LunaticTrader

Investing with the Moon

Not an easy path forward

Posted by Danny on July 25, 2016

Markets kept up very well last week and stocks are still not in the mood for any pullback. That will obviously change some day, but when? I don’t know how many under water shorts are still waiting for a decent chance to get out, but that could be one of the reasons why this market has refused to pull back since its new record highs.
Here is the current Nasdaq chart:

^COMP (Daily)  10_27_2014 - 7_22_2016

While the S&P 500 is at new highs the Nasdaq still has quite a few hurdles in front of it before it can do the same. The 5100-5200 area is heavy overhead resistance in this index.
The Earl index (blue line) has started pulling back from a major high, but the market is not coming along. Meanwhile a new lunar green period is starting, which normally favors further gains. But the lunar cycle hasn’t worked well so far this year, so we better be careful. The slower Earl2 (orange line) is still headed higher, suggesting further gains in the pipeline.
I see a very mixed technical picture, so I am not going to commit too strongly either way at this point. The short term momentum is clearly up, but that can change very quickly. We will probably get more clarity soon.

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Outlook for Week of July 25

Posted by Danny on July 25, 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.

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Waiting for the kiss

Posted by Danny on July 18, 2016

The S&P 500 has reached new record highs and has kept up surprisingly well all week. Will this market just keep climbing without looking back? Maybe.
The S&P 500 chart may offer us a few clues:

^SP500 (Daily)  10_15_2014 - 7_15_2016

There is no clear overhead resistance level at this point. But the Earl indicator (blue line) is turning down already and the MoM has reached very optimistic +8 level, which is quite rare. This suggests that we “should” get at least a bit of a pullback here.
When a market breaks out from a long sideways pattern it is classic to turn back and kiss the old support/resistance line before continuing in the direction of the breakout. In this case that would mean a drop back to ~2130. That’s my current base scenario, given that we remain in a lunar red period. But of course we cannot rule out that the market may climb even further before taking a vacation.
This market is bullish until proven otherwise, and I wouldn’t fight the trend. Let’s see if we get that kiss.

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Outlook for Week of July 18

Posted by Danny on July 17, 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.

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Beyond new highs

Posted by Danny on July 11, 2016

Markets kept climbing last week, and the S&P 500 came very close to new all time highs, which is what we called for. We may see a new S&P high today, even though a new lunar red period has started. But the LT wave for July projects highs on the 11th or the 26th, so let’s see.
The Nasdaq is not so close to its all time high and here the question becomes if it can break out above the 5000 level and stay there. Here is the chart:

^COMP (Daily)  9_26_2014 - 7_8_2016

My 3 indicators are all pointing up and the Earl2 has painted a bullish divergence. So, the odds for a break above 5000 and a further climb look pretty good. But it may not come without some hesitation. So, I think we will see a new high for S&P 500, but then probably a bit of a pullback for the next 10 days. If that pullback is mild then the market will be well positioned to climb further in August.

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Outlook for Week of July 11

Posted by Danny on July 11, 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.

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About being right

Posted by Danny on July 6, 2016

Investing is not so much about being right, it is all about being ready.

  • Being ready to be right, and being ready to be wrong.
  • Being ready for the expected and the unexpected, and for the unexpectable.
  • Being ready to walk alone with an opinion, and being ready for an agreeing crowd if that’s what crosses your path.
  • Being ready to change your mind, and to change your mind about changing your mind.
  • Being ready to take 10 losses in a row and still put on that 11th trade.
  • Being ready to take 10 wins in a row and not feel like you have figured out the market when you put on the 11th trade.
  • Being ready to abandon your favorite method if it becomes too popular, and to pick it back up when the crowd has moved on to the next fad.
  • Being ready to forget about the news and to remember the market’s reaction to it.
  • Being ready to keep calm when the market gets excited and to get excited when the market becomes unusually calm.
  • Being ready for market craziness as well as for market sense.
  • Being ready to stop trading when the market offers you no edge.
  • Being ready to take a loss after 1 day and to take a profit after 10 years.
  • Being ready to see very different outcomes emerge from very similar situations. Yes, it can rain without clouds.
  • Being ready to keep quiet about your profits. Don’t jinx yourself.
  • Being ready to negate advice and stock tips, especially if you have paid for them.
  • Being ready to examine the three sides of a coin, as well as the one side of a dice.
  • Being ready to act decisively when you feel very uncertain, and to pause yourself when you feel very certain. The best opportunities come amidst great uncertainty.
  • Being ready for the fact that our readiness will always be incomplete.

There is the old adage that you are only as good as your last trade. I think that’s totally wrong. You are only as good as your next trade. Are you ready?

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LT wave for July

Posted by Danny on July 4, 2016

Most stock markets surged higher after the Brexit panic subsided. If you bought when others were fearful, as we suggested last week, then you must be smiling. The FTSE 100 climbed about 10% from its Monday lows and is already setting new highs for the year. US markets also rebounded strongly.
Is it now too late to buy? Let’s have a look at the S&P 500:

^SP500 (Daily)  9_16_2014 - 7_1_2016

We got the retest of the 2000 level I had been hoping for. And stocks bounced back very strongly off that level. That is bullish price action, but another revisit of the 2000 level would now quickly worsen the scenario. Being not far from new all time highs the market can be allowed some breathing space at this point, but not for too long. A continued failure to climb above the May 2015 highs would soon be punished with another sell-off. So, the market is entering a do-or-die situation.

Technically the setup is favorable with the Earl (orange line) and MoM indicators turning up again, and the slower Earl2 (blue line) at the verge of doing so. So a push to new highs is possible this week already and if it doesn’t happen then another chance may come by early August.
If no new highs are seen before the middle of August then the odds will quickly shift towards another drop to ~1900. But I prefer to take things one step at a time, so let’s first see what happens with the current market rally.

We also have the LT wave chart for July:

ltwaveJuly2016

The wave did well in June. The high of the month came exactly on the 8th and a first low came on the 16th, just one day off with projected low on the 17th. The second low (expected on 23rd) came with a few days of delay, and was followed by new strength in the final days, as expected.
For July the wave suggests ongoing strength until the 11th, followed by weakness from the 13th until around 20th. The final week looks mildly positive again. Highest LT wave values come on the 6th and the 11th, with another possible peak on 26th. LT wave lows are projected for 16th and 20th. None of those highs and lows stand out as extreme values so it could turn out to be a sideways range period, especially from the 13th onwards.

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Outlook for Week of July 4

Posted by Danny on July 3, 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 »

Buy when others are fearful

Posted by Danny on June 27, 2016

Markets fell on the brexit referendum result and fear seems to be all over the place in what looks like a kind of Stockholm syndrome. But what most commentary failed to mention is that the FTSE 100 was actually up 1.9% for the week. EU stock markets took the biggest beating, so it looks like the market is saying that leaving the EU is better than staying in.

Let’s have a look at the Nasdaq chart:

^COMP (Daily)  10_6_2014 - 6_24_2016

The Nasdaq is back to its May lows. It could easily fall a bit further and test the 4600 level. But we have started a new lunar green period and the Earl and MoM indicators have turned up already. So I would look for volatility to subside as overblown fears calm down. Panic selling will dry up and then stocks will start trading with a positive bias.

As I said during the Greek crisis, stand ready to buy any country that finds a way to leave the EU or the Euro. Britain is now very likely to be the first country to take that step, so I would use this to buy FTSE on any weakness. The long term monthly chart for the UK stock market happens to be very interesting:

FTSE

The FTSE stays well above its February lows and that’s quite remarkable given the hysterical comments that are being made. The smart money must be buying.
Two of my three main indicators have turned up a few months ago and the slower Earl 2 is ready to follow suit. That is a favorable long term setup. A breakout above the multi-decade resistance around 7000 is possible in the medium term, and that would open the door for a further rally. Buy when others are fearful.

Posted in Market Commentary | 4 Comments »

 
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