steady climb into the summer. Short pullbacks could occur late March and again early May moving to new highs around mid-July and a higher high late August...then a steady move down in the fall with the low in November. How do you get back into the market, if you have been on the sidelines? The answer is…cautiously. Start with small lots, about half of what you might normally purchase. As you see the market advance, add to your positions. There is usually another opportunity to purchase on a pullback as the market doesn’t travel up in a straight line. Begin to accumulate stocks that have been on your watch list. Protect your principal with an 8% stop on your purchases.
FOCUS ON HEALTHCARE, ENERGY & EDUCATION
President Obama gave a call to action in the areas of healthcare, energy and education as important parts of America’s economy. Last year these were the sectors we designated as favored sectors for 2009 in this current Jupiter in Aquarius cycle. Another area in the spotlight as a result of the recently signed $787 billion stimulus bill is U.S. Solar Energy companies.
(We already have stocks in these sectors listed on our Recommended List.)
Sohu.com, Baidu.com, Illumina, Emergency Medical,
NCI, Inc., Sunpower Corp., Green Mountain Coffee,
Emergent Biosolutions, Google, H M S Holdings
NCI, Inc., Sunpower Corp., Green Mountain Coffee,
Emergent Biosolutions, Google, H M S Holdings
HORROR MOVIES
The last time the market dropped 50% was in 1931. As we watch the relationship in business to the economy, we’ve noticed that horror films tend to dominate the movies in times like these in 1931 and in 2009.
ECONOMIC CYCLES
Economic cycles are also based on the 22-year Nodal Cycle. The economy was already starting a slow transition to below average from April 2003 to January 2005 (although the downturn may not have been recognized at that time). The downward direction continued from January 2005 through December 2007. Now is the lowest period in the economic cycle from January 2008 until July 2009.
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