Investing with the Moon

Posts Tagged ‘S&P 500’

Stocks and bitcoin

Posted by Danny on November 20, 2017

Stocks have basically gone sideways so far this month. Since the November 9 drop the S&P 500 is trying to climb back, but it looks like a tired effort. Meanwhile bullish participation continues to weaken, as reported in my weekly reversal levels outlook.

The lunar green period is about to end, so it will be interesting to see what comes next. Here is the current S&P 500 chart:

^SP500 (Daily) 2_11_2016 - 11_17_2017

This index keeps pushing into an important trendline. But my Earl indicator is showing a multi-month bearish divergence. And the slower Earl2 (orange line) keeps moving lower with no signs of a bottom. The MoM has cooled off since peaking into the +8 zone in mid October.
While all those warning signs have not resulted in any significant downside action so far, it doesn’t mean the market is becoming safe. Sometimes the real drop comes at the very end of a longer sideways period.

A few readers have asked about my bitcoin targets. Since my August post, the next target of $6430 was reached quickly. And I had one higher target, posted on Twitter a few months ago:

I would not be surprised to see stock markets and bitcoin reach important peaks together, before entering “cooling off” phases. With bitcoin now well above $8000 a move to my higher target at $9374 looks realistic here, and yes an overshoot to just below $10 is possible too. I would expect some serious profit taking if $10k is approached. Here is an updated chart:


Bitcoin is bumping into an overhead resistance line and a jump above $9k would look like a breakout. But false breakouts are a fairly common way of ending major bull markets. A one or two day jump to $10k that is quickly reversed would be a textbook blow-off peak. The ELC indicator has peaked out already and such a move would paint a clear bearish divergence. I will keep you posted on Twitter.

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

Narrow range

Posted by Danny on September 18, 2017

The S&P 500 has climbed just above 2500, technically breaking out above its early August highs. But this doesn’t make the market any easier to read because we remain stuck in a narrowing range. Here is the updated chart:

^SP500 (Daily) 12_8_2015 - 9_15_2017

The narrowing range, as shown by the blue lines in this chart, will inevitably be abandoned sooner or later and that will probably set the direction of trading going into 2018. We remain in a lunar green period and the LT wave for September stays positive until the end of this week. So we could see 2520 in the coming days. But the Earl is peaking out, so it looks like the stage is being set for another pullback.
I wouldn’t be too aggressive with bets either way at this point. I would just wait for the breakout from narrow range and then go along with the new trending move (up or down).

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Where does the Euro strength come from?

Posted by Danny on September 14, 2015

Stock market volatility has calmed down a bit and most markets ended the week on a positive note. We have a few more lunar green period days to go and then we will enter a new red period. If the market is going to retest and possibly take out its recent lows, then its best chance to do so is probably in the second half of September.
Let’s have a look at the situation in the S&P 500 (click image to enlarge it):

S&P 500

The S&P is looking for direction after the late August drop. If the market pushes higher then 2050 could be reached fairly quickly. The slower Earl2 indicator (orange line) has turned up from a major low, which is good to see, but that doesn’t rule out another leg lower in the next couple of weeks. The faster Earl (blue line) is going quite high already and may turn down this week. I think the better odds are for a push towards 2040, followed by consolidation for the rest of the month.

A lot of traders will be watching central banking decisions this week. I don’t know whether it will make any difference. I can easily imagine interest rates being nudged higher and see stocks go up rather than down as a result. Would be a typical example of “sell the rumor, buy the news”. Many investors have been selling the ongoing rumor that rates are going to be hiked, so who will be left to sell? It is the uncertainty of an upcoming rate hike that has been hanging over the market for months, and once the step is taken that uncertainty is taken away. We can actually ponder what would be more positive for stocks: keeping rates at zero while telling people that the economy remains too weak… OR raising rates and telling people that the economy is strong enough to do so?

As chart of the week I am choosing the Euro versus Dollar, because it may also contain clues going forward. The Euro has been surprisingly resilient recently (click image to enlarge it):


Since March the Euro has been painting higher highs and higher lows. The 1.15 level has been major resistance for a while and the most recent attempt to break out above it failed. Bullish energy (green in the iceberg chart) is once again rising quickly, so a second attempt appears to be in the making. It is not clear where this Euro strength is coming from. But it is not rare for markets to move first, with the fundamentals that justify the move becoming clear later on. Anyway, a successful break above 1.15 would open the door towards 1.25.


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

When will the moon blink?

Posted by Danny on July 20, 2015

Stocks rallied strongly last week, and another lunar green period has ended with handsome gains. The lunar cycle keeps up its perfect record for the year. This is a highly unusual winning streak. If we consider the odds of correctly guessing the direction of the market over a given period at 50%, then getting it right 14 periods in a row has a 1 in 16384 chance. Just try tossing a coin until you get heads 14 times in a row.
Historically the lunar periods “work” about 60% of the time. Even if we consider 60% chance of success, getting it right 14 times in a row is a rare 1 in 1276 occurrence. So, it will probably take nearly 1000 years until a similar winning streak for the lunar green and red periods can be seen again.

A new lunar red period is now starting and 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.
Let’s have a look at the S&P 500 (click image to enlarge it):

S&P 500

After a false breakout to the downside the S&P is now climbing strongly. All my indicators are pointing up, but the Earl and MoM indicators are getting quite high already. The Earl2 has much more room to rise, so any pullbacks could be short lived. The June highs and the 2150 level are first overhead resistance for the S&P, and that’s where this rally could stop to take some breath.
But I wouldn’t be surprised if this becomes the period in which the moon blinks. Investors have been cautious for quite a while, and if the S&P pushes above 2150 then more money will come pouring in. Many traders are realizing that bonds are going to be rubbish in a rising rate environment, making selected stocks look more attractive as long as the economy keeps doing OK. If this comes to pass then the S&P can get to 2300, with the Dow pushing towards the magical 20k level in August.

Stay tuned.

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What can rally stocks?

Posted by Danny on July 6, 2015

Stocks have been pressured by the uncertainty over the Greek referendum last week. Of course, the result of that vote was already available on Google trends days ago, as I suggested in my quick post yesterday. What kind of reaction can we expect this week? Let’s have a look at the S&P chart (click image to enlarge it):


We are now in a new lunar green period. The lunar cycle has maintained its perfect record so far in 2015. If it is to keep going for another period then stocks need to rally for some reason or other.
The S&P has fallen back to a long term support trend line. My technical indicators are all in bottom territory, but not turning up yet. So, there is potential for some rally to start in the next week. News from Greece can still swing the market either way, but I don’t think some kind of resolution can be postponed much longer. And any kind of “solution” may trigger a rally.


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Disappointing days can be bullish

Posted by Danny on January 14, 2015

Yesterday the stock market opened higher, climbed even more and then started sliding, only to end the day down and down more than 1.5% from the intraday highs it had reached just a few hours earlier. That’s as disappointing as days can get for people who own stocks, other than a crash of course. Here is how the market action looked like for the S&P 500:

S&P intraday

Social media were full of messages how bearish this kind of market action is, as if people had been waiting for this. And yes, the logic seems to make sense: if the market cannot hold on to early gains, then sells off more than 1.5% intraday, it can hardly be seen as a sign of strength. The problem is: when was the last time the market was logical?
No matter how logical a trading concept may appear to be, and no matter how many experienced traders are telling you about it, it is always important to test. And we have plenty of stock market history to verify what really happens after this kind of disappointing days. So, that’s what I did. Here are the results.

I defined a disappointing day as a day on which the market opens above the previous day’s close, but ends the day below it. And the market must be down 1.5% or more from the intraday highs it reached to qualify as a disappointing day. To test what typically happens next we then look where the market was 5 and 20 trading days later, compared to the closing price on the disappointing day as defined above.

For the S&P 500 I found 143 of those days since the early 1980s. In 54.5% of the cases the market ended up being higher 5 days later, and in 57% of the cases the market was higher 20 trading days later (20 trading days is about 1 month). The average expectation is slightly positive, both after 5 and after 20 days. In 8 cases the market was down more than 6% after 5 days, and in 6 cases it was up more than 6% after 5 days. In 25 cases the S&P was up between 3 and 6% in the next 5 days, and in 47 cases the market climbed between 0 and 3%. Here is the complete distribution chart:


Looking where the market went after one month. In 20 cases (14%) the market was down more than 6% after 20 trading days and in 23 cases (16%) the market was up more than 6%. This chart shows all results for 20 days later:


I did the same test on the Nasdaq since the 1980s, which gives us a larger sample of 385 cases thanks to Nasdaq being more volatile. Also here we find that in 57% of the cases the Nasdaq is up 5 and 20 days after a disappointing day. In these 385 cases the Nasdaq has on average climbed 0.5% within 5 days, which is over 26% annualized. This means that a disappointing day like the one we have seen yesterday has historically been a bullish sign, not a bearish one. The average gain 5 days later is 3.5% and the average loss 5 days later is 3.55%. But there is a gain 57% of the time, so going short after a disappointing day has not been a profitable strategy in the last 30 years.

Here is what happened 5 days after a disappointing day in the Nasdaq:


In 26 cases the Nasdaq was down more than 6% after 5 days, in 37 cases it was up more than 6%

Here is what happened 20 days after a disappointing day in the Nasdaq:


In 44 cases (11%) we see the Nasdaq more than 10% lower after 20 days. In 58 cases (15%) the Nasdaq is more than 10% higher after 20 days.

Bottom line: a disappointing day in the market is more or less neutral with 57% odds that the market will be higher one week and one month after this day. The idea that this kind of days are a bearish omen is thus not supported by history. Slightly more often than not it is actually very bullish going forward. If there is anything bearish about these disappointing days then it will take additional qualifiers to get it to work. If you have ideas or links to similar studies then feel welcome to post them as a comment.

Good luck,

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

The next breaking point

Posted by Danny on August 4, 2014

In our most recent review of the S&P 500 we pointed out the market was at a breaking point, with all my indicators pointing down. US markets have indeed gone over the edge last week, and the rather quick drop has brought them right to the next breaking point. Here is the current S&P chart (click for larger image):

S&P 500

The S&P has dropped to support at long term trend line (green line) near 1930. Will buyers appear at this level? Maybe, maybe not. None of my technical indicators show any sign of a bottom at this point, but that could change if the market manages to hang on to this 1925 level for several more days. Clearly, the prospect for new highs in August, as we discussed in last week’s post, is now a more remote scenario.
Meanwhile, the Nasdaq sits right at the 4350 level, the July lows. This keeps the possibility alive for another run to 4500+… IF buyers show up this week.
Bottom line: both the S&P 500 and the Nasdaq are at a next breaking point. And the technicals still look poor. I think the odds for a rebound or sideways “hanging-on mode” are fairly equal to the odds of a quick further drop this week. If the current support level gives way then I would look for 1880 and then 1730 as likely downside targets for the S&P 500. If buyers show up at these levels then this will be another whipsaw move that is quickly forgotten.

Good luck,

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At the breaking point

Posted by Danny on July 21, 2014

US markets tried to rally last week, but didn’t succeed to print new highs, with the exception of the Dow Industrials. The market appears heavy, but hasn’t really broken down yet, so a further grind to marginally higher highs is still possible. Let’s have a look at the S&P 500 (click for larger image):

S&P 500

The market is right a breaking point. A narrow 3 month up trend channel supports the market at current levels, but any drop below 1950 would not bode well. On the upside a +2000 print remains possible, and would become inevitable if this narrow trend channel is to hold up for another month.
Meanwhile my technical indicators continue to point downwards, and the weekly MoM for the S&P has now turned down as well. So, this is not a setup I want to buy or stay heavily long. At best we are in a sideways correction, but the risk for a sudden downside acceleration is quite high. We have been in a higher highs and higher lows pattern since mid April. Once that sequence ends the S&P will drop 100 points quickly imo, much like it did in January.

Good luck,


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

Key reversal levels for week of July 7, 2014

Posted by Danny on July 6, 2014

Comments for this week :

* US markets have continued to push higher, while the UK and Germany are more cautious and continue to sit near major resistance levels. Weekly key levels remain bullish for stocks.

* In the daily key levels all major stock indexes have followed the lead of the Nasdaq and are back in rally mode with upward MoM. People who are looking for a chance to go short would do well to wait at least until daily MoM turns down again, which is the earliest sign of a possible top. But remember, going short in a strong bull market usually means you end up paying for somebody else’s Ferrari. It is much easier to make money with the trend. Price is the only indicator that WILL tell us when the market has turned down, by first falling below the daily key level and then falling below the weekly key level. Once that has happened, then we can start looking to go short. No major bear market can start without the S&P 500 going below 1852.69, which is our current weekly key reversal level. Trading is waiting: first let the market prove to you that it has turned direction, and then act… and then wait again for the market to prove to you that the move has run its course. This is: don’t shoot before you actually see duck. It sounds easy but it is hard to do. Many traders just can’t wait until the fish bites. And it also took me 20+ years to really learn that lesson. If women are better traders it is because they are generally better when it comes to waiting. Men have to learn waiting, so they tend to become better traders with age.

* We have several new and updated key target zones this week. The old Top1 targets for Nasdaq and S&P 500 are now out of the way. The new Top1 targets are 2001 for the S&P 500 and 4531 for the Nasdaq (see table below).

* In other world markets we are still waiting for China, the only market that remains in bearish mode, to break above its weekly key level. A weekly close above 2073.86 would turn the Shanghai Composite bullish, and then all the stock markets in our list would be in bullish mode. That hasn’t happened since we share these tables here on the blog.

* Bonds (TLT) have gone into declining mode. A weekly close below 109.13 would turn bonds fully bearish. Some of the money that comes out of bonds is likely to move into stocks. When that happens we will enter the bullish final stage of the 1920s scenario.

* Gold is digesting recent gains. Still bullish.

* The Euro refuses to show its hand. Now turning daily bearish again. But MoM is turning up on the weekly level. Mixed signals = wait.

* Oil has not shown follow through to the upside and now we get the logical downturn. Needs a close above 105.55 to get back into rally mode.

* Our weekly key reversal levels for the 30 Dow stocks are available here. 27 stocks are bullish this week, up from 25 last week. Above 20 is healthy, see : Keeping an eye on the Dow stocks.


Here are the tables.

Key reversal levels for next week:

Weekly Current Mode Key (W) MoM (W) Weeks % Ch.
Nasdaq 4,485.93 4,089.30 6.17 78 45.21
S&P 500 1,985.44 1,852.69 7.39 83 40.18
Nikkei 15,437.13 14,551.48 2.67 4 1.53
FTSE 100 6,866.10 6,711.45 1.87 9 0.64
DAX 10,009.08 9,394.49 4.74 14 4.02
Bonds (TLT) 110.68 109.13 2.70 23 3.74
Gold (spot) 1,320.42 1,276.50 -0.37 2 0.42
$EURUSD 1.3593 1.3738 -2.26 7 -0.70
Oil (CL) 104.06 101.05 2.97 20 3.94

(Legend: Mode: green = bullish, pale green = weak bullish – may have peaked, red = bearish, pink = mildly bearish – may have bottomed | Key: key reversal level | for more details about these key levels, see: )

Latest daily key reversal levels:

7/3/2014 Current W Mode Key (D) MoM (D) Days % Ch. Str. #
Nasdaq 4,485.93 4,320.88 7.78 30 8.46 1
S&P 500 1,985.44 1,941.56 5.47 30 5.15 1
Nikkei 15,437.13 15,070.94 3.30 31 7.12 1
FTSE 100 6,866.10 6,778.87 1.11 2 0.73 5
DAX 10,009.08 9,872.29 0.21 1 -0.20 5
Bonds (TLT) 110.68 112.73 0.41 1 0.27 7
Gold (spot) 1,320.42 1,290.50 5.15 16 3.73 2
$EURUSD 1.3593 1.3652 1.95 0 0.00 39
Oil (CL) 104.06 105.55 -0.87 0 0.00 35

(Legend: Mode : green = bullish, pale green = weak bullish – may have peaked, red = bearish, pink = mildly bearish – may have bottomed | Key: key reversal level | W = weekly mode | for more details about these key levels, see: )

Our current key target zones (we use a +/-1% zone around these targets):

Key Targets Top1 Top2 Bottom1 Bottom2
Nasdaq 4531 4588 * 3975 3742
S&P 500 2001 2031 * 1755 1641
Nikkei 15976 17220 13860 12940
FTSE 100 6800 7110 6642 * 6230
DAX 10240 10450 9682 * 8715
Bonds (TLT) 114.60 115.70 108.25 102
Gold (spot) 1415 * 1541 1160 1075
$EURUSD 1.3950 1.42 1.3403 1.2870
Crude Oil(CL) 109.24 112.47 94.60 91.85

(* = new or updated target ) (for more details about these key targets, see: )

Stay tuned, Danny


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LT wave for July

Posted by Danny on July 3, 2014

Last month’s LT wave chart suggested weakness in stock markets. That didn’t pan out for the US indexes, but still the wave got most of the short term swings correct. I have embedded a S&P 500 chart for June, making it easier to see (click for larger image):

LT wave

The blue line did a fairly good job indicating the swing highs and lows. Clearly, the yellow line didn’t work.

For July we see expected swing highs around the 8th, 18th and 26th. Projected lows on the 2nd, 11th and 23rd. Based on the yellow line we can look for weakness in the first half of the month and a stronger second half.

Again, don’t expect perfection, this LT wave is based on an experimental concept. Some months it will match closely, but I expect there will also be months when it misses completely. Sometimes people ask me when is the best time to start using this LT wave. I think that in general the best time to start using a method or indicator is not when it has just been on a hot streak. It is always better to wait until the system has just had some bad months (years). Better be careful in crowded stocks and in crowded methods.

Good luck,




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

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