Washout time

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.


By Dan

Author of LunaticTrader and Reversal Levels method. Stock market forecasts based on proprietary indicators, seasonal patterns and moon cycles.


  1. Bingo! Today it the 25th and we can assume that it hit the lowest level…now as per ur model..which i have full faith in it…the bounce should come from tomorrow i.e 26th and last till friday ! I have bought XIV around $30 (which is 10% down) but i am confident i will get my price with some gains as well ! Eagerly waiting for your views ! :)

  2. While the lunar period may have failed this month, monitoring your LT Wave research in contrast to $SPX has been a lot of fun to watch. Will you be able to provide the September LT Wave graphic soon? Thanks for sharing the great work you’re doing!

    1. Thanks. Failed periods often give good clues about where the market wants to go. That worked very well in this case. The LT wave for September will be given in my next weekend post.


  3. Probably the biggest day since the flash crash in 2010, the brokers -at least market makers – have been suspending trading from time to time so that this market has become for many too big to trade.

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