October 8th, 2010

Lunar Cycle Update

I wrote the following on September 24, on the eve of the last Full Moon:

“This is one time I don’t mind being on the losing end of a score. Since the market moved nicely for the past couple of weeks as it barrels ahead to the 1150-1164 hurdle, the Moon’s batting average dropped to 66.7% over the previous 12 months and 67.7% since I started keeping track.

With the way market momentum seems to be expanding (at 1146, it’s excitingly close the hurdle this morning), I’d be disappointed if the next phase to October 7 doesn’t stick to script and end above yesterday’s close of 1124.83.”

And here we are, on the eve of a New Moon with the Index just shy of the upper-end and right in the middle of the target range at 1158.06.

Pretty amazing. The Moon’s batting average is hanging in at 66.7% for the past 12 months, slightly less than the 68.8% since the count started in July, 2009.

This next phase is probably going to be good for the average but bad for those of us who are looking for a break above those key trendlines. We have several conflicting forces working against and for us:

  1. there are 11 trading days until the next phase, one more than the usual
  2. the index is at a critical resistance level
  3. the market is digesting the excellent September run
  4. we’re facing the curse of Black Monday, Black Friday, Black you-name-it
  5. the election campaign is entering the home stretch and anything is possible
  6. “Sell-in-May-and-go-away” is winding down which could be either good or bad
  7. The Hindenburg Omen hasn’t crashed yet!
  8. The “Death Cross” is on the verge of being rescinded
  9. The inverse head-and-shoulders which we’re now enjoying the benefit of (in the same post as the Hindenburg Omen) is due for a “buyers’ remorse congestion” back to the neckline.

My guess is that if you want a safe side wager, go with a correction to around 1130 by 10/23 before we resume the march higher. That’s the way I’m betting (but I hope I lose because there’s much more money riding on the other side of that bet).

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  • Anonymous

    i am thinking when SPX pass 200ma, it always come back to test 200ma before moving forward..

  • Anonymous

    Hey Joe,

    I noticed the average of accuracy is going down…

    The last new moon (Of September) was completely ignored. QQQQ's most notoriously marched ferociously past it, without any significant pause. DIA is back up to the highs of year… only 2% more to go, which could be done easily next week.

    The same thing happened to US markets in March 2010. Then again, in April – where the 4/14 new moon caused a sell off of emerging markets but not US markets until April 26th.

    Will this happen again?

    We shall see… next week is critical .

  • Jesse

    you mention the Hindenburg Omen like you actually believe in it now. lol, make up your mind

  • Joe

    Sorry my sarcasm was too subtle.

    Jessee, hope you're not still waiting for the crash because there are many opportunities for you to make money are leaving you behind.

  • Jesse

    Joe, I can't buy this market even with your money.

  • Anonymous

    top-callers are being pounded, including me