LunaticTrader

Investing with the Moon

Posts Tagged ‘lunar cycles’

Bitcoin wakes up

Posted by Danny on October 26, 2015

The market kept climbing last week and didn’t stop for any of the resistance levels we had expected. It’s also not bothering about the current lunar red period. What’s going on?
Maybe we are seeing the first positive red period in almost a year. And that would be an indication that the market is starting another leg higher in its multi-year bull market. It will be more clear by the end of the week. Let’s have a look at the S&P 500 (click image to enlarge it):

S&P 500

The S&P is back within the range it held from February until August. The next major overhead resistance is now at 2100-2130. The Earl (blue line) has dropped a bit but appears to turn back up. We could be going to a bearish divergence in this indicator. The slower Earl2 (orange line) is still going up but getting very high. This looks like a market that is more than ready for a pause, so I don’t think there is much upside left at this point.

***

Bitcoin quietly gave a weekly buy signal in our weekly reversal levels a few weeks ago. In my previous articles on bitcoin I was rather bearish: What will replace bitcoin? and Bitcoin price targets, but now could be a good time to turn bullish. Here is a long term icebergs chart for bitcoin (click image to enlarge it):

bitcoin

For the first time since late 2013 we see some significant bullish energy (green) enter the picture. In 2013 the rallies ended in massive overheating (red lava) followed by major corrections. My downside target of $180 was reached earlier this year and a nice base has formed just above $200.
A very long period of “floating ice” has just ended and bitcoin is slowly heading higher. How high can it go? I don’t know, but with this chart $500+ is certainly not out of the question.

As I wrote in 2013, the value of a crypto-currency will start to depend on real intrinsic value that becomes tied to it in some way. It is now clear that this can also be the value of services that are being connected to blockchain technology. This is starting to happen with Bitcoin and also with newer implementations like Ethereum.

Danny

Posted in Financial Astrology, Market Commentary | Tagged: , , , | 4 Comments »

Overhead resistance

Posted by Danny on October 12, 2015

Stocks climbed nicely last week, in line with the lunar green period and the favorable setup in my indicators. We have another week of lunar green to go, but the question becomes: how much is left in the tank here? Let’s have a look at the S&P 500 (click image to enlarge it):

S&P 500

We have a nice double bottom in place and the market is clearly in search of new post-crash highs. All my indicators are climbing, but the Earl and MoM are getting quite high now. So, I think the market will start sputtering if it reaches 2050, which is major overhead resistance. It would surprise me if the S&P bursts through 2050 without a noticeable pullback. Investors who bought in the 6 months prior to the August drops did so at 2050 or higher and many of them may be waiting to get out near breakeven after being shocked by the recent declines. All that selling will have to be absorbed before the market can go higher, and that will take time imo.
I don’t think we will see a sharp drop if 2050 is reached, but rather the start of a sideways pause that allows the market to catch its breath.

As chart of the week I am choosing China, which is giving a speculative buy signal in the weekly reversal levels. (click image to enlarge it)

China

The Shanghai Composite has bottomed with major bullish divergences in Earl2 and ESe. Weekly MoM has turned up for the first time since the crash started. This sets the stage for a new climb towards 4000+.

Good luck,
Danny

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

LT wave for October

Posted by Danny on October 5, 2015

Markets declined into the end of the lunar red period and have started to rebound with the new green period. The August lows have held, so this could mark the end of the recent correction. Let’s have a look at the Nasdaq chart (click image to enlarge it):

Nasdaq

The Nasdaq appears ready to climb towards the 5000 level again. The Earl indicator (blue line) has just turned up from another major low, while the slower Earl2 (orange line) has been marking time to let the market catch up. This is a favorable setup. But a drop below the late September lows would invalidate this scenario.

Several readers have been asking for the LT wave chart form October. I was away from main computer, so couldn’t get it out in time. But better late than never, so here we go (click image to enlarge it):

LT wave

The wave did very well in September with the highs and lows coming very close to the expected dates. For October the LT wave shows a positive bias until the 15th with weakness in the second half of the month. Highest values are on the 4th and the 13th. The lowest values come on the 21st and 29th.
Bear in mind that the LT wave is trend neutral, it is the pattern that matters.

Click here for a copy of the weekly reversal for over 1500 stocks and ETF.

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

A low for the Dow

Posted by Danny on September 28, 2015

Stocks pulled back again last week. But the decline is orderly and with only a few more lunar red period days to go we can start looking for a possible buying opportunity. Let’s have our weekly look at the S&P 500 chart (click image to enlarge it):

S&P 500

The 1900 level was major support/resistance throughout 2014 and is now becoming important again. Technically, my Earl indicator (blue line) is falling back below zero, but not showing any signs of a bottom yet. The slower Earl2 (orange line) is still going up with further room to rise. The most likely scenario is for the faster Earl to bottom out later this week, and that would set the stage for a nice rally in the upcoming lunar green period during the first half of October. An S&P 500 close below the 1900 level could spoil the party, but that remains to be seen.

As chart of the week I am choosing a weekly chart for the Dow Industrials (click image to enlarge it):

Dow weekly

My three “bread and butter” indicators have all dropped to extreme lows not seen since late 2011. The MoM indicator is already flattening out, ready to turn higher. The Earl2 and ESe are still going down. While this doesn’t rule out a further drop below 15k in the coming weeks, the more probable case is for a gradual rebound that will stretch into next year. If the market stagnates just above 17k come January/February, then we will be at risk of a much deeper decline. But my best guess is that we won’t see that deeper decline. I think we are in for a prolonged sideways period, with the Dow hovering between 16k and 18k for another year or so. Until investors are utterly bored with stocks.

Note: the LT wave chart for October will be posted next Sunday.

Click here for a copy of the weekly reversal for over 1500 stocks and ETF.

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

Has oil bottomed?

Posted by Danny on September 21, 2015

The new lunar red period has started with fresh selling pressure in stocks and the weekly reversal levels stay in bearish trend for most markets. It looks like our LT wave for September is panning out quite well, but there is still more than a week to go so we can’t take anything for granted. Let’s have a look at the Nasdaq chart (click image to enlarge it):

Nasdaq

The Nasdaq has rebounded well from the August lows, but this was the easy part. The far more difficult hurdle on the way back up is the 4950-5150 zone, the area where many investors have bought in the last 6 months. Some investors are probably waiting for break even to do their selling, and all that selling will have to be absorbed before the market can go higher. I think we are getting to the point where that delayed selling is starting to show up.
Technically the slower Earl2 indicator (orange line) keeps going up from a major low, but the faster Earl (blue line) has turned down from a high level. This suggests we will first see some consolidation. A retest of the August lows is not impossible, but it is more likely that 4600 will offer major support if the Nasdaq heads down again.
The market has gone up nicely in the recent lunar green period, but the real test of underlying strength in the market will come now, in the red period. If the market holds up well, or even marks gains, then things will look pretty good heading into Q4. If the market drops sharply in the next few weeks, then we are probably in for several more months of pain. There is still plenty of reason to stay cautious as it is too early to declare the correction over.

As chart of the week I want to take a look at crude oil. This is a weekly chart for a longer term perspective (click image to enlarge it):

oil icebergs

“Lava” marked a major top in August 2013. The subsequent massive drop has painted a period of “floating ice” and “open water”, and we now see the first signs of life with icy mountain appearing and going higher. This can still turn into an iceberg, which would be a bearish sign. But if some green grass appears it would be the first indication of longer term bullish energy in more than a year. A breakout above $55 would terminate the long term down trend channel, and then oil can rise to $60 and higher. I am looking for $75 to be reached in the most bullish scenario.
Note: more info about reading icebergs charts can be found in this article.

Danny

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

Iceberg chart for gold

Posted by Danny on September 8, 2015

Stock markets had another rough week. We got the serious down days and the nervousness I warned for in last week’s post. Now the question becomes whether the August lows will be revisited or not. Let’s have a look at the Nasdaq chart (click image to enlarge it):

Nasdaq

We are in a new lunar green period, but that has not resulted in a sustained upward move so far. Meanwhile the Earl and MoM indicators keep going up, while the slower Earl2 (orange line) is about to bottom out at a deep low, on a par with the major lows it reached in April and October 2014. Three weeks ago I recommended to stay very cautious until we see a clear bottom in the Earl2 indicator. The Earl2 is now flattening out and will probably turn up in the next few days, so now is the time to start looking for some bargains.
Major upward resistance is near 4800, the late 2014 highs. And support is probably just below 4600, the January lows.

I would also like to point out that the Skew index hit a very high 142 last Friday. This means that a lot of crash insurance was being bought and unusually high premiums were being paid. Fear is very high in the market. From March until a few weeks ago the Skew rarely went above 130 and mostly traded near 120. This means investors weren’t all that worried and didn’t buy much crash insurance (if any). But now that we have seen a market drop the Skew is suddenly jumping to its highest level in almost a year. This is an example of buying boots after the flood. See the article on Skew index that I posted earlier this year: Forget the VIX, watch the SKEW. This suggests we are in a short term correction, not at the start of a long bear market. Throughout the bear markets of 2000-2003 and 2007-2009 the Skew consistently stayed low and didn’t even get above 130, much less 140. A low Skew means complacency, a high skew means fear. So, right now we have fear. And as the saying goes, it is time to buy when others are fearful.

Some people have been asking for more Iceberg charts. I will try to do one very week. We will start with gold (click image to enlarge it):

Gold icebergs

Gold had a nice bout of bullish energy (green) in the beginning of 2015. “Lava” marked the peak in January. “Floating ice” appeared at a bottom in March. Some erratic bullishness showed up in May and June, but that hardly managed to keep the market flat. “Floating ice” marked the next bottom in July. And now we have had another rally attempt, but bullish energy is even weaker than on the previous occasion. It has only painted a few “small islands”. In a healthy bullish market the amount of green climbs above 4, and that’s what I would wait for if you are looking to buy gold for long term.
If you missed out on my earlier article introducing the Iceberg charts, you can find it here.

Danny

Posted in Financial Astrology, Market Commentary | Tagged: , , , | 12 Comments »

LT wave for September

Posted by Danny on August 31, 2015

There was panic selling in the markets before stocks recovered towards the end of the week. We already warned weeks ago that things could turn ugly quickly and that’s exactly what we got. It’s too early to tell whether the lows are in or not, but we can have a look at the new situation in the S&P 500 (click image to enlarge it):

S&P 500

The lunar red period will end this week. The Earl indicator (blue line) has turned up from a significant bottom already. The MoM is turning up as well. The slower Earl2 (orange) line is still going down, but entering deep bottom territory. This means we could easily see a further rebound, and I think the old support levels near 2050 on the S&P will now become strong overhead resistance if the market gets there. Plenty of investors who bought stocks in the recent 6 months, and were shocked by this sudden drop, will be looking for a chance to get out near break even.
So, I wouldn’t look for an easy climb back, like we saw in October last year. I expect some more serious down days and continuing nervousness. How well the market keeps recovering (if at all) in the next lunar green period will give us new clues going forward. The weekly reversal levels are still fully bearish for most stocks and indexes, so patience is probably a good idea.

Here is the LT wave chart for September (click image to enlarge it):

LT wave

The wave did well again in August. The month started weak as expected, and projected strength into the 17th barely managed to keep the market flat. The ensuing crash bottomed on the 25th, which was the LT wave low value for the month.
For September the LT wave stays close to neutral for the first 8 days, with a possible dip near the 9th. Then a strong period until the 21st followed by weakness in the final week. The highest LT wave value comes on the 15th, with low values coming on the 9th and the 28th.
As always, bear in mind this LT wave is experimental and will not always work as well as it has done in recent months. So, don’t bet the bank on it.

Danny

Posted in Financial Astrology, Market Commentary | Tagged: , | 4 Comments »

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):

S&P

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.

Danny

Posted in Financial Astrology, Market Commentary | Tagged: | 4 Comments »

Iceberg charts

Posted by Danny on August 10, 2015

It was a challenging week in the stock markets. Maybe we are due for the first failed lunar period of 2015.
In recent months I have been working on a new type of stock chart, with the intention of visualizing the market in an interesting new way. More on that further down this article. Let’s first take a look at the Nasdaq chart (click image to enlarge it):

Nasdaq

The Nasdaq had a nasty downturn in the last days of the week. Since the July record highs we see a lower low and a lower high on the chart, something we haven’t seen on this scale for quite a while. That doesn’t have to be the end of the world, but for me it is a good reason to turn into “show me” attitude. My technical indicators have turned back down, and now I just sit back and let the market prove to me that it has the strength to recover from this “dip”.
If it doesn’t then the chart will start looking ugly soon, because what looks like an intact up trend (as given by the blue channel) would quickly change into a visible down trend (shown by the red channel). That would mean a drop to 4700-4800 area, if not worse.
A move above 5200 would invalidate the potential down trend channel and tell us that the bull market is still on.
My weekly outlook based on reversal levels has also been giving warning signs for over a month. This may pass without much further damage, as it often does, but there is no way to tell. Even the worst of bear markets start with a few innocent looking down days.

***

I am a visual type of person and I like colors. A picture can say more than a thousand words, so I have been working on a type of stock chart that can give a better visual picture of what is going on. It is still a work in progress, but I already like the current result, so I am going to show some “iceberg charts” for the first time. Here is crude oil (click image to enlarge it):

Oil iceberg chart

There are no indicators or moving averages in this chart, they are not needed. The icebergs are the kind of landscape that you see at the bottom. A lot of information (and math) is packed in it, but presented in such a way that it becomes easy to “read” what is going on. The elements you find in the iceberg charts are:
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. 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 usually better to sell the stock.
2) When there is no ice left on a mountain you see a red line (e.g. May 2015 in the 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.
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 (e.g. July 2014 in the 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 could be starting.
4) Sometimes you see icebergs in the water, small grey spikes without any green in them (e.g. Sep 2014 in the chart). Icebergs indicate that there is a rally attempt, but it is so weak that no green grass appears (no growth). Before you know it the stock is falling even further, if not sinking like the Titanic. Stay away from icebergs.
5) Small islands (e.g Oct 2014 in chart) are not much better than icebergs, usually followed by a further drop. 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. Aug 2014, Nov-Jan 2015 and Jul-Aug 2015). 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 green grass if you want to buy after a period of floating ice.

Armed with this knowledge you can read stocks in a way that is not possible otherwise. You can quickly spot “regime change” in any market, you can see if a stock is red hot (lava), dead cold (floating ice), healthy green bullish or just dead in the water. Icebergs warn for possible dangers ahead. Here are a few more examples. Apple (click image to enlarge it):

Apple iceberg

Apple has been green bullish most of the time. It was dead in the water around the new year and has again gone dead in the water since May-June. You didn’t miss anything if you sold when the green grass disappeared.

S&P 500 (click image to enlarge it):

S&P iceberg

The S&P had lava in July last year, and saw floating ice at a few major lows. Since the start of 2015 the green bullish energy has been weak with plenty of small islands. An iceberg in June gave way to a quick dip and since July we see more green bullish. If this can be kept up then the market should go higher. If it doesn’t then the S&P will probably go dead in the water again.
I intend to post some iceberg charts from time to time, as it is a nice way to add some color to my articles. Hope you like them. Feedback is welcome as always.

Danny

PS: adding iceberg chart for FTSE 100 per reader question, see comments below.

FTSE 100 icebergs

Posted in Financial Astrology, Market Commentary | Tagged: , , | 7 Comments »

Investing is more about observing than forecasting

Posted by Danny on July 27, 2015

Markets turned down again last week. Potentially this paints a failed breakout in the Nasdaq, which surged to new all time highs last week but didn’t see any other major index follow in its footsteps. We remain in a lunar red period for another week, so a pullback was not unexpected. Now it is important to watch how deep this latest pullback will cut. If major support levels are broken things will not look good heading into autumn.
Some readers may wonder: last week you were talking about Dow 20k in August, and now you think stocks are headed down? Well, it’s always important to remember that investing is more about observing than forecasting. Working out possible scenarios of how the market will move next can be useful but has to be matched with unfolding reality at all times. If observed market action is no longer consistent with a given scenario, then I discard it or at least assign much lower odds to it. A climb to Dow 20k is still possible, but the odds if it happening in August is declining rapidly now. The basic condition for a new rally to start is the S&P 500 climbing above 2150, and that isn’t happening yet.

Let’s have a look at the Nasdaq chart (click image to enlarge it):

Nasdaq

The Nasdaq has quickly turned back from the 5200 level and is now testing support levels around 5090. Technically the Earl (blue line) and MoM indicators have turned down from significant highs. The slower Earl2 (orange line) is going up and breaking above the zero line. The Earl2 has struggled to get above zero since late March, so a continued rise would be a positive. But for that to happen the Nasdaq has to stabilize at current levels as soon as possible.
With the Earl and MoM coming down a further drop is easily possible and downside targets are 4950 and ~4750 if we get a more prolonged slide.

For the fans of my reversal levels, check out the latest weekly levels: http://www.reversallevels.com/2015/07/wrl-july-25.html

The daily reversal levels are available on Scutify as premium content every day: https://www.scutify.com/profiles/LunaticTrader

Posted in Financial Astrology, Market Commentary | Tagged: | 3 Comments »

 
%d bloggers like this: