LunaticTrader

Investing with the Moon

Outlook March 28

Posted by Danny on March 28, 2011

Another good week for our lunar cycles approach.
The Nasdaq produced an 82 point decline in the last lunar Red Period.
And now the market is rebounding swiftly.
We mentioned last week that the Nasdaq would climb back to 2750 easily, and that’s where we are already right now.

With more lunar Green Period days coming up we can look forward to some further gains this week.

But we are at a point where the further action can become quite telling.
If the market stagnates near current levels, it will increase the odds for another leg down.
If the market continues to rise and climbs above the February highs, then we can write off the recent downturn as a normal correction in an ongoing bull move.
If the market goes up to February highs and stagnates there, then it is the likely start of a longer sideways pattern.

Here is a longer term S&P 500 chart, showing 3 different trend channels that are in play (click for larger image):

S&P 500

The steepest channel that started last summer would take the S&P to new all time highs before the end of the year. A break out above 1400 would open the door for that scenario.
If the markets breaks down from this steep channel, then we will probably see one of the other two channels being tested.
We can use this chart for locating support and resistance levels going forward.

Danny

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