Outlook June 28

Stock markets lost ground almost every day last week.
Not a surprise for those who know the Lunar Cycles or follow our blog.

Going forward, the Red Period is about to end in a couple of days, so I am looking for at least a temporary bottom this week, and then some upwards bounce into early July.
But the recent price action suggests that the path of least resistance is down for the moment.
That means our next Green Period is more likely to be on the weak aside again, and then give way to lower prices in August and September.
Only a strong showing during next Green Period would provide evidence that we have turned up again.

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Some readers have asked about the overall performance of the LunaticTrader system.
Just looking at the most simple approach, buying stocks at the end of Red Period and selling them at the end of Green Period, here are the results for Nasdaq since we started sharing these Periods in July 2009:

Red Periods:
25 July – 9 Aug: +34
24 Aug – 7 Sep: -2
22 Sep – 7 Oct: -28
22 Oct – 5 Nov: -45
21 Nov – 5 Dec: +48
21 Dec – 3 Jan: +57
19 Jan – 1 Feb: -117
18 Feb – 3 Mar: +54
20 Mar – 1 Apr: +29
18 Apr – 1 May: -20
18 May – 31 May:-97
16 Jun – 29 Jun: -83 (as of 25 June)

Total return over Red Periods : -170 points on the Nasdaq Index

Green periods:
10 Aug – 23 Aug: +21
8 Sep – 21 Sep: +119
8 Oct – 21 Oct: +40
6 Nov – 20 Nov: +41
6 Dec – 20 Dec: +17
4 Jan – 18 Jan: +19
2 Feb – 17 Feb: +55
4 Mar – 19 Mar: +93
2 Apr – 17 Apr: +78
2 May – 17 May: -107
1 Jun – 15 Jun: +49

Total return over Green Periods: +425 points on the Nasdaq Index

During this time the Nasdaq rose from 1966  (on July 25, 2009) to 2223 (as of June 25, 2010) for a gain of 257 points.

Somebody who invested only during Green periods made 425 points of profit while taking only half the risk (because staying in cash during Red periods).

Greetings,  Danny