LunaticTrader

Investing with the Moon

Is the correction over ?

Posted by Danny on October 27, 2014

Last week I wrote: “We remain in a lunar green period so I expect this to be a bouncing back week, with upside targets of 4350 and even 4450.” But even that was too pessimistic as the Nasdaq has already climbed to 4484. Does that mean the correction is over? Not necessarily, as I also wrote: ” … What happens next will tell us whether we are in an ongoing correction/bear market or in a continuing bull market.
We will find out soon what happens next. This market is not out of the woods just yet, as can be seen on the following S&P 500 charts (click them for larger images). First a longer term chart:

S&P500

Since the 2011 lows the S&P has moved within a broad channel. The recent decline has not changed that. A pattern of lower lows and lower highs may have started (green channel). Within the next few months we will see whether the long term up trend prevails or not.

A more close-up picture:

S&P 500

The market has bounced back very strongly from major support just above 1800. Overhead support is now around 1980. Technically my slower Earl2 is turning up, which bodes well longer term. But the faster Earl is in overbought territory already, signalling we need a bit of a pullback first. We are starting a lunar red period, so I think the S&P will take a step back before it can take another step forward. A quick retest of the 1800 support area remains possible, but the more likely scenario is a milder “give-back” before marching on again.
A drop below 1800 would probably result into a mini-crash.

Good luck,
Danny

 

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Key reversal levels for week of October 27, 2014

Posted by Danny on October 26, 2014

Our key tables and comments for this week. Click the “Expand” button (bottom right) to watch in full screen mode.

If you have any trouble to see the presentation below, then you can also click here.

Good luck, Danny

 

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Why a trader should experiment and how

Posted by Danny on October 20, 2014

Remember the now defunct TickerSpy.com? I used it a few years ago to conduct some live experiments with random stock portfolios here on this blog. You can still read the results and conclusions here: Random stocks experiment. Just like science improves through experiment, a trader can improve from doing experiments as well. More on how and where a trader can experiment will be discussed further on in this piece, let’s first take our customary look at the market.
Here is the current chart of the Nasdaq (click for larger image):

Nasdaq

The Nasdaq has dropped below some important support levels in recent weeks. It has found a (temporary?) bottom on Wednesday and now appears to be bouncing back. I have been talking caution and standing aside for weeks, mainly because my Earl2 indicator (orange line) keeps dropping. Earl2 still doesn’t show any signs of turning up, but at least it is now in deep bottom territory and the faster Earl and MoM indicators are finally turning up from major lows. So, we can start to become a bit more optimistic at this point, but another quick drop to ~4000 cannot be ruled out yet.

We remain in a lunar green period so I expect this to be a bouncing back week, with upside targets of 4350 and even 4450. What happens next will tell us whether we are in an ongoing correction/bear market or in a continuing bull market. But that will be a topic for the next weeks. This is still not a safe market (as if it ever is), but it is a bit safer to enter than the last weeks.

Another topic that will start coming into play is the seasonal tendencies. Nearly everybody knows that stocks tend to perform very well in the autumn through winter period, and those seasonals have not failed to show up for 5 years in a row now. Buying with your eyes closed in Sep-Oct has been profits in the bank since 2009. Will the winter 2014-15 make it 6 in a row? If stocks start going up after the recent correction then many investors will take that as a signal to buy going into a strong period for the next 4 to 5 months. But could investing continue to be that simple? Or are the seasonal tendencies overdue for a hiccup? More on that next week.

***

As I said in my opening remarks, experimenting can help an investor improve. There are many ideas we can try, we can experiment with different timeframes or with stocks we normally never buy, or we can just test to see what happens if we follow the recommendations of the pundits on CNBC. There is always something left to learn.
How to do it? Well, experimenting within the comfort of our own PC is perfectly possible. But the disadvantage of trading experiments that nobody else sees is that we are doing it in a completely unrealistic “nothing to lose” setup. In a public experiment we put at least a bit of our reputation on the line, so it is more like trading for real money. TickerSPY closed down last year, but Scutify is now opening up very similar portfolio manager functionality in their new Hedge Fund Manager. They are starting today and I will participate with a few public portfolio experiments. It is open to everybody so feel welcome to join in with your own experiments.

Good luck,
Danny

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Key reversal levels for week of October 20, 2014

Posted by Danny on October 19, 2014

Our key tables and comments for this week. Click the “Expand” button (bottom right) to watch in full screen mode.

If you have any trouble to see the presentation below, then you can also click here.

Good luck, Danny

 

Posted in Market Commentary | Tagged: | Leave a Comment »

A market in trouble

Posted by Danny on October 13, 2014

Stocks markets came under serious pressure last week and many indexes broke below important support levels. The Nasdaq has dropped 236 points in the lunar red period that just ended, making it the worst red period since we started this blog. In the next weeks we have to watch how the market recovers from this, if at all.

Let’s have a look at the S&P 500 chart (click for larger image):

S&P 500

I have been pointing out for weeks that the market is at a high risk point. By now several long term uptrend lines have been broken, and the S&P 500 is testing its August lows. If that level doesn’t hold, then the February lows could become the next stop.
Technically, my Earl2 is still dropping fast, with no signs of bottoming out yet. The faster Earl and MoM are trying to build a base, so a rebound rally could start any day. With a lunar green period starting I think we will get a rebound rally from these levels. The question will be whether the market can repair the damage that has been done. Or will investors use any bounce to lighten up on stocks in their portfolio? We will find out soon.
My key reversal levels are now bearish for many markets. This is a different trading environment than the one we have become used to in recent years. The market can come back from this kind of pullback and go on to new highs, but it can also be the start of a bigger decline. It is just too early to tell at this point. We have to wait for more positive signals.

Good luck,
Danny

 

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Key reversal levels for week of October 13, 2014

Posted by Danny on October 12, 2014

Our key tables and comments for this week. Click the “Expand” button (bottom right) to watch in full screen mode.

If you have any trouble to see the presentation below, then you can also click here.

Good luck, Danny

Posted in Market Commentary | Tagged: | Leave a Comment »

LT wave for October

Posted by Danny on October 6, 2014

Another volatile week pulled stock markets down, only to see them rebound strongly by the end of the week. What’s next?
As we pointed out last week, the market is at a high risk point. That is still the case here. Last week’s drop has set important lows. If these lows get broken to the downside, then we are very likely to get a bigger drop.
The situation is quite clear on the Nasdaq chart (click for larger image):

Nasdaq

Thursday’s low tested the long term up trend support line. The market rebounded very strongly and climbed right back to the July highs. We can expect some resistance at this point. A second test of the 4400 level is easily possible, but not a given.
Technically my indicators are coming close to bottoming, with the faster Earl (blue line) tentatively turning up already. The slower Earl2 (orange line) will need a bit more time to turn up. We remain in a lunar red period, favoring more weakness in stocks.
I think the next week will be sideways to down, looking for direction. Longer term I would just wait and watch what happens first: a break out to new highs or a drop below 4320.

With this kind of setup I prefer to stand aside. The downside risk is still high, while the upside potential is limited by the resistance level formed by recent highs. In the market there is always enough money to be made by going along with what happens. We can try to estimate odds for a given move, or attempt to predict what will happen, but at the end of the day it is our going along *with* the market that makes the money, while trying to fight the market usually costs money. The desire to make forecasts, and the ego that comes with it, is what tends to get (and keep) us into fighting the market. An expensive hobby. Humbly going along with the moves that come is not very ego-fulfilling and that’s why it is a difficult thing to do.

***

I was too busy to post the LT wave for October, so here it is (click for larger image):

LT wave

Expected weakness in the beginning of September panned out as sideways action, but expected strength after the 20th failed quickly. The market embarked on a serious decline and printed a low on October 2nd.
October 2nd happens to be a major bottom value in the LT wave for October. Other expected lows for October are seen on the 10th, 18th and 29th. This can be lower lows, or just pullbacks in a rising or sideways market. The projection looks fairly neutral with the strongest period coming in the second half of the month.

Remember, this LT wave is experimental, so use with the necessary caution.

Good luck,
Danny

Posted in Financial Astrology, Market Commentary | Tagged: | 10 Comments »

Key reversal levels for week of October 6, 2014

Posted by Danny on October 5, 2014

Our key tables and comments for this week. Click the “Expand” button (bottom right) to watch in full screen mode.

If you have any trouble to see the presentation below, then you can also click here.

Good luck, Danny

Posted in Market Commentary | Tagged: | Leave a Comment »

Market motor sputtering

Posted by Danny on September 29, 2014

After a very volatile week US markets stabilized a bit on Friday. The Nasdaq ended the recent lunar green period with an 80 point loss, making it the weakest green period since January. Is this weakness set to continue in the current lunar red period?
Let’s take a look at the S&P 500 chart for clues (click for larger image):

S&P 500

The recent market action in the S&P 500 is eerily similar to the first 3.5 months of the year (red boxes in the chart). In April this led to a 10% rally in the next 2 months. Are we setting up for a similar outcome? Maybe, maybe not. We have to watch the support and resistance levels very carefully. A drop below 1950 would clearly tell us that we are in a different scenario.
Technically, all my indicators are pointing down right now, and my weekly key reversal levels are also flashing warnings. So, until some of these indicators turn up I would stay very cautious. We are at a high risk point in the market.

Stay tuned,
Danny

 

Posted in Financial Astrology, Market Commentary | Tagged: | Leave a Comment »

Key reversal levels for week of September 29, 2014

Posted by Danny on September 28, 2014

Our key tables and comments for this week. Click the “Expand” button (bottom right) to watch in full screen mode.

If you have any trouble to see the presentation below, then you can also click here.

Good luck, Danny

Posted in Market Commentary | Tagged: | Leave a Comment »

 
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