Lord Ganesha rides Mooshika, or rats. Although Indian scripture says he rides mice and not rats. Regardless, there is also supporting literature that claims it is a large Indian rat or a bandicoot rat. Mooshika, or a known pest to farmers and crops, helps Ganesha.

As Lord Ganesha is the remover of obstacles, his standing or riding on the rat symbolizes that with the rat’s ability to slither through tiny holes, together they really can conquer anything.

I thought this a perfect segue into introducing you to how this Year of the Rat might affect the stock market.

Each year, I study the work of Raymond Lo, famed Chinese astrologer. His track record is good. Not perfect, but good.

For 2020 Raymond Lo says, “The relationships of the Chinese Five Elements (metal, wood, water, fire and earth) are believed to be the basic components of everything in the universe, from sounds, colors, shapes, directions, numbers, emotions, organs, etc.”

This year, the fire element is completely absent.

Lo says “Without fire to control the water element in the rat, we can expect to see water- and fire-related disasters, including sea and air accidents. Furthermore, because the Fire Element is totally absent and both the Metal and Water Elements are weakening the Earth Element, there will also be more serious earth-related disasters such as landslides, sink holes, avalanches, mining accidents, building collapses, and earthquakes.”

Should these disasters occur with any regularity, that gives the commodities theory credence. (Incidentally, on Friday, Like Tahoe in California had an avalanche reporting several missing people.)

Natural disasters could impact the prices of raw materials, still trading at historical lows compared to equities. What else might we prepare for as the year continues? There could be a continuation of public upheaval and rebellion.

Going back 120 years, in 1900, also a Yang Metal Rat year, it was a very turbulent time in Chinese history. It was the peak of the Boxer Rebellion.

In 1600 (also the Year of Yang Metal Rat) there was an aggressive invasion by the Russians into Manchuria.

But cheer up, there is good news too.

The Rat is a Peach Blossom (or Flower of Romance) star and it will stimulate plenty of sex and romance. So there’s that.

Lo has a lot to say about the global outlook and the stock market.

“The cycle of the Fire Element ended in 2017 with Yin Fire Rooster. When the Dog year arrived in 2018, the Fire entered the grave, resulting in setbacks in the economic atmosphere and creating a lackluster, zero-sum year. 2019, Year of the Pig, represented the termination of the Fire Element. The pessimistic energy of Water—also the symbolic emotion related to fear— has begun. Hence, the world economy has been greatly affected by the trade war talks between the U.S. and China, which generated a lot of fear and uncertainty for global investors.”

He goes on to say, “These upcoming years 2019, 2020, and 2021 all belong to the Water cycle. Fire does not return until 2025.

Therefore, the general economic atmosphere is entering a bearish cycle and the pace of growth will slow significantly.

Looking back to 2008 (also a Rat Year), Wall Street was in turmoil after the financial tsunami of the mortgage industry that lead to the recession.

Lo also says that pessimism, cynicism and despair will set in and contribute to an economic decline.”

He also said that last year. That makes me wonder, can he be wrong two years in a row?

It’s not that simple. Certain industries thrive even in the worst market conditions.

Here is what Lo expects could do well:

Most likely: Energy, power generating, restaurants, and entertainment.

Next industries that can do well belong to the Earth Element. Earth industries are real estate, land development, mining, insurance, computer software, and technology.

Finally, the third-most prosperous industry belongs to the Metal Element. These industries include automobiles, engineering, banking, and machinery.

And here is what Lo says could suffer:

Shipping, transportation, and communication.

Wood industries such as fashion, media, books, and environment will also face an uphill climb.

Lastly, Lo expects 2020 to be a favorable year for President Trump, with a high likelihood of reelection. He also believes this year will favor Putin.

He further states that Prince William could succeed Queen Elizabeth.

In 2017, the Year of the Rooster, Lo nailed it. As a fire year, we saw the market rally big time.

In 2018, the Year of the Dog, like dogs, the market had both a best friend and a rabid threat. Lo nailed it again.

Last year, the Year of the Pig, we saw the rise of water-like threats, but certainly not reflected in the market. Lo missed the mark.

So, with the Year of the Rat, an animal described as smart, opportunistic, occasionally stubborn and greedy, should Lo’s predictions come to fruition, remember the Chinese proverb-“In every crisis, there is opportunity.”

Xīnnián kuàilè Happy New Year!

S&P 500 (SPY) Yet another new all-time high. 327 support

Russell 2000 (IWM) Made a new January high and closed on the intraday lows. Still not that close to the all-time high made in 2018. 166.43 pivotal

Dow (DIA) Made a new all-time high and closed near the intraday lows. 289.27 the level to hold

Nasdaq (QQQ) Made another new all-time high and now 219.25 support to hold

KRE (Regional Banks) Confirmed bullish but I would still watch this. 57.09 pivotal

SMH (Semiconductors) 143.95 pivotal support

IYT (Transportation) 200 support. If clears 204 could see move to 208

IBB (Biotechnology) 120.62 support

XRT (Retail) 45.50-46.00 pivotal

Volatility Index (VXX) If closes Tuesday above 13.56 returns above the seasonal low