LunaticTrader

Investing with the Moon

Outlook for week of April 24

Posted by Danny on April 23, 2017

Outlook for world markets with brief 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 click here.

For shorter term trading and more optimal entries there are daily reversal levels, which are available by monthly subscription. Comes as a daily html file covering over 2700 stocks and ETF. To see what you get you can pick up recent free samples on this page. Instructions for use are included. Give it a try.

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Outlook for week of April 17

Posted by Danny on April 17, 2017

Outlook for world markets with brief 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 click here.

For shorter term trading and more optimal entries there are daily reversal levels, which are available by monthly subscription. Comes as a daily html file covering over 2700 stocks and ETF. To see what you get you can pick up recent free samples on this page. Instructions for use are included. Give it a try.

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

Outlook for week of April 10

Posted by Danny on April 9, 2017

Outlook for world markets with brief 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 click here.

For shorter term trading and more optimal entries there are daily reversal levels, which are available by monthly subscription. Comes as a daily html file covering over 2700 stocks and ETF. To see what you get you can pick up recent free samples on this page. Instructions for use are included. Give it a try.

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

LT wave for April

Posted by Danny on April 3, 2017

Markets had a good week and the Nasdaq is close to new all time highs already. The S&P 500 has been a bit weaker. The recent lunar green period has ended with a 14 point gain for Nasdaq. Not a big gain, but the lunar cycle seems to be getting back to its normal rhythm after a long period of “divergences”. Let’s have a look at the S&P 500 chart before discussing the LT wave for April:

^SP500 (Daily) 7_24_2015 - 3_31_2017

The market tested important support levels and veered back up. That’s a positive and it has printed bottoms in my Earl and MoM indicators, but the slower Earl2 (orange line) is still headed lower. A pattern of lower highs and lower lows appears on the chart and that’s something we haven’t seen for a while. The thing to watch in the current upswing is whether it can challenge the March 1 highs or not. A clear push above 2400 would tell us the bull run is ongoing.

The LT wave had an almost perfect month in March and here is how it continues for April:

ltwaveApr2017

The up and down swings corresponded very nicely to the expected weaker and stronger periods in March and if the LT wave keeps performing well then the current period of strength can continue until the 10th or 11th. Then there is projected weakness until the 23rd, followed by a more positive final week.
There will be a major high value in the wave on the 8th, but that’s a weekend day so any related highs would probably come on the Friday before or the Monday after. If that is the case then it will be interesting to see if the market can reach new records. A failure to do so would indicate that the path of least resistance is shifting down.
The lowest LT wave values for the month come on 22nd and 23rd, which are also weekend days. If the market falls below the March lows around that time it would also tell us that a more serious correction is underway.
For new readers, please remember that the LT wave is experimental and a good month doesn’t mean the next month will be good too. So, don’t bet the farm on it.

Good luck.

Posted in Financial Astrology | Tagged: | Leave a Comment »

Outlook for week of April 3

Posted by Danny on April 3, 2017

Outlook for world markets with brief 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 click here.

For shorter term trading and more optimal entries there are daily reversal levels, which are available by monthly subscription. Comes as a daily html file covering over 2700 stocks and ETF. To see what you get you can pick up recent free samples on this page. Instructions for use are included. Give it a try.

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

Markets are bending, will they break?

Posted by Danny on March 27, 2017

Stocks made a significant dip last week and important support levels are giving way. The continuation of the rally that started in November is now questionable. Here is the current Nasdaq chart:

^COMP (Daily) 7_8_2015 - 3_24_2017

Nasdaq is trying to stay above the important 5800 support level. But all my indicators keep pointing down, showing a strong possibility for more downside action to come. Once the Earl (blue line) turns back up we will have a first indication of a tradeable bottom. So, better be patient here. The LT wave has been working like a Swiss clock so far this month. If it continues that way then we are likely to get a low today followed by several days rebound. Let’s see.

My more long term ELC indicator is still negative. I put it out on Twitter from time to time, this is the latest:

Once the ELC turns higher we can become more confident that a next leg higher is starting. Until that happens I wouldn’t be too aggressive and just wait. The vigor of any rebounds after down swings will also give us important clues.

Posted in Market Commentary | 4 Comments »

Outlook for week of March 27

Posted by Danny on March 26, 2017

Outlook for world markets with brief 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 click here.

For shorter term trading and more optimal entries there are daily reversal levels, which are available by monthly subscription. Comes as a daily html file covering over 2700 stocks and ETF. To see what you get you can pick up recent free samples on this page. Instructions for use are included. Give it a try.

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

We got a 1% down day, what next?

Posted by Danny on March 22, 2017

The S&P 500 dropped 1.2% yesterday and this ends a 109 day streak without 1% drop. This is only the 13th such +100 day period since 1950 for the S&P, see my February post.
This drop was met with panicked reactions and crash warnings on social media, but people forget that 1% down days in the S&P 500 are nothing special. Over the last 67 years the S&P 500 has had 1662 such down days, or 10% of the time. That’s about one 1% down day every two weeks on average. But traders have very short memories and when something hasn’t happened for 5 months it feels as something special already.
The previous 1% down day was 11 October 2016, do you remember it? Probably not.

What’s more interesting is what happens after such a long streak ends. Here is the updated list of +90 day periods:

1pc_down2

While most investors intuitively think that a first big down day after a long absence of such days is a bearish sign and maybe the start of a crash, history shows us otherwise. More often than not the market just keeps climbing after that first big down day. Two weeks later (10 trading days) stocks were higher 8 times out of 13. After two months (40 days) the market was higher 11/13 for an average gain of 3% ( = 19% annualized). And a year later the S&P 500 was higher 11/13 for an average gain of 14.8%.
While this doesn’t guarantee similar gains in the coming months, there is certainly no reason to believe that yesterday’s 1% down day is a very bearish omen. If anything you should probably use this drop to pick up some cheap long term call options in the coming days. That’s the counterintuitive thing to do here.

Sure, this drop does some technical damage and has probably shocked a few investors. A trend line is clearly broken and now the market will search for a bottom from which it can start to rally again. How long that healing will take is a guess at this point. I like to keep an eye on my aggregate stats for bullish and bearish stocks in S&P 500. This is what we have at the moment:

spx

The number of S&P stocks in bullish mode (red line) has dropped to 230, which is below 50% for the first time since early November. Stats have been weakening slowly since early March, very similar to what happened in Jul-Aug 2016. When the red line bottoms out it will be a first positive development and when it gets back above the blue line we can start thinking about a new sustained rally.
I wouldn’t be surprised to see the market test the bottom orange trend line in the coming week or so. And that’s where it will get interesting.
Patience pays.

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SKEW is high again

Posted by Danny on March 20, 2017

Stocks have been pulling back a bit in recent weeks, but so far it seems to be the “short and shallow” variant as described in my most recent post. The Nasdaq has easily held above 5800 and is already pushing back towards its recent highs. This means the scenario for a further 5% surge before summer stays firmly on the table and is gaining traction. Let’s have a look at the current S&P 500 chart:

^SP500 (Daily) 6_17_2015 - 3_17_2017

The trend line since the November lows is being tested but holds up well. The Earl (blue line) has bottomed out and is headed higher, this is short term bullish. The slower Earl2 (orange line) has a bearish divergence in place and that is a medium term warning sign. The MoM indicator is back in the neutral zone and can go either way. The bearish divergence in the Earl2 indicates a serious risk for a significant pullback, but it would get invalidated if the Earl2 turns back up near the neutral line. That would probably happen if the S&P 500 climbs above the March 1 highs. So, what will it be? This is the kind of situations where keeping an eye on investors’ mood is most important.

Right now lots of technical traders probably see a strong potential for a sharp pullback if the blue trend line gives way. And that’s why the CBOE SKEW index reached a new all time high last Friday. This means traders are overpaying for “crash insurance”. But, as I pointed out in this article a few years ago, major crashes are typically preceded by a period of relatively low SKEW readings. When there is widespread confidence and feel-good about the economy then people don’t buy crash insurance puts. Then SKEW becomes low and complacence high. But that’s not what we see at the moment. Here is a chart showing the recent years evolution of SKEW index:

SKEW

The early 2015 highs were accompanied by relatively lower SKEW values for months and that’s when we got some significant drops later that year. Then SKEW reached new record highs in the days before the Brexit referendum, as investors were buying crash insurance again, but most of that crash insurance became worthless as the market surged to new highs in the ensuing weeks. More often than not overpriced cash insurance does not pay off. But bears keep trying and now we have record high SKEW again. Will their crash bets pay off this time? If history is a guide then the answer is: probably not.
And in that case we can expect something like this:

spw

On a breakout above the March 1 highs the market will probably head for the upper boundary of its trend channel (blue) since the early 2016 lows. That boundary is currently in the 2500-600 area, so that would be my initial target for such a move.

This bullish case would go on the back burner if the S&P 500 makes a close below 2350. Such a failure could come this week, because our LT wave for March suggests weakness until the 29th. If no downside action is seen and the bullish scenario can survive this weaker period then we are probably headed for a mad April. Be ready.

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

Outlook for week of March 20

Posted by Danny on March 20, 2017

Outlook for world markets with brief 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 click here.

For shorter term trading and more optimal entries there are daily reversal levels, which are available by monthly subscription. Comes as a daily html file covering over 2700 stocks and ETF. To see what you get you can pick up recent free samples on this page. Instructions for use are included. Give it a try.

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

 
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