Copyright: Randall Ashbourne - 2011
Wall Street's New Moon party
Week beginning July 4, 2011
The USA celebrates its 235th birthday this weekend and Wall Street has been in a New Moon party mode leading up to the event.
Those of you who have read The Moods of the Moon, or the excerpt under the Moon Trading button will already know New Moon rallies are the "norm".
Those of you who have read The Moods of the Moon, or the excerpt under the Moon Trading button will already know New Moon rallies are the "norm".
The real question is whether this is a short-term countertrend rally, or the start of something else with the potential to launch markets on a new rally leg back into the price levels previously associated with "irrational exuberance".
Well, Wall Street ... and even a few other markets, perhaps. But certainly not all of them. However, since it is America's birthday, we will concentrate our attention this weekend on viewing the stock markets through Miss Pollyanna's prism.
For starters, the sharpness of the rally does suggest there is more to come. In Elliott Wave terms, it certainly looks to have the characteristics of a Wave 3. This means there are, probably, higher prices to come. Whether this is just the first leg of a longer-term rally leg, however, is open to question. At least at this stage.
In a moment we will begin exploring potential price targets for whatever remains of the rally. However, it has been a strong rally into a Solar Eclipse New Moon and it has happened in a particularly nice area of the USA's 1776 birth chart.
I don't want to go too deeply into astrological matters here, but that chart has what is called a stellium in the early degrees of the sign, Cancer. The USA Sun, Jupiter and Venus are all "conjunct", meaning they're closely bundled in the same zodiacal position affected by the Solar Eclipse New Moon late last week.
Well, Wall Street ... and even a few other markets, perhaps. But certainly not all of them. However, since it is America's birthday, we will concentrate our attention this weekend on viewing the stock markets through Miss Pollyanna's prism.
For starters, the sharpness of the rally does suggest there is more to come. In Elliott Wave terms, it certainly looks to have the characteristics of a Wave 3. This means there are, probably, higher prices to come. Whether this is just the first leg of a longer-term rally leg, however, is open to question. At least at this stage.
In a moment we will begin exploring potential price targets for whatever remains of the rally. However, it has been a strong rally into a Solar Eclipse New Moon and it has happened in a particularly nice area of the USA's 1776 birth chart.
I don't want to go too deeply into astrological matters here, but that chart has what is called a stellium in the early degrees of the sign, Cancer. The USA Sun, Jupiter and Venus are all "conjunct", meaning they're closely bundled in the same zodiacal position affected by the Solar Eclipse New Moon late last week.
First, let's take a look at a lunar phase chart of the SP500, Wall Street's main, broad-based index.
As I've explained in The Moods of the Moon, prices tend to rise from Full Moon to New Moon and the Quarter Moon dates are particularly important from a Moon Trading perspective.
It is very easy to see in the chart above that the Full Moon dates coincided with short-term low points and that there was further rise from the Third Quarter dates. Prices tended to peak at the New Moon and there were further declines from 1Q into FM.
I've also spoken recently about the expectation of at least a 2nd degree countertrend rally. Well, we can see that while it was slow to start, the SP500 has actually been in a 2nd degree move since the Full Moon, which marked the Low point of the recent decline.
If the rally continues beyond Wednesday, we are into something "cyclical" on the daily timeframe chart - and that is likely to mean a minimum timespan of 22 days from the bottom. These timespans are explained fully in The Technical Section of the book.
It is very easy to see in the chart above that the Full Moon dates coincided with short-term low points and that there was further rise from the Third Quarter dates. Prices tended to peak at the New Moon and there were further declines from 1Q into FM.
I've also spoken recently about the expectation of at least a 2nd degree countertrend rally. Well, we can see that while it was slow to start, the SP500 has actually been in a 2nd degree move since the Full Moon, which marked the Low point of the recent decline.
If the rally continues beyond Wednesday, we are into something "cyclical" on the daily timeframe chart - and that is likely to mean a minimum timespan of 22 days from the bottom. These timespans are explained fully in The Technical Section of the book.
Last weekend, I spent some time discussing purely technical charts - pointing out the Price & Time restrictions indices like the SP500 and FTSE are facing just overhead. That report can be accessed in the Eye of Ra - Archives, using the link button at the start of this report.
This week, we will deal more with "the spooky stuff" - and the chart above is one of those explained in the Old Gods chapter of the book; how different indices react time and again to price lines associated with particular planets.
This is a very strong weekly bar and I have remarked in the past couple of weeks that it has been a "struggling" move down and that struggling moves are resolved only one of two ways - a panic capitulation in the same direction, or a rapid rebound in the opposite direction. And here we see a classic example of that mechanism at work.
I mention last week's technical charts because they are historically important - especially the price of 1370 which marked the Low of the sudden spike down in August, 2008, just before the index went into its final blow-off phase.
We see in the chart above, price levels associated with a couple of the Old Gods, particularly Saturn and Neptune - and that those levels closely match the zone of technical Resistance, whether purely in horizontal terms or in important Fibonacci levels.
Now, while we're dealing with the spooky stuff, I should mention that Venus is following the Sun into the early degrees of Cancer and while it will make the same "nice" aspects as the Sun to the USA's natal Sun, Jupiter and Venus, it will also start adding energy to some potentially negative aspects.
On Tuesday, the fast-moving planet Mercury will square Jupiter - but heliocentric Mercury will conjunct Saturn. Later in the week, around the time of the 1Q Moon phase, Venus will square Uranus and oppose Pluto, and Uranus itself, which rules stock markets, will go Retrograde.
Yes, I know; all terribly esoteric and totally meaningless. So, in everyday terms ... don't expect Miss Pollyanna's prism to continue making pretty-pretty rainbow delights all over your stock charts; there are going to be some earnings "surprises" and not all of them will be nice-nice.
In case you missed it ... Tuesday and Thursday/Friday.
This week, we will deal more with "the spooky stuff" - and the chart above is one of those explained in the Old Gods chapter of the book; how different indices react time and again to price lines associated with particular planets.
This is a very strong weekly bar and I have remarked in the past couple of weeks that it has been a "struggling" move down and that struggling moves are resolved only one of two ways - a panic capitulation in the same direction, or a rapid rebound in the opposite direction. And here we see a classic example of that mechanism at work.
I mention last week's technical charts because they are historically important - especially the price of 1370 which marked the Low of the sudden spike down in August, 2008, just before the index went into its final blow-off phase.
We see in the chart above, price levels associated with a couple of the Old Gods, particularly Saturn and Neptune - and that those levels closely match the zone of technical Resistance, whether purely in horizontal terms or in important Fibonacci levels.
Now, while we're dealing with the spooky stuff, I should mention that Venus is following the Sun into the early degrees of Cancer and while it will make the same "nice" aspects as the Sun to the USA's natal Sun, Jupiter and Venus, it will also start adding energy to some potentially negative aspects.
On Tuesday, the fast-moving planet Mercury will square Jupiter - but heliocentric Mercury will conjunct Saturn. Later in the week, around the time of the 1Q Moon phase, Venus will square Uranus and oppose Pluto, and Uranus itself, which rules stock markets, will go Retrograde.
Yes, I know; all terribly esoteric and totally meaningless. So, in everyday terms ... don't expect Miss Pollyanna's prism to continue making pretty-pretty rainbow delights all over your stock charts; there are going to be some earnings "surprises" and not all of them will be nice-nice.
In case you missed it ... Tuesday and Thursday/Friday.
While it might seem I'm unduly cautious about the potential for significant further rally, there is something not quite right in the state of major world indices. There's an old saying that a rising tide lifts all boats. And that is exactly what one would expect if everything were truly Pollyanna rosy.
We can see the state of Germany's main index, the DAX, above - pushing strongly against overhead Resistance.
But the same is not true of France's CAC40, below
We can see the state of Germany's main index, the DAX, above - pushing strongly against overhead Resistance.
But the same is not true of France's CAC40, below
This is a quite severe disconnect between perception and reality in some markets. If it were only one index screaming for caution, one might be able to dismiss it as being caused by local problems. But, it's not.
Like the CAC40, the ASX 200 has made several attempts at breaking above a 50% retrace of the Bear move down into March, 2009 - and failed at each attempt.
A fresh attempt may now be underway, with the 50 CCI turning up from a deep oversold level. However, it's actually the depth of that last trough which has the alarms ringing - because it went much deeper than the previous one, even though Price levels stabilised at around the same level.
Safe trading - RA
(Disclaimer: This article is not advice or a recommendation to trade stocks; it is merely educational material.)
A fresh attempt may now be underway, with the 50 CCI turning up from a deep oversold level. However, it's actually the depth of that last trough which has the alarms ringing - because it went much deeper than the previous one, even though Price levels stabilised at around the same level.
Safe trading - RA
(Disclaimer: This article is not advice or a recommendation to trade stocks; it is merely educational material.)