Room for another record high
Posted by Danny on August 12, 2013
The market came under some pressure last week, but still ended the lunar green period with a respectable 55 points gain on the Nasdaq.
It looks like stock markets are ripe for an autumn correction, and the failure to build on gains last week is a warning sign. Is the decline getting started now?
Let’s take a look at the S&P 500 chart (click for larger image):
The S&P has gone mostly sideways for the last couple of weeks, which is fairly normal after its big July gains.
Meanwhile the Earl2 indicator is seeing the orange line turn down, which is the first sign of a potential top. But the shorter term Earl is still in bottom territory, which increases the odds for another upswing before we see a broader decline set in.
If so, then I think that upswing is likely to come this week. A failure to climb this week would probably weaken the technical picture to the point where such an upswing becomes unlikely.
So, as long as the S&P holds above the green trend line in the chart another spike into record territory remains possible, even though we are now in a lunar red period.
The most likely date for such a peak then becomes our lunar yellow period, which would be Friday 16th or Monday 19th, as you can see in the LunaticTrader chart for August:
The lunar yellow period will start on Thursday 15th and extends until Sunday. There is a cluster of other lunar cycle extremes on those days. Moon declination bottoms on the 16th, Moon distance bottoms on the 18th, and Moon latitude peaks on the 19th. This favors a trend change, so if news highs are seen on those days, then it will be a sell signal.