When the moon fails
Posted by Danny on August 17, 2015
Stock markets had a difficult week and we may be on track for the first failed lunar period of 2015. Failed lunar periods offer indications about underlying strength or weakness in the market. More on that in next week’s post, when we will know how the current green period has ended.
Let’s have our weekly look at the S&P 500 chart (click image to enlarge it):
The S&P sits right in the middle of the sideways channel it has been occupying since February. Technically the Earl (blue line) and MoM indicators are rather neutral and directionless. The slower Earl2 (orange line) has ever so slowly turned down from another weak peak.
This doesn’t help us much, but in a situation like this I would go with the Earl2 and stay very cautious until it shows a clear bottom. If the current lunar green period ends down, then it will also signal weakness, and then a sudden breakdown of the market is a scenario that needs to be taken more serious.
The 2050 level is really critical here. If we get a close below that level, then it could turn ugly very quickly. A target of 1900-1950 would be my first guess in that case. But, as long as the market stays above 2050 there is no reason for panic. There is also no reason for celebration as long as the S&P cannot break out above its May highs. Sideways ranges like this require a lot of patience. But a breakout is inevitable, so it’s good to be ready for it.