With John Hampson
We did not see the usual upside into the new moon of this last weekend. Instead we fell all the way into the close of Friday and then rallied on Monday, making for a cycle inversion. I still do not know why cycle inversions occur, and won’t be happy until I do. If full moons have hardwired negativity and fear into humans over evolution due to nocturnal hunting and sleep deprivation, then we can follow why suicides and depressions admissions are higher around full moons, and stock market returns lower. Why then, might this reverse just occasionally, and we rally right into a full moon, and the opposite into the new moon like the one of this last weekend?
Solar trader Jan and I have discussed and maybe it could be as follows. Into this last weekend, bears were in control of the market, bulls had stepped aside. The positivity and optimism of the new moon did not inspire bulls to join due the increasing severity of the declines, but rather cemented bears in their conviction: i.e. the bears became more positive and optimistic about their positions. Just a hypothesis, but maybe it could be something along those lines.
What’s interesting is that in 2011, my 3 lunar cycle inversions appeared to be significant – see chart below. The first marked an end to the uptrend out of 2010. The second marked the end of the sideways consolidation and start of the sharp correction, and the third marked the end of the of the sharp correction.
Again, this is just a hypothesis that maybe they are significant. But the rest of 2011, the market fairly well tracked the lunar phase oscillation as we would expect.
In 2012 we already saw one occur in February, which perhaps marked the end of the up-move out of 2011, as oil and gold topped in February and indices as a whole started to track overall sideways. Then this last weekend’s inversion could spell the end of the sideways consolidation or the end of the correction. The seasonality of geomagnetism would support the market beginning to rally again here. As would the secular position, posted yesterday. As would the major washout readings in sentiment, CBI and oversold indicators. If you are of a different persuasion, it could mark the end of overall sideways correction and the beginning of massive falls.
Just a hypothesis, guys, on cycle inversions. I post it for interest, and we’ll look back later in the year on whether it was a major turning point.
I have updated the short and medium term model pages. I am not around much today and tomorrow.