| AstroCycle research - 80% accuracy |
|
||
6/27/08 - Equities, The Cardinal New Moon of July 2nd
As suspected last week, the Nasdaq broke its descending wedge and joined the rest of the market in the decline. Last week turned out to be exactly as forecasted since I wrote: "My logical choice is to see the market make a low Monday June 23rd to finish wave 3, rally for 2 days into the Fed meeting of Wednesday June 25th, then turn down for wave 5 possibly all the way into next Monday June 30th." Many are considering that the decline ended Friday and that we will get an end of month/quarter and Independance day rally like most years. However, statsistics show that the last trading day of June is down most of the time, while the first trading day of July is up most of the time. This week I expect the market to make a major low, probably Monday or Tuesday, and possibly at levels quite a bit lower than where we are now, especially for the Nasdaq. Charts courtesy of StockCharts.com Where is the capitulation
I have been expecting Capitulation in Oil, the US Dollar and Equities since my Newsletter of June 6th, "Capitulation is in the Air", but it has been elusive and there is only one day left in the month. Since many cycles converged on the end of June, we may have to wait until the very last day to make a low, at least as far as Equities are concerned. What concerns me about Friday's low, was the lack of fear as we approach the March lows. All indicators are still headed down, and have yet to reach very oversold levels considering the sharpness of the decline. The VIX failed to make a new high despite a nasty turn down in price, and the StochRSI is just crossing below 20% and not really oversold yet. We are near Price support, and this shows up in the PPO as well, with two lines of support, but support may fail and the next level of support is near 1,220. Charts courtesy of StockCharts.com Nasdaq Tick is closer to overbought
The 20 hour Nasdaq Tick is near the 200 level, which is closer to where many tops are made and not what I would expect after such a sharp decline. Over the last year all major lows were made with the 20 hour Tick closer to zero or negative as can be seen in the 2007 chart here. If this was a short anomaly I would not worry too much, but the 20 hour Nasdaq Tick has not gone below 100 since the March lows. It is also building an unstable expanding wedge, otherwise known as a bearish megaphone, which suggests the Nasdaq could see a major sell-off to the March lows. Charts courtesy of StockCharts.com The Cardinal New Moon of July 2nd
The word cardinal comes from the Latin cardo for "hinge" or turning point, and that is why we refer to the turn in seasons as Cardinal dates. We are all affected to some degree by the beginning of a new season, and this is often reflected with a change in psychology and corresponding pricing of risk. Chris Carolan 1998 award for his work on Panics showed that they almost always occur on a Cardinal Moon. While 1929 and 1987 style Panics are rare, smaller versions of the same phenomena occurs quite frequently as shown in the Cardianal Moons chart below. In any case, the Moon Cycle Trading chart shows that it is always best to be aware of the Moons, especially when the market is volatile and/or trending heavily towards one of these Moons. The Cardinal New Moon of January 22nd tought us that support levels can be broken violently under these Moons, with the proper news and/or rumors to set them off. Under these conditions, it is advised to be careful until the New Moon of July 2nd is behind us, or the market recovers for more than a few days. Charts courtesy of StockCharts.com Beware of the 2 year cycle lows
The 2 year cycle is less well known than the 4 year cycle, but it should be since it produces very good trades in the most volatile issues, like the Nasdaq. Since we are heading for an August low, and this indicator has turned down from a cluster of resistance, it would suggest that the Nasdaq will join the Nyse in a sell-off before a good low is made. Charts courtesy of StockCharts.com 6/27/08 - Bonds, Fed Dovish as suspected
Charts courtesy of StockCharts.com 6/27/08 - Currencies, US Dollar weakens
The US Dollar weakened from a Dovish Fed as forecasted last week, and should start to decline into the low of 2008 this Summer. Any capitulation and panic will only start once the 71 level is lost, and we probably won't break that support level this week but it could happen. Charts courtesy of StockCharts.com Euro and Yen may be turning
Both the Euro and Yen have cycles and support structures suggesting higher prices. In contrast to the USD index, the Commitment of traders on the Euro and Yen shows very little open interest, something that often occurs near turns. Charts courtesy of StockCharts.com The PI Cycle low
Martin Armstrong's discovery of the PI * 1000 days cycle or 8.6 year, is one of the most fundamental discovery in the workings of time and seasonal events. The 2nd sub-harmonic of this cycle is 4.3 years long or 1,571 days, and can be seen clearly in the chart below. From the low of Apr 19, 1995 to the Oct 14, 1999 low, wecount 1,639 days or 4 x 17 = 68 days over the ideal 1,571 days. The next low occurs on Feb 18, 2004 and 1,588 days from the previous low, or 17 days over the ideal 1,571 days. Adding 1,571 days to the Feb 18, 2004 low gives us June 24th, and allowing 68 days over brings us to Aug 14th. Since the March 17th low was 90 days before the ideal low of June 24th, I doubt it was the low of 2008 for the USD. I would expect to see more news coverage of the demise of the US Dollar or even magazine covers, before such an important cycle low but instead, it is Oil that is on the June cover of "The Economist". I expect Oil to eventually decline significantly because of this cover, and in a reverse way this may imply strength in the USD, but they do not always move in opposite direction. The Commitment of traders shows that large traders have the most long positions in over two years, and should they have to unload, the USD could fall quite a bit. Since the Euro is almost 60% of the USD index, a long term chart of the Euro/DM may help us to pinpoint the high, and the 170 area appears likely before a big pullback. Charts courtesy of StockCharts.com 6/27/08 - Commodities, Dovish Fed pushes Oil to new highs
Gold rallied from major support near the 13 month PI cycle of June 18th, and could continue to rally until July 16th, the next cycle date in this pair of 13 month cycle dates so significant in 2006, but also in 2007 since they marked the lows of the year. Charts courtesy of StockCharts.com Gold stocks are confirming
Gold and Mining stocks are rallying strongly from a 9 month consolidation, and any strength will push them firmly into bullish territory and much higher prices. Charts courtesy of StockCharts.com Oil continues to set record levels
Oil continues to set marginal records as it inches towards 150, but it is doing so on weaker momentum and I doubt it reaches 150, and may fall dramatically at any time. Charts courtesy of StockCharts.com Oil on the cover of The Economist
Oil made it to the June cover of "The Economist", another sign like the recent largest one day gain ever that a top of significance is imminent. The geometry looks complete in the monthly chart and both the 170 day cycle low in mid July, and the 5 year cycle low in December are likely to pull Oil down significantly this Summer. Charts courtesy of StockCharts.com |
|||
