Posted by Danny on August 24, 2015
We got the first failed lunar period of the year and the market promptly followed through on the downside. I have been warning for it. Last month I wrote:
“…we keep waiting for the first lunar cycle miss of the year. When it comes it will give us an important read on the market, as it will probably indicate the direction of the next major trending move in the markets and a departure from the mostly sideways trading we have seen since the beginning of 2015.“
So, what’s next? Here is the current Nasdaq chart (click image to enlarge it):
We remain in a lunar red period. Panic is engulfing the market with US futures indicating another 4-5% drop for stocks at the moment. And nothing suggests a bottom at hand in any of my indicators. My weekly and daily reversal levels are also bearish across the board.
The first thing to do now is wait and let the washout pass. A bottom may come today or tomorrow, but it could also take weeks or months. First indications that a bottom is in are likely to come from MoM indicator turning up, so that is what I would wait for. We may get several “false starts” before a proper rally gets going again. When markets are dropping fast it is better to buy too late than too early. Remember: this too will pass.
Also keep an eye on my reversal levels, which are posted on Twitter, Stocktwits and Scutify every day. In emotional market times an objective method is usually worth its weight in gold.
And if you are looking for something to blame, spare the Chinese or the Greeks. We can blame it on Saros cycle 125, something I warned for more than 2 years ago: The Saros cycle and the stock market. Saros cycle 125 has been bringing financial panics since the Tulip mania in Holland.