LunaticTrader

Investing with the Moon

Posts Tagged ‘stock market’

The long term crash cycle

Posted by Danny on November 19, 2013

In a previous article I pointed out the possible existence of a 4666 day (= 666 weeks) and a 88.37 year cycle in the market. Of course, with only 200 years of observed stock market history we have little proof for it.
One reader asked whether there are even longer cycles we could possibly consider.

Yes, there are, but then we have even less data to confirm them. However, we can to some extent use data of famous financial panics and crises, which occurred already before we had official stock markets.
And long term climate cycles can also offer clues. I do not think that planets influence the stock market directly. But planetary cycles can and do influence climate and weather, and weather events can influence people’s mood and their spending patterns. So, planetary cycles can influence the economy (and by extension the stock market) indirectly, through the effects they have on the solar cycle and on long term climate.

For example, long term Nile records have provided evidence for a 88 year and a ~200 year cycle in the water levels. See: NASA Finds Sun-Climate Connection in Old Nile Records
A study of 9400 years of reconstructed solar data has also confirmed long term cycles of 88 years and 208 years. These are known as the Gleissberg and Suess cycles. See Abreu et al.: http://www.aanda.org/articles/aa/pdf/2012/12/aa19997-12.pdf
So, it is not a big stretch to propose that these cycles may have economic effects, as it is clear that annual rainfall and temperatures influence a lot of different sectors.

Thus, besides 88 years we can also look for 208 year patterns. Interestingly, these periods do indeed show up quite frequently when we look at the most famous speculative bubbles and crashes.
One of the earliest recorded bubbles was the Mississippi Company and the South Sea Bubble, which peaked in 1720. Well, 1720 + 208 = 1928, which was of course near the peak of the 1920s speculative stock mania.
Another period of rampant speculation ended with the Panic of 1792. 208 years later we had the dot.com bubble, again rampant speculation, which ended in the year 2000.
Another interesting case was the Panic of 1796-97, which was a real estate bubble (land speculation), affecting Europe and the USA. Adding 208 years we find 2005, which was close to the top of the most recent real estate bubble.
Not only that, 1796 + 88 years = 1884, which leads us to the Panic of 1884, which was a banking crisis.
Similarly, the Panic of 1819, was followed by the Panic of 1907, again 88 years later.
The 1901 crash, points to 1989 if we add 88 years. Not a perfect match, but we had the crash of 1987 and the Nikkei crash in 1990.
Then there was the Depression of 1920-21, followed 88 years later by the Great recession of 2008-09.
So, what we see is that similar crises are often separated by these 88 year and 208 year periods.
Sometimes they also return to the same place after 88 years. In France the value of assignats (an early experiment with QE) crashed to near zero in 1794, and that got things really going in the French revolution. See in this chart (click for larger image):

assignats
(source: http://en.wikipedia.org/wiki/File:The_value_of_assignats%281789-1796%29.png )

Exactly 88 years later the Paris stock market crashed in 1882.

Based on this crash cycle, we should thus watch out in 1929 + 88 = 2017 as the next year to bring us a major stock market mania and crash.

Where do these 88 year and 208 year cycles come from?

It are combined planetary cycles.
88.37 years is the triple Saturn cycle. It is also 8 solar cycles and 10 lunar precession cycles. The lunar precession cycle (8.85 years) is often overlooked, but actually quite important as it determines when we get spring tides and plays a role in weather and climate as well.
The 208 year cycle is equal to 19 solar cycles and 11 Metonic cycles. It is also 11.5 Saros cycles. It is 10.5 times the Jupiter-Saturn synodic period (19.8589 years), and 15 times the Jupiter-Uranus synodic period (13.8119 years).
Through a more complex interaction, a 208 year periodicity also emerges from the lunar cycle. See this article.

The 4666 day cycle, is a shorter term cycle that resonates closely with a bunch of planets.
Jupiter and Neptune are conjunct every 4668 days (heliocentric) or 12.8 years.
Venus and the Earth are conjunct every 1.59869 years. 4 * 1.59869 = 6.39476 years
Earth and Mars are conjunct every 2.13535 years. 3 * 2.13535 = 6.40606 years
Venus and Mars are conjunct every 0.914227 years. 7 * 0.914227 = 6.39959 years
The implication is that every 6.4 years the planets Venus, Earth and Mars come back to the same relative position in the sky. Every 12.8 years (~4666 days), the planets Venus, Earth, Mars, Jupiter and Neptune return to the same relative position in the sky.

If we combine the 88.37 year cycle with the 208 year cycle, then there is a resonance at 153.6 years.
153.6 years = 12 * 12.8 years (4666 days).
153.6 years = 14 * 10.97 years (= 14 solar cycles).

Now it all fits together.

Danny

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

The Saros cycle and the stock market

Posted by Danny on March 6, 2013

Once in a while I get questions about lunar and solar eclipses, or messages from readers who protest against my website stating that eclipses are rather irrelevant for the markets.

English: Total Solar eclipse 1999 in France. *...

English: Total Solar eclipse 1999 in France. * Additional noise reduction performed by Diliff. Original image by Luc Viatour. Français : L’éclipse totale de soleil en 1999 faite en France. * Réduction du bruit réalisée par Diliff. Image d’origine Luc Viatour. (Photo credit: Wikipedia)

I can’t help it that there is no consistent effect from eclipses as such.
It’s just a common sense thing. Any casual observer can find out that there are between 4 and 7 eclipses each and every year, so whenever there is a decline in stock markets, it is guaranteed that it will be no more than three months away from some eclipse, and about half of the time it will be less than a month away from an eclipse. But that doesn’t mean the market decline or panic has anything to do with the eclipse.
It is equally easy to observe that the stock market goes through many years without any panics worth talking about. So, then it must be clear that the 4 to 7 eclipses in that year didn’t cause anything special.

That being said, for somebody who wants to dig a bit deeper into eclipses, there are a few things worth considering.
Lunar and solar eclipses are not standalone events. Eclipses are related to each other in what is called the “Saros cycle“. I am not going to use this article to explain the Saros cycle, wikipedia and other sources will do a better job than I can do on that point. All we need to know for our purposes here, is that very similar eclipses occur every 18 years, and they create long series of connected eclipses that can stretch over more than a thousand years.

From the perspective of market panics, it can be found that certain Saros series have collected a bad reputation, so to speak.
For example the famous Tulip mania came to an end in 1637, near a solar eclipse belonging to Solar Saros 125.
Subsequent eclipses in Solar Saros 125 have marked years of other financial panics:
*1637: Tulip mania
*1736: Bank crisis (Amsterdam, Germany)
*1799: Crash in Hamburg
*1907: Bankers Panic (New York)
*1979: Market panic, dollar crisis (USA)
*1997: Asian financial crisis
The next eclipse in this series will come in November 2015

A solemn crowd gathers outside the Stock Excha...

A solemn crowd gathers outside the Stock Exchange after the crash. 1929. (Photo credit: Wikipedia)

Solar Saros 126 has been equally “productive”:
*1720: South Sea Bubble, Mississippi Company
*1792: Market crash (USA)
*1810: Crash (England)
*1828: Depression
*1864: Market crash (France)
*1882: Crash (France)
*1990: Start of crash in Japan
*2008: Worldwide financial crisis
The next eclipse in this series will happen in August 2026

Solar Saros 127 is also worth mentioning:
*1857: Crash (USA and Europe)
*1893: Crash and depression (USA, Australia and UK)
*1929: Wall Street crash and start of Great Depression
*2001: Market crash and 9/11
The next eclipse in this series will come in July 2019

Remember, there are about 40 active Saros cycles at any moment, and only a few of them have coincided with market crises on a somewhat regular basis. Within a given series the eclipses always come at 18 year intervals, and as we can see, even in the worst series not every eclipse came with meaningful trouble.
That’s why, if you were to give an astrologer some stock market charts (with dates removed), he would not be able to tell where the eclipses have come.
Bottom line: don’t get overly worried about upcoming eclipses. Most of them just come and go. It may be useful to keep an eye on the really “bad” Saros cycles we mentioned above.

By the way, the upcoming lunar eclipse for May 25th is a rare eclipse marking the start of Lunar Saros 150. For most of us this will be last time we experience the start of a new Saros cycle, because the next opportunity to see the start of a lunar Saros cycle will come in June 2096.

Be well,
Danny

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Posted in Financial Astrology | Tagged: , , | 15 Comments »

About the Solar Cycle

Posted by Danny on January 14, 2013

Markets continue to trade with a positive bias, but it is not a crazy race to the top.
We will be entering a lunar Red Period this week, so I am looking for a bit of a pause to start.

Let’s have a look at the S&P 500 index (click for larger image):

S&P500

This market is already testing its 2012 highs, satisfying a forecast we made back in December.
With my Earl2 indicator still nicely pointing upwards, the upcoming lunar Red Period is likely to offer some consolidation, followed by further gains in February. I think the S&P will reach at least 1500 before we see any broader correction.

***

The current Solar Cycle 24 is expected to peak in 2013, and I have been getting some questions whether one should prepare for it. The previous Solar Cycle peaked in March 2000, and of course a lot of investors remember that was a major stock market peak. Does that mean we should look for another market top to come with the current solar cycle peak in 2013?

I have been doing some research on this topic recently, in preparation for a bigger article. But some things I can share already.
Using monthly historic data for the Dow Jones Industrials Index going back to 1790, I have looked what happened in all these earlier cycles. (click here for the list of solar cycles)
In the 19 solar cycles that were covered by data, there have been 6 occasions where the solar peak coincided with a clear stock market peak (March 2000 and November 1968 are the most recent cases), on 7 occasions the solar peak produced a market bottom (December 1979 and March 1958 are recent examples), and in the other 6 cases the solar peak came more or less in the middle of an ongoing move.
If we average out the month by month changes in all these solar cycles we get this chart (click for larger image):

solarcycles

In this chart we start with solar minimum at year zero and generally the solar peak comes about 4 years into the cycle.
As we can see, the market just climbs steadily throughout the solar cycle and never varies much from the long term average. We see neither a peak nor a bottom around the solar max, which means it is not something that can be exploited for market profits. The stocks can go either way after a solar max.

I also made a chart for the average performance over a decade, known as the decadal cycle (click for larger image):

decades

Here we see a more outspoken pattern and more variation away from the mean. This implies that the decadal cycle is more relevant than the solar cycle. It is probably just a psychological effect. There is uncertainty in the early years of a decade, then confidence returns by mid-decade, and there is a typical crisis towards the end of the decade.
There is an average 40% gain in the 3rd through 5th year, and we also see an average 10% decline in 7th year through mid 8th year. That is useful.
If historic average holds up perfectly (which almost never happens), you would thus look for 40% stock gains by 2015 or 2016.
2015 and 2016 will also be the 6th and 7th year in the current solar cycle (which started December 2008), and that happens to be the strongest years in the solar cycle chart as well.
So both the decadal cycle and the solar cycle will be supportive for stocks over the next 3 to 4 years.
More details about this in my upcoming article.

Good luck,
Danny

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

 
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