April 15th, 2010
I’ve been busy working on adding a new feature to the blog that I hope you’ll find of interest and value. Details coming soon. But I’ve also been busy relishing in the market’s advance over the past several weeks since hitting the correction low at the beginning of February. Wow, all I can say is wow!
But I did want to take time out to follow up on the curiosity of Lunar Phases and the Stock Market only because it was so uncanny ….. I can’t explain it, don’t want to believe it. On April 2 in “Lunar Phases: Redux, I presented the following table and wrote:
“With a full moon last week, the next couple of weeks to April 14 should, statistically, result in a higher market (to about 1210 at the average gain with an upside possibility of 1245). If the market isn’t bewildering enough, this makes it just a bit more exciting.”
And where did the market close yesterday? At 1210.65 ….. right on the button:
That makes 15 out of the last 22 cycles being correct, or 68%. I’ll take those odds to Las Vegas. The next cycle, the moon growing to Full, will end on Wednesday, April 28. For selfish reasons I hope this phenomena doesn’t continue so the bull market just keeps rolling on.
With those hopes in mind, I took an alternative view of the data: relative changes instead of directional changes. Specifically, the question is “how often has the magnitude of a market’s change during one phase been correct when compared to the phases immediately before and after?”
In other words, the changes of weeks 2/16, 3/15 and 3/30 were 2.70%, 4.17% and 1.98% were correct relatively but not directionally (i.e., the change during the waning to new phase ending on 3/15 should have been greater than the changes in the phases preceding and following). On this basis, the lunar cycle phenomena was predictive 15 out of 20 phases, or an even higher 75% of the time.
With that in mind, where can we expect the S&P Index to close on April 28? It could be anywhere between 1203 (down the average -.06%) and 1228 (up half the growth in the just completed phase).
Place your bets everyone.