LunaticTrader

Investing with the Moon

Slow slide

Posted by Danny on May 23, 2016

Stocks had a quiet week, extending the slow slide that started in April. Will the selling intensify? We have a few more days of lunar red period to go, so if it does it may come sooner rather than later. But if every dip continues to be bought, as seems to be the case in recent weeks, then selling may dry up and pave the way for another strong upswing. Here is the current S&P 500 chart:

^SP500 (Daily)  8_20_2014 - 5_20_2016

The market is basically unchanged since mid-March, and down a little over 2% since the April closing highs. Yawn… This is about as mild a pullback as one can expect after an almost 20% rally. Of course, this correction may not be over. A downward acceleration and swift drop below 2000 would alter the picture significantly. But until that happens we have to keep considering the scenario of a continued rally too. Investors are not prepared for a further rally and according to some measures bearish sentiment is already back to the levels last seen at the January-February lows. If that’s indeed true then the odds for a further rally are much better than most investors currently believe.
Technically the setup is gradually becoming more attractive. The slower Earl2 (orange line) keeps going down but is now well into bottom territory. The faster Earl (blue line) and MoM indicator are painting bottom formations as well. Once the Earl2 turns up we may get a great entry point, especially if the 2000 level gets tested in the S&P 500.
I wouldn’t rush in just yet. But I would stand ready to do some buying if this market turns up. Especially if it turns up without any clear reason to do so.

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

Outlook for Week of May 23

Posted by Danny on May 22, 2016

Outlook for world markets with brief comments for next week.

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

Click the “Expand” button (bottom right) to watch in full screen mode.

* The latest weekly reversal levels for over 2500 stocks and ETF can be found every weekend at http://www.reversallevels.com/.

* For shorter term trading and more optimal entries there are daily reversal levels, which are available as a monthly subscription. It comes as a daily html file covering over 2500 stocks from Dow Composite, Nasdaq 100, S&P 500, S&P 400 mid caps, S&P 600 small caps, and more than 100 popular ETF. Instructions for use are included. Give it a try.

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

Be ready for everything

Posted by Danny on May 16, 2016

Stocks tried to rally for a few days, but fell back just as quickly. The pullback has been very orderly so far, and after 4 weeks of downside action a bottom may be near. Of course it is also possible that more downside action is in the pipeline. Let’s have a look at the Nasdaq chart:

^COMP (Daily)  8_29_2014 - 5_13_2016

The 4600-4700 area is a probably bottom zone if this market is setting up for a further climb. A drop below 4600 would look much more bearish. Four weeks of downside action has brought the slower Earl2 index (orange line) into bottom territory, but it is not turning up yet. The faster Earl (blue line) and the MoM have bottomed already.
We may see another rally attempt this week, but I think it will take another dip below 4700 to allow the Earl2 to paint a proper low. That would give us a nice setup going into June.
So, I would wait at this point and when the next lunar green period starts towards the end of May we could have a favorable situation to enter longs. Patience pays in this kind of situations and we may be moving towards a “buy in May” while nearly everybody will be chanting the classic “sell in May”.
Be ready for everything, then you can’t be surprised by anything.

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

Outlook for Week of May 16

Posted by Danny on May 15, 2016

Outlook for world markets with brief comments for next week.

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

Click the “Expand” button (bottom right) to watch in full screen mode.

* The latest weekly reversal levels for over 2500 stocks and ETF can be found every weekend at http://www.reversallevels.com/.

* For shorter term trading and more optimal entries there are daily reversal levels, which are available as a monthly subscription. It comes as a daily html file covering over 2500 stocks from Dow Composite, Nasdaq 100, S&P 500, S&P 400 mid caps, S&P 600 small caps, and more than 100 popular ETF. Instructions for use are included. Give it a try.

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

Pullback underway

Posted by Danny on May 9, 2016

Stocks have started a long awaited pullback. The bearish divergences we mentioned a few weeks ago have finally taken their toll on the market rally. Now the question becomes how deep the pullback will be and when it will end.Let’s have a look at the S&P 500 chart.

^SP500 (Daily)  8_5_2014 - 5_6_2016

The S&P has lost about 50 points since its April highs. That’s still a very mild pullback given the size of the rally that preceded it. But it has been enough to pull the Earl indicator into bottom territory and ready to turn up again. That lines up nicely with the LT wave for May, which suggests a strong period over the coming 10 days, so a rebound may start sooner rather than later. The slower Earl2 (orange line) is still headed lower, so if we get a bounce in the next week or two it will probably be followed by a second leg down.
My current base scenario is for a rally attempt that may go as high as 2100, but probably no new high for the year. Another pullback in late May or June would create a good setup going into summer. But we will first see what happens.

Posted in Market Commentary | Tagged: , | 2 Comments »

Outlook for Week of May 9

Posted by Danny on May 8, 2016

Outlook for world markets with brief comments for next week.

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

Click the “Expand” button (bottom right) to watch in full screen mode.

* The latest weekly reversal levels for over 2500 stocks and ETF can be found every weekend at http://www.reversallevels.com/.

* For shorter term trading and more optimal entries there are daily reversal levels, which are available as a monthly subscription. It comes as a daily html file covering over 2500 stocks from Dow Composite, Nasdaq 100, S&P 500, S&P 400 mid caps, S&P 600 small caps, and more than 100 popular ETF. Instructions for use are included. Give it a try.

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

LT wave for May

Posted by Danny on May 2, 2016

Stock markets have finally entered something more than a 2 day pullback. Last week’s advice to step aside works out fine so far. Now the next challenge is to watch for signs of a bottom. Let’s have a look at the Nasdaq chart:

^COMP (Daily)  8_8_2014 - 4_29_2016

All my indicators keep pointing down, with bearish divergences still in place. So, I wouldn’t rush back in just yet. This pullback or correction may continue for several weeks or months, but there will also be strong up days. A correction target in the 4600-4700 area would be fairly normal given the 800 point rally from the February lows. A deeper drop would indicate that a retest of the February lows is likely. It is too early to tell which scenario will unfold.

As for a possible path forward the LT wave for May could offer some clues. Here it is:

ltwaveMay2016

The LT wave for April did a fairly good job. Expected choppy neutral trading in the first weeks panned out perfectly. The high of the month came on the 20th, exactly on the day with the highest LT wave value,  and was followed by the predicted weakness in the final week.

For May the LT wave suggests continued weakness in the first week, followed by a strong period from the 7th until around the 18th. The final 10 days of the month show significant weakness again. The lowest LT wave value comes on the 3rd and the highest value is on the 17th.

As always, please remember that this LT wave is experimental, so don’t expect it to work perfectly every month.

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

Outlook for Week of May 2

Posted by Danny on May 1, 2016

Outlook for world markets with our comments for next week.

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

Click the “Expand” button (bottom right) to watch in full screen mode.

* The latest weekly reversal levels for over 2500 stocks and ETF can be found every weekend at http://www.reversallevels.com/.

* For shorter term trading and more optimal entries there are daily reversal levels, which are available as a monthly subscription. It comes as a daily html file covering over 2500 stocks from Dow Composite, Nasdaq 100, S&P 500, S&P 400 mid caps, S&P 600 small caps, and more than 100 popular ETF. Instructions for use are included. Give it a try.

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

A time to stand aside

Posted by Danny on April 25, 2016

Stock markets keep marching higher as if pullbacks and corrections are a thing of the past. Can it keep going like this? Yes, it happened in 1995. Of course, that doesn’t mean it *will* keep going, but it is a viable outlier scenario. A reader was so good to pull up this old tweet I posted on February 18, with a buy signal for S&P 500 just a week after the bottom:

The market never looked back and S&P is now almost 10% higher and within a few % of new all time highs. Will it pull back here? Or just keep climbing like in 1994-95? I don’t know. Let’s have a look at the S&P chart:

^SP500 (Daily)  7_22_2014 - 4_22_2016

At the current rate of change the S&P is set to make new highs within the two weeks. A failure to do so would be a clear loss of momentum and show a break of the steep up trend that has been in place since the February lows. For many traders that would be a sign to take profits and that would give us a long awaited pullback. Within two weeks we will find out.
Technically there is a bearish divergence in the Earl indicator (blue line), which is just turning back down. The Earl2 (orange line) continues to head down and is nowhere near bottom territory. The MoM is still headed higher. A lunar green period will start on Tuesday, but this is not a favorable setup to enter new longs, so I will just stand aside and watch.
This is a point where the risk for a significant pullback is high while the upside potential is limited unless the market breaks out to new highs. Hence, we can stand aside and let the market prove us that it can go to new highs. Just letting other traders do the heavy lifting. If we get a pullback then a retest of the 2000 level is my base scenario.

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

Outlook for Week of April 25

Posted by Danny on April 24, 2016

Outlook for world markets with our comments for next week.

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

Click the “Expand” button (bottom right) to watch in full screen mode.

* The latest weekly reversal levels for over 2500 stocks and ETF can be found every weekend at http://www.reversallevels.com/.

* For shorter term trading and more optimal entries there are daily reversal levels, which are available as a monthly subscription. It comes as a daily html file covering over 2500 stocks from Dow Composite, Nasdaq 100, S&P 500, S&P 400 mid caps, S&P 600 small caps, and more than 100 popular ETF. Instructions for use are included. Give it a try.

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

 
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