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 . Mr.. 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
|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