Posted by Danny on September 23, 2013
Markets have continued to march higher and we just finished an exceptionally strong lunar red period, which saw the Nasdaq gain 115 points.
This is a sign of strength and generally points to even higher stock prices in the months ahead.
Taking a look at the chart for S&P 500 (click for larger image):
The S&P 500 has raced to new highs and only took a few weeks to recover from the August pullback. We are now entering a lunar green period, so it will be interesting to see if the market can build on those gains.
The Earl indicator appears to be topping out, but the slower Earl2 is nowhere near a peak. So that doesn’t help us much to determine the shorter term direction.
Based on the lunar phases I would say a peak in early October and then a correction, but with this technical setup it is highly uncertain. While strength tends to continue longer than most people expect, the risk for a sudden drop is rising together with the market. At times like this I prefer to be mostly in cash.
More promising setups are seen in certain commodities right now. Last week I posted long term charts for Corn and Sugar on my twitter account. See: http://t.co/VgoOCOJWEU and http://t.co/6RnmAm8sq7. You are welcome to follow me on Twitter if you want to get the charts as soon as I post them.