Astrological Fireworks in Stocks

Virgina Jim asked a few questions in a comment to the prior post.  They include a crash window from the sky.  You should be aware that I am highly skeptical of any astrological indicators. 

1) Hyperinflation or deflation? You ask: "am I correct that Fibonacciman (Jeff) is on board with the imminent hyperinflation (dollar collapses) scenario?" Fibonacciman thinks we have avoided the deflationary depression and is more worried of inflation. I think he and others who have reached that conclusion are premature. The deflation will not sneak up on us, but follow a series of debt write-offs which haven't really started due to the massive liquidity thrown out by the Fed. It might await the coming OptionARM resets and how they cascade; or it might be sparked by a shock in China as their stimulus runs its course. (They show a turn-up in their economy that seems to be more due to stockpiling of real assets like iron from Australia rather than any increase in real production of say steel. The iron sits on ships and in storage.) 

2) Head & Shoulders? You ask: "I have a pet peve with most the head and shoulders applications. Edwards/Magee never intended it to apply to trends less than primary or secondary and they commented on it in that regard as I recall." H&S pattern is oft-seen and seldom realized. I view it as a subset of a variety of patterns that reflection distribution of stock. The way elliott waves seem to hover in a range from the peak of 3 to the start of C down is a similar pattern (4 and 5, then the a and b down, often mirror each other - look at the S&P from 97 - 03). We see the same pattern from early May until now, with Jun11 as a pop-up outside a two month trading range. These reflect the former bulls getting out, and new bulls getting in (too late). Whether they *always* fall below the neckline as much as they pop up I am sure is more myth than reality. Perhaps the situation you describe shows it as higher odds. In my view the distribution pattern itself, vs a accumulation pattern is key to discerning trend. This trend still points down.

3) Crash Alert due to the Puetz Window? You list the window from before the coming solar eclipse (Jul22) to the lunar eclipse after. (see below the fold.) I have seen the Puetz Window described differently; perhaps I am thinking of Carolan's similar work, or Peter Eliades'. I recall that almost always the major crashes come after a solar eclipse, at around the first or second full moons, especially if one or both are also lunar eclipses. (We should recognize that whenever a solar eclipse occurs, one or two lunar eclipses are likely due to the orientation of solar and lunar positions.) Maybe it also included the prior lunar eclipse before the solar; but the key point is I thought it went two lunar eclipses after, or a window of 2 to 6 weeks after the solar eclipse. If so, the risk extends to the end of August or early September.

You note that: "We are in the Puetz Crash Window and following are the dates I computed:

July 1 (yesterday) the first day of the Puetz Crash Window which is 6 days before a full moon which is before and within 6 weeks of a solar eclipse,
July 7 full moon and lunar eclipse,
July 22 total solar eclipse,
August 6, full moon and lunar eclipse, and
August 10, close of the Puetz Crash Window which is 3 days after the first full moon after a solar eclipse."

Here is a common explanation of Puetz:

"Puetz attempted to discover if eclipses and market crashes were somehow connected. Without discussing our own opinion on the potential connection between astronomical configurations and market timing, let's simply relate to you the basic findings discussed by Puetz. He emphasized that he is not contending that full moons close to solar eclipses cause market crashes. But he does conclude that a full moon in general and a lunar (eclipse) full moon close to solar eclipses, in particular, seem to be the triggering device that allows for the rapid transformation of investor psychology from manic greed to paranoia. He asks what the odds are that eight of the greatest market crashes in history would accidentally fall within a time period of six days before to three days after a full moon that occurred within six weeks of a solar eclipse? His answer is that for all eight crashes to accidentally fall within the required intervals would be .23 raised to the eighth power less than one chance in 127,000."

". . .Puetz) used eight previous crashes in various markets from the Holland Tulip Mania in 1637 through the Tokyo crash in 1990. He noted that market crashes tend to be lumped near the full moons that are also lunar eclipses. In fact, he states, the greatest number of crashes start after the first full moon after a solar eclipse when that full moon is also a lunar eclipse . . Once the panic starts, Puetz notes, it generally lasts from two to four weeks. The tendency has been for the markets to peak a few days ahead of the full moon, move flat to slightly lower --waiting for the full moon to pass. Then on the day of the full moon or slightly after, the brunt of the crash hits the marketplace."

Now, I am highly skeptical of astrological connections, indeed any claimed cycle that lacks underlying causation. Yet the high number of crashes at this odd solar/lunar eclipse sequence is hard to explain as coincidence. Perhaps the limbic system (reptilian brain) still gets spooked by full moons and lunar eclipses.

Or perhaps the Puetz analysis is not well done. Before we accept the Puetz conclusion, check out this link. He includes Carolan's conclusion as well: both the 29 and 87 crashes occurred within 3 days of a new moon, and it was the 2d new moon after a solar eclipse followed by a lunar eclipse. This meant they both occurred about 10 days after the 2d full moon or lunar eclipse.

Comments

[Larry Stanhoppe]

http://www.youtube.com/watch?v=HM-QiYgYNpk

[tom]

You may want to look at some of the work that has been done on sunspot populations and stock market crashes. I think the evidence is pretty clear on that. Sunspots being astronomical. It this astronomical event affects investor psychology, it not unreasonable to expect other astrological events doing the same.

[george]

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[vipul garg]

wavist,
it is incorrect to say that elliott entire claim was that markets moves up or down in impulses.
in direction of larger degree trend , market moves more often that not in impulses but not on every degree which is why the concept of degree is so important.so lets assume on a larger degree we may be in wave 2/4 (part of impulsion but corrective ), on a smaller degree we may be in wave a(of a-b-c) of this wave 2/4 which is corrective.

one has to analyse the environment one is in, corrective or trending , what logic and implications each rule indicates and then make a call.

here in my comment , i was specifically speaking about robin landry's wave count.

[VirginiaJim]

Now Yelnick. First, I clearly did not infer a crash must occur in a Puetz window. In fact, I cleared stated that was not the case. I take your facetiousness with some level of offense unless I mistake your intent. Second, there's nothing scientific (as defined by the 'scientific method') about Elliott Waves, astrology or just about any technical indicator for that matter. Nassim Taleb (following in Mandelbrott's shoes) totally lays waste to any thought that deterministic methods applied to the market can be evaluated in terms of the scientific method or currently existing statistical terms. Science simply can't evaluate anything that displays the level of variability in the market. So, to the extent 'science' disputes astrology, I say not any more so than any of those myriads of indicators, or even EW itself, relying upon the deterministic nature of the markets.

For my part, I haven't spent any time studying astrology but I don't dismiss some of the amazing things I've seen. But I won't take a position one way or the other because I simply don't know.

"For those who believe, no proof is necessary. For those who don't, no amount of proof is possible." Frederick Jezegou

Puetz initial 1995 definition, according to my notes, of the window extended from 3 days before the first full moon before and within 6 weeks of a solar eclipse to 6 days after the first full moon after a solar eclipse. I could be wrong on this formulation. I can't find his original work. His Jan 18, 1999 letter regarding the window (available on Sribd) modified his work (based on Carolan's findings) to say that the 'panic phase' of the window was simply Feb 4 to April 5 and Sept 3 to Oct 20.

[yelnick]

VirginaJim, I elevated your questions because I took them seriously, not facetiously. A lot of folk follow Puetz, and I haven't seen a really good reconsideration of his conclusions since Carolan, other than the link in my post. Seems something so clever is taken to heart without the requisite skepticism.

As to your comments about elliott waves not being scientific, Prechter is ever intent to make them so with Socioeconomics. Without underlying causality, pattern recognition schemes are of dubious predictive value.

Where I think the next leap will occur is applying chaos theory to waves - which means abandoning determinism and replacing it with strange attractors and other indicia of underlying order. Zoran Gayer was headed in this direction. As, too, Mandelbrot (for 40 years!) and Taleb. Essentially, it means accepting that often the market really could go either way, and backing off trying to predict before the market clarifies. Sometimes you can predict, often times not.

[Vassko]

You speak of causality. The astrological forces that affect the world, the people and the mass psychology apparent in the markets are the cause you refer to. The average investor (2 std dev) simply looks at the economic and market effects to study and base their decisions upon. Using effects to achieve consistent success can only take a person so far because the underlying causes are experiencing changes in vibration which alters the perceived effects and does not allow for a static-based thinker to define patterns.

[iota]

vipul,
what are your views on spx and nifty especially after todays fall?
both turned from your targets of 930 and 4500 respectively.

[vipul garg]

iota,
for sp500: it should take out 878 .i am looking at 860 as the first zone where it may meander for a while.i doubt if sp500 is going to move above 910 for quite a while now.

for nifty, views are pretty much as before.
more market action is need to have any change in the view.

[Poe]

Neckline of the head and shoulders pattern now broken.

Not looking good for the bulls.

Neely megabear count is acting well so far.

[ino]

Looks the 880-890 neckline is tested today, and not broken.
Everybody and his mother is looking for Head and Shoulders breakdown,
expecting the obvious; as ususal not happening when all expecting it.

So, next I expect a short bounce for 2 days, and maybe a retest the 930 level. This should be decisive test.
If it breaks, the market should run up to test 950 level; if not, the downward trend will reassert decisively, and the HS pattern should be completed, with downside target at 770.

Anyway, Neely's midterm count looks good.
The news seeem to get worse by the day. Bulls seeem to lose their rose-tinted glass they have put on since March. A very strong and long 5th wave down, to 550-500 range is ahead, bottoming Nov09.
Just my thinking.

[John]

Where is Anon_aka_Tera_baap?

and Glen 'Looser' Neely?

[vovor]

Don't worry John, I predict they'll come back today or tomorrow with the same speech. After early next week, we might not hear much about them...

[DG]

Where is Anon_aka_Tera_baap?

and Glen 'Looser' Neely?

I've always said that I doubt anyone was taking anon seriously, but he was annoying. Obviously, anyone trading a certain side of the market wants others on the other side to be wrong, but there's no need to go rubbing it in people's faces when they are, especially when you are clearly not even sure why you are making money, which he definitely wasn't. Even though he was annoying, I hope he took the warnings posted by many on this site and took his money off the table.

I also said that as soon as the markets turned back down, he'd disappear. I doubt he was even really trading.

[vovor]

We'll probably never know and we'll certainly never care.
If he was trading, contrary to you DG I hope he lost money. Not because I've been bearish while he was bullish and potentially earning money, not at all. Neither because his tone was patronizing, disgusting and insulting. Just because I firmly believe that losing and accepting it with time and psychological efforts is part of the learning curve. It is particularily true in the early steps when one takes far too much risk buying options (warrants as they're called here), not setting stops, not having a methodology, etc. I earned and then lost a lot when I began and while it is certainly one of my most painful experiences, I later understood when I 'came back' that it was necessary. Markets teach you, they teach you the hard way! They smash your head up and down, kick you in the guts just to see if you're ready to say "I want more!". What a cruel and fascinating world...

[DG]

vovor,

The greatest or one of the greatest traders who ever lived, Jesse Livermore, went broke 5 or 6 times in his career, for various reasons. He said that no matter how many times he learned from his mistakes, the market kept helping him find new mistakes to make!

[vovor]

DG,

So I think I have 3 to 4 times left ;-)

[joe]

in regards to the puestz window ill note a few things
first of all it does blend with chris carolans work but the 2
are not the same , secondly it has been working for the past
couple years including the decline into march 2009 .
you explained it fairly well yet ill note the formula
and then the dates going forward .ive used this over the past
several years and i look at it as a market turn set up not always
bearish but usually strong moves follow the dates so they bear
watching at this junture .
based on puetz parameters it goes like this .
the market will be at a high point on the first full moon following a solar eclipse when that
full moon is also a lunar eclipse
from that full moon lunar eclipse a down trend will begin (better put as a trend change will begin ) the cycle ends 6 days before to 3 days after a full moon that is with in 6 weeks of the solar eclipse .
hence solar eclipse was july 22
the next full moon lunar eclipse is aug 5th . the stock market is overbought and due for a pullback so if we were to use this stradegy we would turn bearish aug 5th 6th 2009 and hold waiting untill 6 day before to 3 days after a full moon that is with in 6 weeks of the july 22 solar eclipse
to sum it up:turn bearish aug 5th 6th and look to exit aug 29th sept 7th
then you take chris coralans work which im not going to explain in detail
ill just note the dates
may 16 spring low
aug 20 summer high
sept 27 autumn high
oct 14 15th crash
using both these theries you can see why there is a strong move coming yet the puetz window
would need to set it off in the right direction as i see it .
aug 5th 6th top and down into aug 29 sept 7th
then upwards into the sept 27th autumn high and then down into mid oct
might just be a large B wave decline and yet both theories may blend together
calling this as a simple A B C decline . id keep these theories in mind each year
cause it doesnt matter weather the market crashes or turns upwards and rallies strongly
the dates tend to caall market turns fairly closely .
joe
www.tradersaffiliates.com