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http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm
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6/6/08 - Capitulation is in the air
The banking index broke support on Friday and started a large decline in equities. Since this sector is due for its 34 month cycle low in June 08, we should see a capitulation style sell-off to probably mark the low of the year. The banking index is currently near 70 and has support near the 65, 60, and 55 levels, which may mean significant downside risk for the broader market. Charts courtesy of StockCharts.com Late June cycle clustering
A number of cycles which recently have been lows are converging on the last week of June, and the price structure so far agrees. Charts courtesy of StockCharts.com Moon cycles and the Full Moon of June 18
Statistically Full Moons are lower than New Moons, and long term studies show that anyone can beat the market by buying on every Full Moon, instead of randomly. Since my studies show that Moon cycles invert almost 50% of the time, the New Moon lows must be less deep than the Full Moon lows, or the long term study would not have found better returns. While a buy and hold on Full Moons is better than randomly, a better system is to buy every time stocks decline into a Moon. This approach catches most Moon lows whether they are inverted or not, and avoids buying when the Moon is possibly an inverted high. This behavior can be seen in the chart below, and the wave structure suggests the Full Moon of June 18 will be a low as statistically expected. Charts courtesy of StockCharts.com Short-term Rates spike and reverse
The ominous spike and reversal in short term rates, may mark a return to safety until the next Fed meeting of late June. Charts courtesy of StockCharts.com Top Corporate Bonds are precarious
The Dow Corporate Bond index has made a double top on less than stellar momentum, as it heads for its PI 13 month cycle low in early July. The expected breakdown in the debt of the very best and most liquid, suggests that credit fears will return in June. Charts courtesy of StockCharts.com The US Dollar weakens into its 4.3 year cycle low
The US Dollar may already be in its own capitulation wave 5 of 5, or may begin one in a few days as it heads for its 4.3 year cycle low or PI * 500 = 1,571 days. This cycle is quite accurate with lows occurring no more than 17 to 68 days late. The next 4.3 year cycle low date is on June 24, 08 but could easily extend 17-68 days into Aug 14, 08. The likelihood of a decline into late June is increased since it is synchronous with the somewhat less accurate 8 week cycle which turns down next week. Charts courtesy of StockCharts.com Oil enters exhaustion phase
With its biggest one day gain, Oil has put in place an exhaustion move that was felt necessary by many before a significant top was in. An exhaustion move rarely pauses for more than a day or two, and if Oil fails to rally for a few days, many will now return to sell it. Open interest has shrunk to very low levels, as it often occurs prior to significant turns. Charts courtesy of StockCharts.com |
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