LunaticTrader

Investing with the Moon

Chances for another high

Posted by Danny on July 14, 2014

US markets dipped last week, but recovered some ground already on Friday. Our LT wave chart for July indicated a bottom for the 11th, looks like it missed by a day. We are about to enter another lunar green period. Can this market climb to new highs once again?

Let’s have a look at the Nasdaq chart (click for larger image):

Nasdaq

Last week’s drop saw the Nasdaq restest the March highs after the recent breakout to the upside. A drop below 4350 would tell us it was a false breakout, which would be a bearish signal. But so far the market has successfully defended that level. Was this the first swing in an unfolding larger pullback? Maybe.
As I pointed out last week, my technical indicators are not looking good. But, with a lunar green period coming up there is now a good chance that the Nasdaq will pull out another rally attempt, before going down (in autumn?). It is not unusual for the Earl2 indicator to be early, and in a strong bullish market a downturn often does not start until the orange line falls below the red line. Also, the faster Earl (blue line) is now in bottom territory, which supports the case for another upward move.
This means there is room for a rally to new highs. It would probably take the Nasdaq up to approximately 4530, which is the Top1 target in our key reversal levels. At that level overhead resistance from long term trend lines will probably stop the market.
This rally should come within the next week or so, otherwise the deteriorating momentum is likely to lead to a second swing to the downside. If we get a drop below 4350, then the chances for another rally would become much smaller. 4200 and then 3950 become the initial targets in an extended pullback.

Good luck,
Danny

 

2 Responses to “Chances for another high”

  1. mike said

    I do not know about astrology but heard Full Moons were supposed to be associated with Tops when will law of gravity prevail or market start to crater crumble are all these massive up days short covering or overseas money flowing into usa. When is the next total eclipse?

    • Danny said

      Hi Mike,

      While some tops have come on or near a full moon, it is more common for the market to decline in the red period around full moon. So full moons are more often associated with a bottom.
      As for eclipses, contrary to what most astrologers believe, eclipses have a history of being quite positive for stocks. See my article: https://lunatictrader.wordpress.com/2013/04/15/eclipses-and-the-stock-market/

      So, don’t count on full moons or eclipses to warn you when the market will crumble. Tossing a coin will give you better odds of forecasting the next market peak.

      Danny

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