Posted by Danny on October 19, 2015
Markets went higher last week and ended the lunar green period with a nice 267 point gain for Nasdaq. So far this year the lunar cycle has been ridiculously accurate in calling the swings in the market.
There are still a few more months to go and a lot can happen, but this could easily become the best year for lunar cycle trading since 1950. The previous top years were 1998 and 1956, when the green periods outperformed the red periods by 34% (for S&P 500). I am saying this to warn readers that this streak WILL end and the lunar cycle will go back to more “normal” performance sooner or later. And there will also be bad years. E.g. the worst year since 1950 was 1987, when the market lost 19% in green periods and gained 16% in red periods. And almost equally bad was 1990, when the S&P 500 lost 18% in green periods and gained 25% in red periods. This gives you some idea what to expect when a really bad year comes around.
I am getting more questions about the lunar cycles than ever, and new followers on Twitter every day. That’s all very nice, but this suggests that too many people are starting to keep an eye on the moon because it has been doing well all year. Don’t become too confident in the lunar green and red periods. Historically they “work” 60% of the time, not 90% of the time.
On to our weekly look at the Nasdaq (click image to enlarge it):
The Nasdaq is coming into overhead resistance in the 4900-5000 zone. The Earl indicator (blue line) has turned down, while the slower Earl2 (orange line) and MoM indicator are still headed higher. This suggests there could be a bit of upside left, but we could as easily have some short term top at hand and head into a phase of consolidation. I think 4700-4950 is going to be the range for a while. A drop below 4700 would not look good and a painless climb to 5000+ would probably be most surprising for investors.