Investing with the Moon

Outlook 17 October

Posted by Danny on October 17, 2011

Stock markets have been in melt-up mode since they touched our downside targets a few weeks ago.
As a result the recent lunar Red Period finished with a 187 point gain for the Nasdaq.
This is very unusual and we will now have to look whether the market can build on those gains.
Our lunar cycles have not been reliable in recent weeks, and the wild swings up and down make it difficult to get a sense of direction for the moment.

We have now started a new lunar Green Period, but we better wonder how much fuel is left in the tank after a 12% rise in about 10 days.
Let’s have a look at the current chart for the Nasdaq (click for larger image):


Nasdaq has reached its highest level since early August and broken above the resistance at the 2600 level.
Upside target is now 2700 and next comes the 2800 area, where we would start testing the highs of the year.
But given the sharp rise of the recent weeks I think a consolidation phase is likely to kick in, with the indices probably going sideways for several weeks before further gains become possible.
That’s for the upside potential.

On the downside, any drop back down below 2300 would probably result in a market crash. So we want to keep some stop there.


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