Outlook March 28

Another good week for our lunar cycles approach.
The Nasdaq produced an 82 point decline in the last lunar Red Period.
And now the market is rebounding swiftly.
We mentioned last week that the Nasdaq would climb back to 2750 easily, and that’s where we are already right now.

With more lunar Green Period days coming up we can look forward to some further gains this week.

But we are at a point where the further action can become quite telling.
If the market stagnates near current levels, it will increase the odds for another leg down.
If the market continues to rise and climbs above the February highs, then we can write off the recent downturn as a normal correction in an ongoing bull move.
If the market goes up to February highs and stagnates there, then it is the likely start of a longer sideways pattern.

Here is a longer term S&P 500 chart, showing 3 different trend channels that are in play (click for larger image):

The steepest channel that started last summer would take the S&P to new all time highs before the end of the year. A break out above 1400 would open the door for that scenario.
If the markets breaks down from this steep channel, then we will probably see one of the other two channels being tested.
We can use this chart for locating support and resistance levels going forward.

Danny

Outlook March 21

So, that was a pretty solid down move we got in most stock markets last week.

The Nasdaq fell right to the 2600 level, as we mentioned in our post two weeks ago.
While we have a few more lunar Red Period days to go, I think the bottom for March is in, unless we get yet another disaster hitting somewhere.

The upcoming lunar Green Period will help markets recover from the recent losses, the question will be how strong a recovery we will see. It may only set us up for another leg down in April or May. We have to watch as always.

Now some charts.
We suggested to buy some Japan this week.
The Nikkei index may have made a major bottom indeed.
As long as it stays above 8200 it will be OK (click for larger image):

And here is the current Nasdaq chart (click for larger image):

Still holding in a rather steep uptrend channel.
I think the Nasdaq will climb back to 2750 quite easily, but then what next?

Good luck, Danny

PS: Last Tuesday we tweeted that the best chances for a rebound in the market would come on Thursday, which is what happened. You can follow us on Twitter to receive our occasional tidbits.

Outlook March 14

Red Period is bringing the expected decline in most markets.
Even before the earthquake in Japan the market had already dropped below its recent uptrend line.

More red period days are coming up this week, so likely further weakness.
But probably some bottom is going to be formed between now and early next week.

There is a rare perigee full moon coming up for March 19, so I’ll postpone my buying till early next week.
Perigee full moon creates spring tides, and can also trigger earthquakes in areas that are ready for one.
This is because the extra gravitational pull of a perigee full moon can be the proverbial drop that makes the bucket flow over, and cause underground stress to be released.

Here is the current chart for S&P 500, with major support levels drawn in (click for larger image):

As for Japan, there will be no Chernobyl type disaster. This is probably a good opportunity to buy some Japanese stocks this week. That is also a good way to help the people there. Some of them will have to sell stocks (to rebuild their homes and economy), and if there are no buyers in the market they would take big losses. By stepping in as a buyer you help putting a floor under the prices.

Good luck to all, Danny

Outlook March 7

Market action was pretty much as expected last week.
Market is trying to recover and close to making a double top.

With a couple more days of lunar Green Period to go the Nasdaq could add another 20 points or so, but I would use it as an opportunity to sell.
A weak Green Period is all but certain now, so this signals that the path of least resistance has probably turned down for the moment. We haven’t had a negative Green Period since early August last year, and typically negative Green Periods are followed by more weakness in the next weeks or months.

Here is a current chart of the Nasdaq, with some trendlines and support levels I consider important (click for larger image):

A drop below 2750 this week would confirm an ongoing correction. First target 2600, then 2450.
Just staying out, and I will watch if there is any buying opportunity by the end of next lunar Red Period.

Good Luck, Danny