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Astrology and the Markets


While the notion of using Astrology in the markets seems ludicrous, it has been used successfully by traders long enough to generate interest and studies by some Universities and the Federal Reserve. Their results confirm a Moon effect that can consistently increase returns by about 5% a year vs. the benchmark indexes of many countries as seen here, but there are other studies linking industrial output to the Solar cycle of 11 years and increased volatility from large Solar influx as seen in the Federal Reserve study here.

Although the Solar cycle predicts increased volatility and a recession into the next 4 year Election-Business cycle low of 2014, what is most important is what lies ahead into the current 4 year Election cycle low of Fall 2010. Before Man laid trans-Atlantic cables, radio was the only way to communicate, and great efforts were made to increase its reliability, but RCA researchers ran into an obstacle they could not overcome, and that was the fact that radio communications were impaired when the Planets were at 90 and 180 degrees from each other, and those have been known as negative angles in Astrology for thousands of years, obviously for a good but unexplained as yet reason as seen here.

Now that we have gained some credibility about the effects of our Solar system on our activities, we can see that it can be applied with measureable success in the markets as seen by the performance of the best known Financial Astrologer, Mr. Arch Crawford and listed on his website. Arch Crawford recently made some dire predictions for a rare Cardinal Climax in August 2010 as seen in the original here or our archived copy here (IE only).

Before we get to the Full Cardinal Climax of early August 2010, we have a sort of Half Preview into May 18th which is turning out to surprise in a very negative way and may be a sign that Arch Crawford is right and a dose of reality and Debt Deflation will enter in the market and force a repricing of risk and assets like we saw in 2008.


Cardinal Climax Preview

S&P500 3-week chart
S&P500 8-month chart
Courtesy of StockCharts.com

Wall-Street and the media would like you to believe that last week was caused by a glitch and things will return to normal but there were some Panic Signatures in place before the event that prompted me to warn my subscribers of a possible Panic to the 1100 level into May 11th in my weekend letter and repeated the warning on May 5th when I saw the ingredients coming together for one as seen here.

...and we may even get a small panic to 1100 into Tuesday the 11th....we do have some Panic signatures into May 11th, ....event risk could escalate into May 11th and continue into the Full Moon of May 27th.

In fact what happened this week is not uncommon at major tops and actually happened already at the top in 2000 with Saturn and Uranus at 90 degrees just like they are at 180 degrees now and part of that rare Cardinal Climax formation. There was no glitch on Tuesday April 4, 2000 to explain a 100 point drop and an 80 point recovery, and the glitches on Thursday may have been the catalyst, but were not responsible for the 100 point drop but only 70 point recovery, this kind of price action is only a natural reaction of an overbought market and a bubble mentality near major tops.

What is happening is a herd of short to medium term traders trying to get out through a small liquidity exit door, and since there is no one big enough to take the buy side, all bids suddenly disappear and the Fed will probably have to step in and become the last buyer as it did for the 2 trillions in questionable loans it has already bought.

What is likely to happen is a reaction similar to what we saw after the April 4, 2000 intraday dip, and that is a mild recovery for a few days and a then a return to where the market was going in the first place and that is likely closer to 1050 than 1150 as shown on the top right. Any close above the 1170 highs of spike Thursday the 6th would invalidate this pattern and lead to new highs in June.

The Saturn - Uranus part of the Cardinal Climax which was exact on April 26th, was last exact on November 4, 2008 which marked the high of the Obama rally and the beginning of a 4 month decline into the famous March 6th low which I also warned my subscribers about in my February 27, 09 letter here. The many Venus retrograde turns are further proof of the effect our Solar system has on our activities and 4 months from the April high falls in August and right in the Cardinal Climax window and could turn out to be a major low with the possible road map seen on the lower right chart.


The Price-Time-PI cycle Geometry and April 25, 2010

The 30 month cycle is the 1/4 Harmonic of the well known Decennial cycle and has marked many important double tops and bottoms in the last decade as was discussed back in my letters of December 09 seen here, This cycle was suggesting a January and April 2010 double top like we saw 4 x 30 month cycles ago in 2000, but also 30 months ago in July and October 07, which was a mirror image of the July and October lows of 2002 exactly 2 x 30 months before. Since we saw both tops come on schedule with this cycle, it is best to assume the drop on May 6th was significant and probably marks the high of the year as it also fits in with the Price and Time Geometry of the April 2000 top, the 9/11 Panic Low, the August 2004 low and the March 2009 low forming a neat Butterfly pattern and the indicators are in a position for a decline to occur.

S&P500 10-Year Chart
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Courtesy of StockCharts.com


The PI cycle low of June or Fall 2011

The PI cycle of 3,142 days was discovered by Martin Armstrong and apparently validated into Roman times, and some of the more recent evidence of its significance is summarized neatly by Barclay T. Leib once associated with Martin Armstrong here. My own evaluation of the effect of the PI cycle over the last 30 years shows a constant inflation of the Debt supply shown by the growth of 1 trillion in Bonds to the 11 trillions of today which has now fueled Asset Bubbles in most markets with a serious correction occurring every 8.6 year PI cycle or so, and the current one is probably not over.

Nikkei 30-year chart
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Courtesy of StockCharts.com


The 40 year cycle of highs in 1929, 69, 09 and lows in 1934, 74 and 2014?

1850-1900 Stock Prices
Chart courtesy of Jim

Just like the 30 month cycle is the 1/4 Harmonic of the Decennial cycle, the 40 year cycle is the 4th Harmonic of the same 10 year cycle that Man naturally uses to catalog its recent history. The Roaring Girls of the 20's were not that different from the Mini Skirt Girls of the 60's, or that different from the frisky singers of the 2000's and they all came on schedule for the 40 year cycle of open sexuality and ebullient markets.

The inverse is also true with the Depressing 30's being matched by the difficulties of the 70's which led to the beautiful Soul soothing music. Unfortunately for those unprepared, this cycle says the 2010's will be Depressing like the 70's and 30's and unlike the top of 1969, this 2008 crash came more like the 1929 crash and its effects will be more likely to match the 1930's and 80 years earlier in the 1850's than the 1970's or the 1890's both periods which were bad enough on their own to be careful going forward as seen in the chart of the late 1800's on the right.

As seen in the chart below, over the last 120 years there has been 3 Bull markets with the uncanny similarity of lasting about 400 months each and rising about 2,000%. The Bull Market of the late 1900's was a few months short in Time with the 2007 high, but in the middle of the range percentage gain wise, and that suggests it is over and we should have a deep and/or long correction matching the ones we saw in the decades of 1850, 1890, 1930 and 1970.

Dow Jones Industrial Average Monthly Chart
Courtesy of The Chart Store


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