LunaticTrader

Investing with the Moon

Outlook for week of May 14

Posted by Danny on May 13, 2018

Outlook for world markets with my 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. It comes as a daily html file covering over 3000 stocks and ETF. 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 May 7

Posted by Danny on May 7, 2018

Outlook for world markets with my 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. It comes as a daily html file covering over 3000 stocks and ETF. 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 May

Posted by Danny on May 1, 2018

Stocks have largely gone sideways in the recent month. It remains unclear whether the next major move will be up or down.
Here is the current S&P 500 chart:

^SP500 (Daily) 6_30_2016 - 4_30_2018

Technically the Earl (blue line) peaked out in mid April and has come down to the neutral line. No signs of a bottom.
The slower Earl2 is still climbing, but appears to be flattening out near the neutral line. And the MoM indicator is also in the neutral zone. None of this offers us any clues about the next move, so all we can do is wait.

It’s time for our LT wave for May:

ltwaveMay2018

The wave did pretty well in April. Expected weakness until the 12th saw the index hover near support just below 2600. The more positive bias for the remainder of April saw the market test the 2700 levels as we expected. Volatility did clearly drop, so that was a good call too.
For May the wave projects another weak period until around the 11th. This is to be followed by a strong period until the 28th. The final days of May show weak again.

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Outlook for week of April 30

Posted by Danny on April 29, 2018

Outlook for world markets with my 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. It comes as a daily html file covering over 3000 stocks and ETF. 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 23

Posted by Danny on April 21, 2018

Outlook for world markets with my 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. It comes as a daily html file covering over 3000 stocks and ETF. 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 16

Posted by Danny on April 15, 2018

Outlook for world markets with my 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. It comes as a daily html file covering over 3000 stocks and ETF. 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 9

Posted by Danny on April 8, 2018

Outlook for world markets with my 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. It comes as a daily html file covering over 3000 stocks and ETF. 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 »

The art of calling market tops

Posted by Danny on April 5, 2018

Most good books about trading, as well as most famous investors, will tell you: don’t try to call tops or bottoms in the market, it can’t be done. So, they usually advocate scaling in and out of positions to get a good average buy or sell price.

But is that so? Is there really no way, other than watching for clear signs of investors’ euphoria or despair, which tend to accompany major long term highs and lows?

Any “it can’t be done” has always looked like an invitation to try to me. True, you won’t be very successful at calling tops with the standard technical indicators like 200 day MA or RSI or VIX. But of course, big banks and fund managers are not using those standard indicators you can find in any free charting program. They have better stuff. Expecting to beat the market with 50 year old indicators is like hoping to win a Formula 1 race with a 1970s car.
You will also not call tops by listening to the experts on CNBC or other financial news outlets. A news channel survives by showing what its viewers want to see or hear, not by ringing a bell when the market has peaked. They simply ring whatever bells are popular enough on the given day, and that are usually the wrong bells. At the top most viewers want to hear only the good news, because they are fully invested.

The approach I have chosen is to develop my own indicators, using a bit more complicated math than the simple moving averages of yesteryear. I have a bunch of different indicators that have been gradually improved and tested over the years.
Today I want to show how my ELC and BMO indicators can be used for detecting major tops on weekly charts. The ELC is specifically designed to turn up (or down) very close to market peaks (or bottoms). At major long term peaks it tends to show a clear bearish divergence. A picture shows more than a thousand words, so let’s start with the Dow Industrials 1906 peak:

dji1

Market made new record highs in early 1906, but the ELC painted a much lower peak. The ensuing 2 year bear market took the index down almost 50%.

By 1916 the market had reached new records again:

dji2

A big bearish divergence appeared at the highs in late 1916 and a sharp 1 year bear market followed. In late 1919 the market peaked with another bearish divergence and another 50% decline followed suit.

The roaring 20s showed multiple bearish divergences before the market collapsed:

dji3

The highest ELC peak came in 1925 already, a full 4 years before the ultimate peak. The highs in the final advance 1928-29 came with lower and lower ELC peaks. A 90% bear market and great depression followed.

By 1937 the market had recovered a great deal:

dji4

But once again the ELC printed a lower high at the peak, leaving a 1 year bearish divergence in place. The market dropped 50% over the next year.

After the second world war a long term bull market started:

dji5

Clear bearish divergences appeared in 1955-56. This led to a milder bear market, more a multi-year sideways pattern. Not every bearish divergence in weekly ELC becomes another great depression. But you didn’t miss anything if you stayed out of stocks until 1958.

I will use the broader S&P 500 from the 1960s:

spx1

By early 1965 we see a clear bearish divergence. A first dip was overcome, but by early 1966 there was an even bigger divergence. The market crashed 25% within a year.

The bull market resumed, reaching new record highs in late 1968:

spx2

But ELC painted a lower peak and the market crashed almost 40% over the next 18 months.

The same scenario in early 1973:

spx3

New all time highs for the S&P 500 but a clearly lower ELC reading. A 50% bear market followed suit.

The 1980s burst out into new record territory and by 1987 we saw this:

spx4

Once again clear bearish divergences on the chart before the market crashed.

The 1990s massive bull market was very interesting:

spx5

Highest ELC value was in early 1996, a full 4 years before the eventual peak just like in the 1920s. We see several bearish divergences that only led to a sideways period or mild pullback. This is something to remember: not every divergence leads to a major bear market, but almost every bear market is preceded by a bearish divergence in weekly ELC.
By early 2000 the market was still making new highs with the ELC making lower and lower peaks and barely keeping above the zero line. The S&P 500 would drop 50% over the next 3 years.

The subsequent advance into 2007 high was a bit unusual:

spx6

The highest ELC peak came in early 2004. Several bearish divergences only led to a mild pullback. By late 2007 the market peaked with the ELC down very sharply from its high earlier that year. In fact ELC hardly turned up on that last peak. This showed unusual weakness and a 60% decline followed.

So where are we now?

spx7

Bearish divergence in 2014-15 only led to a mild decline into early 2016 lows. The ELC has meanwhile printed new highs for this cycle, so there is no bearish divergence in place at the moment.
This means we have two possibilities. If January 2018 turns out to be a major peak then it will be the first time in over 100 years it peaks out without an ELC divergence. The other option is that this market makes at least one more run to new record highs and then we would probably get that bearish divergence as seen on all those earlier occasions. It will be interesting. Exceptions are there to prove the rule, but if history holds up then it is too early to call for a market top here.
I will keep you posted on how this chart evolves. Here and on my Twitter. And with a bit of luck I will try to call the top when my indicators suggest it is that time again.

Posted in Market Commentary | Tagged: , , | 8 Comments »

LT wave for April

Posted by Danny on April 2, 2018

Markets are going through another significant downswing. Volatility has been high compared to what traders got used to in 2017. This was of course inevitable, and it is something I was watching as an indication that we are getting into the late stages of a multi-year bull market. See: Updated long term scenarios and charts.

So, what’s next? Here is the current Nasdaq chart:

^COMP (Daily) 6_14_2016 - 3_29_2018

The long term blue trend line in Nasdaq is clearly broken. But the Nasdaq is still in a higher highs and higher lows sequence, so it’s too early to declare the end of the bull market in this index.
The Earl (blue line) is turning up from a major low. The slower Earl2 (orange line) is still dropping fast, but well into bottom territory. The MoM indicator has fallen into the blue pessimistic zone (<-5), where major buying opportunities are usually found. Once the MoM turns back up we will have a nice setup to do some cautious buying here.

If major indexes drop below their February lows, then more bearish scenarios would gain traction. That wouldn't rule out new record highs later on, but it would probably push them further back in time.

Our lunar cycle has been on fire so far this year, so that's something to keep an eye on as well. A new green period starts later this week, so it will be interesting to see if it keeps rolling on: lunar cycle tracking page.

Our LT wave did a decent job for March. The peak early in the month came with several days delay, but the subsequent weak period ended on target at March 26.
Here is the LT wave for April:

ltwaveApr2018

There are no outstanding peaks or lows in the projection for April, which suggests volatility will drop. We see a period of mild weakness until the 12th, followed by a more positive bias for the remainder of April. The lowest LT wave value comes on the 4th, and there is no daily peak value worth talking about.
If the wave holds up then I would look for a low in the first trading days of this week, but probably not a major new low. And then a very gradual recovery that could lift the S&P 500 back to near the 2700 area.
Let’s see.

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

Outlook for week of March 26

Posted by Danny on March 25, 2018

Outlook for world markets with my 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. It comes as a daily html file covering over 3000 stocks and ETF. 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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