LunaticTrader

Investing with the Moon

Outlook for week of September 4

Posted by Danny on September 3, 2017

Outlook for world markets with brief comments for next week.

Click the “Expand” button (bottom right) to watch in full screen mode.

If you have any trouble to see the presentation below, then click here.

For shorter term trading and more optimal entries there are daily reversal levels, which are available by monthly subscription. Comes as a daily html file covering over 2700 stocks and ETF. To see what you get you can pick up recent free samples on this page. Instructions for use are included. Give it a try.

Posted in Market Commentary | Tagged: , , | 2 Comments »

LT wave for September

Posted by Danny on September 1, 2017

Markets have been jumping higher in recent days and are close to new highs again. This is rather unexpected given the current lunar red period and goes against the projected weakness per our LT wave. What to make of this? Here is the current S&P 500 chart:

^SP500 (Daily) 11_3_2015 - 8_31_2017

The crucial support at 2400 has held easily and my indicators are pointing up. This paves the way for a possible test of the 2500 level in the coming weeks. But this could also be a fake-out move before a bigger downturn. If a lower high gets printed here then it will not look good and the 2400 level may get tested again.

Our LT wave was partially successful in August. Here is the projected pattern for September:

ltwaveSep2017

Expected weakness in the first half of August came right on target and the low on August 10 gave us a significant down day. But weakness continued longer than expected. The projected high on August 23rd was only a weak rebound and strength also stretched longer than expected with the best days coming at the very end of the month. So it looks as if the cycle is getting delayed by a few days. I don’t know if that will continue to be the case.
For September some mild weakness is expected until around the 9th, followed by a stronger period with an LT wave peak value on the 21st. The final week of September shows renewed weakness with a bottom value on the 28th.

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Staying alert

Posted by Danny on August 29, 2017

Markets had a rebound last week, but it lacked vigor. The lunar green period ended with a 54 point gain for Nasdaq. Not bad, but it only recovered a small portion of the 206 point loss in the preceding red period. Here is the current Nasdaq chart:

^COMP (Daily) 11_25_2015 - 8_28_2017

The Earl index (blue line) has bottomed and climbed back to neutral, but the market is not really coming along very well. The slower Earl2 (orange line) keeps going down.
Expected strength around the 23rd per LT wave for August only gave us a weak rebound rather than a new record. This suggests the path of least resistance has turned down. A drop below 6200 would confirm that scenario. If so I would look for 5500-5600 as an initial target in that “correction”.

Since the trend is still in place a continuing rally is possible too. I would give that a 30% chance right now. In that case a breakout above 6400 would probably start a rally towards 6600 and thus new records.
If the uptrend (blue line) is still in place by the end of the current lunar red period then the odds for a rally to new highs would go up considerably. We will find out soon.

I will be back later this week with the LT wave chart for September. Stay tuned.

Posted in Market Commentary | Tagged: | 4 Comments »

Outlook for week of August 28

Posted by Danny on August 27, 2017

Outlook for world markets with brief comments for next week.

Click the “Expand” button (bottom right) to watch in full screen mode.

If you have any trouble to see the presentation below, then click here.

For shorter term trading and more optimal entries there are daily reversal levels, which are available by monthly subscription. Comes as a daily html file covering over 2700 stocks and ETF. To see what you get you can pick up recent free samples on this page. Instructions for use are included. Give it a try.

Posted in Market Commentary | Tagged: , , | Leave a Comment »

Did the market peak?

Posted by Danny on August 21, 2017

Stock markets remain under some pressure, but overall the pullback is still small. It is amazing how quickly investors’ talk has changed to crash predictions, which makes me think there is more upside to come before we see a more serious decline. Here is the current S&P 500 chart:

^SP500 (Daily) 11_5_2015 - 8_18_2017

The S&P 500 is currently testing major support near 2420. A drop below 2400 would definitely not look good, but as long as that doesn’t happen we better the possibility of another rally here. All my indicators are in the bottom zone but not turning up yet. If the S&P can hold above 2400 for a few more days then the Earl is likely to turn up first, with MoM following suit. But that remains to be seen, of course. We are in a lunar green period and our LT wave goes strongly positive this week. That “should” give us at least some rebound rally and if that rally is very weak then it would be a very bearish sign.

The solar eclipse over the US will gather some attention today, even on Wall Street. I wrote about this eclipse a few months ago, so you may want to check out that article. See also my older article: Eclipses and the Stock Market. Basically, the historic tendency has been for stocks to drop in the lunar red period that comes two weeks before a solar eclipse. The Nasdaq dropped 206 points in the lunar red period that ended on August 11, again confirming that idea. And then the market tends to climb in the green period containing the eclipse itself. We will find out this week if that happens again.

That wouldn’t rule out a further correction or even bear market in September or October, but I wouldn’t worry too much as long as the 2400 level holds in the S&P 500.

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Outlook for week of August 21

Posted by Danny on August 20, 2017

Outlook for world markets with brief comments for next week.

Click the “Expand” button (bottom right) to watch in full screen mode.

If you have any trouble to see the presentation below, then click here.

For shorter term trading and more optimal entries there are daily reversal levels, which are available by monthly subscription. Comes as a daily html file covering over 2700 stocks and ETF. To see what you get you can pick up recent free samples on this page. Instructions for use are included. Give it a try.

Posted in Market Commentary | Tagged: , , | Leave a Comment »

So bitcoin hits my long term target

Posted by Danny on August 14, 2017

Normally I write about bitcoin once a year, but since my last post in May the cryptos have become a very fast market and now my long term price target of $4246 is being reached. So, I will give a quick update and some new price targets.
But first I want to take a look at stock markets where some interesting things are happening too. Here is the current Nasdaq chart:

^COMP (Daily) 10_27_2015 - 8_11_2017

Nasdaq has reached 6400 and S&P 500 has stagnated just below 2500, which was the base scenario I mentioned a month ago. Markets had a quick dip last week. Nothing unusual, the S&P was down 1.4% for the week, but people have become so accustomed to low volatility that this was enough to get some traders panicked already. What are those traders going to do if the markets are down more than 2 or 3% in a week (or day)? We will find out some day.
Long term trend lines in Nasdaq and S&P and are being tested but not broken yet. As long as that is the case we better assume that the bull run is ongoing. We are more likely than not to get a rebound rally here. We are starting a new lunar green period and the Earl indicator is in bottom territory (but not turning up yet). Whether that rebound will be weak or strong I don’t know. A sustained drop below 6200 would not look good and then the chances for a rebound rally would dwindle quickly.
Keep an eye on August 23rd, when our LT wave will peak for August. If that paints any kind of high (rebound high, double top or even all time high) then we could very well see a new downturn in the ensuing days.

So, what about those bitcoins? In February 2014 I posted price targets based on my reversal levels calculations. Bitcoin was trading above $600 back then, but my bottom target of $180 was nicely reached by early 2015 and then bitcoin started climbing again. I reiterated my long term buy signal in October 2015, when you could still buy bitcoin at $280. Of course we had to wait longer to get to my top targets of $2457 and $4246, but here we are with bitcoin knocking on $4200 over the weekend. So, does this mean the move is now over?
I really don’t know here, because the $4000 level is a very critical juncture in the long term chart:

bit

Some people are warning about parabolic moves and bubbles already, but that’s because they are looking at a linear scaled chart. Moves of this magnitude can only be judged on a semi-log scale chart. What we see here is a sustained (but very high) rate of change, with the move confined to a rather narrow channel since 2015. The same rate of change it also held throughout 2012 before going parabolic in 2013. A sustained breakout above $4000 that quickly heads for $5000+ would start a parabolic move like in 2013. And then it can go above $10k. A failure to do so would probably give us a peak near my $4246 target and be followed by a significant decline when traders notice that the steep rally has ended.
Both scenarios have 50/50 chance at the moment, so if you hold bitcoin from a much lower cost base then I would sell some and hold the rest at zero cost base. A tulip mania type move is possible here and then bitcoin could reach $10k or $20k before a big panic.

Meanwhile my method shows two new price targets: $6430 could become relevant as a next top target or as a resistance zone on the way to even higher levels. And there is a bottom target at $1470. This would come into play if we get a big drop. Bear in mind, not all my targets and forecasts will work out. I am probably due for some bad calls on bitcoin.

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Outlook for week of August 14

Posted by Danny on August 13, 2017

Outlook for world markets with brief comments for next week.

Click the “Expand” button (bottom right) to watch in full screen mode.

If you have any trouble to see the presentation below, then click here.

For shorter term trading and more optimal entries there are daily reversal levels, which are available by monthly subscription. Comes as a daily html file covering over 2700 stocks and ETF. To see what you get you can pick up recent free samples on this page. Instructions for use are included. Give it a try.

Posted in Market Commentary | Tagged: , , | Leave a Comment »

Outlook for week of August 7

Posted by Danny on August 6, 2017

Outlook for world markets with brief comments for next week.

Click the “Expand” button (bottom right) to watch in full screen mode.

If you have any trouble to see the presentation below, then click here.

For shorter term trading and more optimal entries there are daily reversal levels, which are available by monthly subscription. Comes as a daily html file covering over 2700 stocks and ETF. To see what you get you can pick up recent free samples on this page. Instructions for use are included. Give it a try.

Posted in Market Commentary | Tagged: , , | Leave a Comment »

Icebergs 3

Posted by Danny on August 4, 2017

A few years ago I introduced Iceberg charts on this blog. I kept posting them on Twitter and on this blog from time to time and now simply call them the “Icebergs”. Testing has been ongoing and a few new elements have been added, which will be explained in this post.

A brief recap for newer readers. I started experimenting with this idea because a picture says more than a thousand words. But our brain is not really made to read typical indicators that come in the form of a boring graph that dances up and down. Most people cannot combine more than a few such indicators in their mind. But technical charts are usually full of lines, averages and indicators, leaving investors glazed in front of their trading monitors when different indicators point in opposite directions. By creating a type of chart that resembles a landscape we can get very different results based on a picture we can intuitively understand. Thousands of years as hunter-gatherers and later farmers has left us with well developed skills to read the land. By generating a “landscape” based on stock data we can use that part of our brain to get a better read on the stock market. If you are a visual person then you will probably find a much stronger connection with this kind of landscape than with a set of abstract indicators.

The Icebergs are now in version 3 and here is a current example for Crude Oil, which we can use to explain all elements in this type of chart:

oil

The new elements compared to v1 are “gold” (yellow) and “fish” (black and pink dots in the water), and I have circled some examples in this chart. More on them later, let’s first explain the other landscape elements:
1) Green mountains, covered with more or less ice (grey). The more green the more bullish the stock is behaving at that point. Stocks in healthy bull markets show plenty of green mountain, often uninterrupted for months. The mountain peaks should get above 4 or 5 (see right hand scale) to be healthy. Some ice on the mountain is OK, but too much ice (and little green) means the continuation of the bull move is in question. If all green disappears it is a bearish sign.
2) When there is no ice left on a mountain you may see a red line (e.g. October 2016 in this chart), or “lava”. This indicates the market is very hot and probably at or near an important peak. A stock can stay hot for weeks, so don’t sell immediately. I usually sell half or all of the position as soon as the lava disappears. Not all lava will lead to major declines, sometimes you just get a sideways period followed by another rally.
3) Open water appears when no green mountain or even grey ice is present. This means the stock is dead in the water, bulls are too weak to take it higher and the stocks is probably grinding down or near recent lows (e.g. July 2017 in this chart). As you can probably guess, there is no good reason to own a stock that is dead in the water. We wait for green grass to tell us that a new bullish phase may be starting.
4) Sometimes you see icebergs in the water, small grey spikes with no green in them. Icebergs indicate that there is a rally attempt, but it is so weak that (almost) no green grass appears (no growth). Before you know it the stock is falling even further, if not sinking like the Titanic. Long term investors better stay away from icebergs and wait for a proper mountain.
5) Small islands are not much better than icebergs, usually followed by a further drop (e.g. May 2017 peak in this chart). But sometimes a small island is soon followed by a big green mountain, so they can be like the first green sprouts after a long winter.
6) In open water you will sometimes see floating ice (white lines in the blue water at the bottom, e.g. May and June 2017 in this chart). When you see floating ice it means hell is freezing over for the given stock. There is often floating ice at major bottoms, but not every case of floating ice is “the bottom”. If a stock is crashing it is best to wait until the floating ice disappears if you intend to buy near the lows. To play safe it is even better to wait for some green grass if you want to buy after a period of floating ice.
7) New: Gold (yellow) typically appears on a mountain peak, but can also appear on the beach or even in the middle of open water. “Gold on the mountain” (see Oct 2016 in this chart) usually indicates a kind of peak and is a good chance to take some profits. It may appear together with “lava” (red), as is the case here, and then it is an even stronger indication of a top. This doesn’t rule out higher peaks later on, as happened in this case, but if you sold in October you certainly didn’t regret it in November. Also note that not every peak gets “gold” or “lava”. The early 2017 highs came with an ordinary green mountain.
“Gold on the beach” is what you see in April 2017 here. If it is connected to green mountain through ice then we consider it “on the beach”. The meaning depends on what preceded. If the preceding months had mainly open water or ice, then it is like finding land with gold on the beach. This is usually bullish as it suggests there will also be “gold on the mountain” (=higher peaks) later on. But if gold on the beach is found on the declining side of a preceding mountain then it is bearish. That’s what we see in this chart. The gold on the beach was soon followed up by two significant declines.
If we see “gold in water” (not connected to any land) then it is generally short term bearish unless it is quickly followed by new land with green grass.
8) New: Fish (black and pink dots in the water). Just think “bottom fishing” opportunity with this one. Pink (think salmon) means a higher quality chance. Fish can appear when there is still land (see Nov 2016 here), then is usually a good entry for a short term swing trade. But it will usually appear in open water or together with “floating ice”. If you see pink dots under ice you can think “king crab” and that’s a major bottom fishing opportunity with the highest chance of giving way to a significant rally, if not the start of a new bull market. June 2017 was a good example here.

Now, this way of reading a chart takes some getting used to, but once you get the hang of it the system becomes difficult to forget. It really helps to visualize. Just picture yourself as a hunter-gatherer traveling through this landscape from left to right. If you take your bottom fishing opportunities along the road and grab the gold (= take profits) whenever you find it then you are likely to do well. The changing landscape also tells you whether the market is getting hotter or colder and icebergs warn you of potential dangers ahead. It becomes an alive journey dealing with unfolding challenges rather than trying to read abstract indicators like RSI and VIX index.

Let’s take on a few more current examples. Here is bonds TLT:

tlt

Bullish energy (green) disappeared in late August 2016, and bonds dropped. A bottom fishing chance in mid September gave a brief rally, but a lot of ice told us the market stayed very cold. New bottom fishing chances (and 2x salmon) led to an even weaker reaction. The market painted a first iceberg in late October, a strong warning sign. Then bonds dropped quickly, giving us a period of open water and more “fish”. In early 2017 we reached icy land and there we got “gold on the beach” for the first time. This was after a period of open water, so it suggested more “gold on the mountains” (= higher highs) coming up. But subsequent rally attempts were too weak, with bullish energy (green) not getting above 4 and being too short-lived. In mid March we got another bottom fishing chance. A few weeks later we saw bullish “gold on the beach” again. The green mountain got above 4 soon and then we found “gold on the mountain” in mid April as bonds reached a first peak. Bullish energy sputtered a bit there but didn’t go away and led to a couple more peaks with “gold on the mountain”. Notice how the gold in late June was lower than on the previous occasions, that’s a kind of bearish divergence but not necessarily the end of the move. Bullish energy has not gone away and is back above 4 again, so there may be more to come. If bullish energy disappears then our outlook would change.

Here is the current icebergs for Nasdaq:

nas

Bullish energy disappeared in Oct-Nov 2016 and the market went through a major pullback. In late November we saw a great example of “gold in the water”. At that moment we didn’t know if that was bullish or bearish. A few significant down days followed, but then bullish energy came back fairly quickly. As the gold in the water was closer to the new mountain than to the old one we could suspect gold on the mountain was coming up next. A period of “lava” in early 2017 proved insignificant and we had an ongoing green mountain with gold appearing on several occasions. We only got sideways or brief pullback after each episode of gold on the mountain, which is quite typical in ongoing bull moves. Note how the gold in early June was visibly lower than the gold in early May. This bearish divergence led up to a more serious correction in late June. But the market held on and bullish energy returned in mid July. The problem is that bullish energy did not get back above 4 and now we see “gold on the beach” after a mountain. That’s a dangerous omen and would be “cured” only if bullish energy (green) gets back above 4. If an iceberg gets painted next it would be another strong sign to get out.
Note that there is no floating ice and no “fish” in this chart. If we get a correction I would expect to see floating ice and/or fish near the lows.

This type of bearish gold on the beach is rather rare. Here is the previous occurrence for Nasdaq:

nas2

We see the gold falling away towards the beach with the market at new highs after a long advance with continuous mountain. The market subsequently dropped 10% in 6 weeks. A few observations here. The market did make a final brief rally to new highs in early March, when bullish energy was gone already. That cannot be ruled out. Fish appeared nicely at the lows in mid April, giving a great re-entry point for traders. And even conservative investors who waited for green to get back above 4 would have bought back in late May as the index climbed back above 4150. Not bad.

As a final chart I will take weekly EURUSD:

eurusd

I will give no comments on this one so you can just try to read it for yourself.

I do intend to post more icebergs charts on my Twitter and here on the blog whenever there is something interesting, so just stay tuned. If you have questions, just post them in the comments.

Posted in Market Commentary | Tagged: , , | 9 Comments »

 
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