|
PureBytes Links
Trading Reference Links
|
"Overall, I think this astrological stuff (heck, ANY trade
decision making system!) only shows it value (or lack) when its
usage is demonstrated through real trades."
Space is the place. This was published on Peter Eliades' website
months before the top.
MARKET CRASHES
Market crashes are rare and tend to be generational or longer in
terms of their frequency. In 1962, the DJIA declined 27.9% on an
intra-day basis between March 16 and June 25. At the time, many
referred to it as a crash. Our reference to a "crash" is to an
event far more dramatic and more condensed than that. As a
general rule, crash panics cause declines of 25 to 50% or more
within a 2-6 week period. The most obvious example in the U.S.
market are the crashes of 1929 and 1987.
Many consider it foolhardy to attempt to predict a crash. Others
believe that all crash predictions are simply devices to seek
attention. We agree to the extent that a prediction of a
typically generational event should be almost impossible, and
would tend to attract attention, especially a crash prediction
from someone who has had any prior success predicting market
trends. That much having been said, we are going to tell you why
we believe there is a real chance to see a crash in the near
future. The most important requirement for a true crash is a
market at historic overvaluation levels. In many ways, the
current market is more overvalued than any other in our history.
The rest of this section is an excerpt from our newsletter
written on June 22, explaining why we see the real potential of
a market crash over the next few months and some rather precise
time periods for the timing of such an event, should it occur.
"There is little doubt that we are fast approaching one of the
most important cyclic time periods in a long, long time. The
period between July 20 and July 29 is scheduled to be a bell
ringing cyclic period. Over the past several months, we have
noted that our own 10 plus year cycle discovery was due to see
the second of two peaks resolve on July 29, plus or minus three
weeks. We have also noted that both Chris Carolan of Carolan’s
Spiral Calendar Research (800-336-1618) and Martin Armstrong of
Princeton Economics (609-987-0600) are looking for one of the
most important cyclic turns of the decade to occur between July
20 (Armstrong) and July 28 (Carolan). That is not all, however.
The Bradley Model, which has been popularized recently by the
Gerry Favors Analysis newsletter (614-868-1053), is pointing to
July 20 as a major market turn. In fact, the Bradley long-term
model shows July 20 as the high for the year. Be aware that
turning points are more important on the Bradley than magnitude,
but a surprising number of times, this indicator that can be
calculated years and decades ahead of time, has pinpointed
important tops and bottoms in the market. In 1987, the Bradley
high for the year was August 23, just two days away from the
most important top of the past decade. In 1996, the Bradley high
for the year was May 24, one day after the Dow topped out prior
to a 10% decline (17% for the OTC Composite). Last year, the low
for the year on the Bradley was October 28. After the August 7,
1997 all time Dow high, the low for the rest of the year was
seen on exactly October 28. We will not go into details on the
Bradley Model, but it is calculated on the basis of angular
relationships or aspects between planets. It is truly amazing to
us that there are four completely different disciplines that
argue for the possibility of a major trend change in the stock
market between July 20 and July 29.
Let’s use that as a starting point and have some fun. Let’s
assume that an important market top will be seen between July
20-29. Our current opinion is that if it does mark a top of
significance, it will probably be a lower top on the Dow than
the one seen already in May (May 4 intra-day and May 13 close).
That is unimportant, however. It is what might happen next that
is significant. If we take some clever and fascinating research
from two market students and put them together and include an
assumption stated by John Kenneth Gailbraith that "the
speculative episode ends, not with a whimper, but with a bang,"
we can paint a fascinating potential picture.
We seldom use much newsletter space for the ideas of others, but
the theories we are about to present fit together so well, we
believe you will find them as interesting as we do. The two
researchers are Steve Puetz (pronounced "pits") and Chris
Carolan. Chris just won the 1998 Charles H. Dow Award for his
original research and the complete article is offered on his web
page at www.calendarresearch.com. The research by Puetz was
first noted in our October 10, 1995 newsletter. Here is what we
wrote:
"Puetz attempted to discover if eclipses and market crashes were
somehow connected.
Without discussing our own opinion on the potential connection
between astronomical configurations and market timing, let’s
simply relate to you the basic findings discussed by Puetz. He
emphasized that he is not contending that full moons close to
solar eclipses cause market crashes. But he does conclude that a
full moon in general and a lunar full moon close to solar
eclipses, in particular, seem to be the triggering device that
allows for the rapid transformation of investor psychology from
manic greed to paranoia. He asks what the odds are that eight of
the greatest market crashes in history would accidentally fall
within a time period of six days before to three days after a
full moon that occurred within six weeks of a solar eclipse? His
answer is that for all eight crashes to accidentally fall within
the required intervals would be .23 raised to the eighth power
–less than one chance in 127,000.
". . .Puetz) used eight previous crashes in various markets from
the Holland Tulip Mania in 1637 through the Tokyo crash in 1990.
He noted that market crashes tend to be lumped near the full
moons that are also lunar eclipses. In fact, he states, the
greatest number of crashes start after the first full moon after
a solar eclipse –when that full moon is also a lunar eclipse . .
.Once the panic starts, Puetz notes, it generally lasts from two
to four weeks. The tendency has been for the markets to peak a
few days ahead of the full moon, move flat to slightly lower
--waiting for the full moon to pass. Then on the day of the full
moon or slightly after, the brunt of the crash hits the
marketplace."
We also know that secondary tops prior to crashes tend to occur
38 calendar days after the primary top. In 1929, it was 38 days
from September 3 to October 11. In 1987 it was 38 days from
August 25 to October 2. In Tokyo in 1989-90 it was 39 days from
December 29, 1989 to February 6, 1990.
If we use July 25 as a mid-point of the four cycles discussed
above, then assume it will represent some kind of market high,
we can then add 38 calendar days to that date and arrive at
Tuesday, September 1 for a potential secondary top just before a
potential crash begins.
Chris Carolan’s new research paper concludes that market panics
have a strong tendency to occur on the 27th and 28th days of the
sixth or seventh lunar month where the annual lunar calendar
labels the date of the first new moon following the spring
equinox as month on, day one etc. In 1998, that day was March
20. The date of the second new moon after the spring equinox is
month two, day one etc. This year the dates of the 27th and 28th
days of the sixth and seventh lunar months are September 17 and
18 and October 16 and 17. With a few more bits of information,
we can put together a fascinating scenario. There are ony two
lunar eclipses remaining in 1998. They occur on August 8 and
September 6. There is only one solar eclipse remaining in 1998.
It occurs on August 21-22, 1998. Remember the research from
Puetz above that "the greatest number of crashes start after the
first full moon after a solar eclipse –when that full moon is
also a lunar eclipse." Do you find it as childishly fascinating
as we do that these pieces of evidence, again from at least
three separate areas of research point so compellingly to the
same time period for a potential crash, if one is to occur. It
is difficult to avoid the conclusion that there is a very real
possibility of some kind of market top around September 1-8,
leading to a precipitous decline that culminates in a panic
crash on September 17-18.
There is one more trick up our sleeve. There has been a tendency
for crashes to occur 55 calendar days after final tops are
registered. If we assume a crash on September 17, based on
Carolan’s research, then count back 55 calendar days, we arrive
at July 24 as a date for a final top –right in the middle of our
cycle target area!
The reader should not assume that either Puetz or Carolan is
predicting a crash this fall. Their work simply points to
periods where panics have occurred in the past based on
celestial observations. There is nothing in the work of Carolan
or Puetz that points specifically to 1998 as a possible crash
year. On the other hand, when you are dealing with what many
veteran observers would agree is the most overvalued market in
history, perhaps the greatest speculative episode in history, it
is wise to remember the sage admonition of Mr. Gailbraith. The
speculative episode ends, not with a whimper, but with a bang.
Steve Karnish
CCT
|