LunaticTrader

Investing with the Moon

Who buys new record highs?

Posted by Danny on March 30, 2015

Last week we asked a poll question and several readers have taken the time to put in a vote. More on the results later in this post. We also have the LT wave chart for April, but first we take our customary look at the S&P 500 (click image to enlarge it):

S&P 500

We got a pull back as was indicated last week. US indexes are sitting near major support levels again, and with another week of lunar red period to go they are at an increasing risk of falling further. The weekly reversal levels outlook is also very mixed, giving a situation that is going to resolve in one direction or the other. Which way? My technical indicators are all pointing down and at rather neutral levels, so nowhere near indicating a bottom at hand. It looks like more downside action is needed to clean out the market. But will we get it?

The LT wave has been doing well in recent months, and here is what it shows for next April (click image to enlarge it):

LT wave April 2015

In March we had the expected weakness in the first week with a low near the 14th. The 3rd week was especially strong with the highs of the month coming right on target.
For April a different pattern is projected. There is room for a weak rebound attempt until April 6th, followed by a very weak period until April 17th. If the market is to drop below recent support levels, then this is the time to do it. Then renewed strength until the 25th, before weakening again in the final days of the month.
Interestingly, the very weak period in the middle of April will be a lunar green period. The lunar cycle has been very reliable so far this year, but if the LT wave is correct then this will probably be a cycle inversion, with the market dropping during that green period. If so, a major low in May can be expected.

Last week we asked: “How often do you buy a stock that is at record highs?” This is the current result of the poll:

poll

We see that almost 1 investor out of 3 never buys any stock that is at record highs, and only 16% answer “frequently”. Half of the answering readers buy new record highs rarely or never, and 1 out of 3 does it “sometimes”. What this suggests is that most investors are trying to pick bottoms or time corrections most of the time. Only 1 out of 6 investors seems to use buying new highs as a deliberate strategy.
This also means that when stocks hit new record highs it is a small minority of buyers that keep pushing them even higher. Most investors are trying to wait for a correction to get in a bit cheaper, and if corrections are very shallow they typically miss out the entire move.
John Templeton advocated using “unpopular” methods and changing methods when your method becomes popular. Buying new record highs has been an unpopular strategy for years, and that may be why it has worked so well since 2012. Will it become popular again?

Good luck,
Danny

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Outlook for Week of March 30, 2015

Posted by Danny on March 29, 2015

Outlook for world markets with my comments for next 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.

Happy trading, Danny

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

Weekly Reversal Levels for March 28, 2015

Posted by Danny on March 28, 2015

Weekly reversal levels are useful for market orientation and long term investing. Trading in the direction of the weekly trend has better odds of being profitable. Below are the levels for over 1500 stocks and ETF. Click the “Expand” button (bottom right) to watch in full screen mode.

For shorter term trading you can use the daily reversal levels, which are available every day as premium info on Scutify.com for just a few $. The current version is a 54 page PDF with the latest reversal levels and buy or sell signals for over 1500 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.

Happy trading, Danny

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

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

When the market is ready the catalysts will appear

Posted by Danny on March 23, 2015

US markets are surging higher again. That’s also what we have been calling for in recent weeks. Eclipse green periods tend to be very positive for stocks, and this one has been no exception. The Nasdaq is now knocking on the door of new record highs, one of the last major indexes to do so. So, where do we go from here? Let’s have a look at the Nasdaq chart (click image to enlarge it):

Nasdaq

The Nasdaq has broken out to new multi-year highs, but this may still turn into a false breakout. We start seeing a large rising wedge in the Nasdaq. Major overhead resistance is now just below 5100, with support at 4900. We are about to start a new lunar red period, so we will probably get a pullback or a pausing market in the next couple of weeks. But sooner or later we are to get a breakout, up or down, and that will probably set the tone for the rest of the year.
If this wedge gets broken to the upside then look for the Nasdaq to climb to 6000+. If it goes the other way, then prepare for a rather sharp drop that would take the Nasdaq to 4000-4200. This is a major crossroads.
Technically the Earl (blue line) and MoM indicator are going up from recent lows, but the Earl2 (orange line) is languishing and that’s a warning sign. We risk getting rather large bearish divergences if the current rally stops below 5100.
What may trigger such a breakout move is something I don’t know. But as an old friend used to say: “When the market is ready the catalysts will appear.” All we can do is keep our eyes open and go along with what comes along.

I am preparing for next week’s post and want to use a little poll I have set up. Feel welcome to enter your vote on this question: “How often do you buy a stock that is at record highs?” The link to the poll is here: http://www.easypolls.net/poll.html?p=5507ee16e4b0a63961cbbd23 Thanks for participating. Next week I will give my comments on it.

Good luck,
Danny

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Outlook for Week of March 23, 2015

Posted by Danny on March 22, 2015

Outlook for world markets with my comments for next 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.

Happy trading, Danny

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

Weekly Reversal Levels for March 21, 2015

Posted by Danny on March 21, 2015

Weekly reversal levels are useful for market orientation and long term investing. Here are the levels for over 1500 stocks and ETF. 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.

For shorter term trading you can use our daily reversal levels, which are available every day as premium info on Scutify.com for just a few $. The current version is a 54 page PDF with the latest reversal levels and buy or sell signals for over 1500 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.

Happy trading, Danny

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

Another burst higher?

Posted by Danny on March 16, 2015

Markets have been pulling back since the beginning of March. This has brought US indexes back down to major support levels. The stage is now set for another push higher. Will we get it?
Let’s have a look at the S&P 500 (click image to enlarge it):

S&P 500

S&P is once again trading North and South of the 2050 level, as it has been doing since November. The recent pullback could be coming to an end as the Earl indicator (blue line) has just turned up from a major low. The MoM indicator has reached pessimistic territory, a level typically seen at major buying opportunities. The slower Earl2 (orange line) is still heading down, but may go on to paint a shallow bottom.
A rally towards 2150 or 2200 is quite possible with this setup. A decline below the important support at 2040 would invalidate this scenario and probably give us a serious drop.
A climb above 2150 would make it increasingly likely that the red channel in the chart is the one to watch going forward. But that remains to be seen.

Good luck,
Danny

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

Outlook for Week of March 16, 2015

Posted by Danny on March 15, 2015

Outlook for world markets with my comments for next 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.

Happy trading, Danny

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

Weekly Reversal Levels for March 14, 2015

Posted by Danny on March 14, 2015

Weekly reversal levels are useful for market orientation and long term investing. Here are the levels for over 1500 stocks and ETF. 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.

For shorter term trading you can use our daily reversal levels, which are available every day as premium info on Scutify.com for just a few $. The current version is a 54 page PDF with the latest reversal levels and buy or sell signals for over 1500 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.

Happy trading, Danny

Posted in Market Commentary | Tagged: , | 1 Comment »

Equinox eclipses and the stock market

Posted by Danny on March 9, 2015

The Nasdaq is falling back a bit after climbing above the psychological 5000 mark. Readers of this blog were probably not surprised by that move, as we have been calling for it weeks ago. We will be ending the lunar red period today, and then we will see if the market can go even higher in the next lunar green period. It will be a very unusual eclipse green period. More on that later in this post, let’s first have a look at the Nasdaq chart (click image to enlarge it):

Nasdaq

The Nasdaq has gone mostly sideways in recent weeks with a few spikes reaching for 5000. This could be setting us up for a further climb towards 5200 in the coming weeks. Technically the Earl indicator (blue line) is now in bottom territory getting ready to turn back up, while the slower Earl2 (orange line) is still climbing but starting to flatten out a bit. This allows for another push higher in the upcoming green period.
A failure to get another rally going would not bode well and signal that we are starting a broader market correction. A drop to 4800 support level would still be OK, but any deeper drop would spell bigger trouble. We just watch and respond. The bull market scenario remains intact until it doesn’t. The most common mistake in investing is to call for a top too early, as countless analysts have experienced once again in the recent years.

***

As I mentioned in the introduction, we are heading into an eclipse green period. For readers who are new to this blog, check out my more extensive article about Eclipses and the Stock Market. Basically the lunar green periods that contain a solar eclipse have a history of being very positive for stocks. That’s why a surge to new records is definitely possible. But it is not guaranteed.
The upcoming solar eclipse of March 20th will fall within a day of the spring equinox, and that is very rare. The last time a solar eclipse fell more closely to a spring equinox was in the year 1681. I did a little study on equinox eclipses (considering both the spring and autumn equinox) and here is what I found.

In the last century we had only two of them: September 1968 and September 1987. In both cases the equinox eclipse came within months of an important peak, just before a major bear market started. Here is the S&P monthly chart showing the 1968 equinox eclipse with a red diamond(click image to enlarge it):

equinox eclipse 1968

It marked the end of a 20 year bull market, and the S&P declined 35% in the next few years. Market kept going sideways for more than 10 years until the great bull market of the 1980s got underway.

The next equinox eclipse was September 1987 and came just before the famous crash (click image to enlarge it):

equinox eclipse 1987

That were the only two equinox eclipses in the 20th century.
We got another equinox eclipse in September 2006. In this case it was once again near the end of a multi-year bull run. But it came a year before the eventual top, so the timing was not as good. A serious bear market followed, as most of us remember all too well. And now, March 20th will give us the next one. (click image to enlarge it):

equinox eclipse 2006 & 2015

Once again the market has been climbing for years. Will the equinox eclipse of March 2015 mark another major top? Time will tell, but the technical setup is now very similar to the one we had in 2007. We see a bearish divergence in the Earl (blue line) and the slower Earl2 (orange line) has just turned down. Once the up trend line that started in 2009 gets broken to the downside we are quite likely to see a serious drop.

As if that is not enough, later in 2015 we will also get the visit of Solar Saros 125, which has a history of producing financial panics going all the way back to the tulip mania in 1637. See my article: The Saros cycle and the stock market.

Warning: with only a few observed cases we better remember that the law of small numbers applies. So, these bear markets that came on the heels of equinox eclipses can be the result of coincidence. I don’t give any guarantee that it will “work” again. Don’t bet the bank on it. It is just a hypothesis I am passing on.
Equinox eclipses tend to come in clusters (for reasons that exceed the scope of this article). We have seven more coming up in the 21st century: 2025, 2033, 2034, 2052, 2053, 2071, 2072. So, there will be more chances to see if this tendency keeps up.

Good luck,
Danny

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

 
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