LunaticTrader

Investing with the Moon

Should investors worry about the grand cross in April?

Posted by Danny on March 1, 2014

In April and May there will be a rare constellation in the sky, a so-called “grand cross” between the outer planets Mars, Jupiter, Uranus and Pluto. This is considered a stressful aspect by financial astrologers. In this article we will take a look at historical examples, and see if there is anything to fear.

A grand cross (GC) only happens a handful of times per century if we consider the outer planets (Mars to Pluto) with a 10 degree orb. I looked into all examples since the start of the 20th century, focusing on the two year period centered around the month when the GC becomes most exact. Doing this we can easily see what happened in the market (Dow Jones Industrials) from one year before the GC until one year after. Do we see a market reaction to this aspect? Does the market go up or down from it? Here is the result (click for larger image):

grand cross

The market data were normalized and centered around the week when the stressful aspect was most exact. This allows for easy visual comparison. As we can see it is very much a mixed bag. There is no consistent effect in the months around the GC that jumps out from the chart. On six occasions the market went up in the year prior, three times it went down. Five times the market was up a year after a GC, and four times it was down twelve months after the GC. In three cases the market went up about 20% within the next year. In four cases it was down 20% or more.

If we calculate the average effect using these 9 historic examples then we get this:

grandcross average

The blue line is the average of all samples, the magenta line is the average excluding the 1931 sample, which is a clear statistical outlier. Here we do see a general tendency for the market to rise until a few weeks before the GC is most exact. In the year after a GC the market tends to experience some weakness, with the average bottom coming 6 or 10 months after the GC data. In the current case that would point to a bottom in late October or in February 2015. Of course, because we have a sample of only 9 cases in the modern market era, the statistical confidence is very weak. I also checked the grand crosses that happened in the 19th century (5 cases), and the results were equally mixed.

Some people may say that we should only look at grand crosses involving the same planets. That can be done, but then the number of historic examples shrinks even further. E.g. The current GC between Mars, Jupiter, Uranus and Pluto was earlier seen in 1903 and 1931. This happened to be bear markets ( see turquoise and green line in the chart). But, what’s the statistical significance of something that was observed twice? Well, not high of course. If somebody tosses a coin twice and gets tails twice, does that allow us to make any conclusions about the coin?

Bottom line: a few centuries down the road we may have enough observations to support the hypothesis that grand crosses affect the stock market. Right now the evidence is just too weak. A +10% correction typically happens every 11 months on average. So, chances are pretty good that we will get such a correction later this year anyway. But there is no reason for extra caution because of the grand cross. And for many among us this will be the last time we can watch it. The next grand crosses for later this century: Feb 2041, Jun 2048, Sep 2063, Feb 2069 and Aug 2072

Good luck,

Danny

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3 Responses to “Should investors worry about the grand cross in April?”

  1. […] […]

  2. bob collett said

    Interesting post

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