By Astrology Traders

The Markets

2014-11-23_1721There are several key indicators occurring, suggesting a Bearish market trend, while at the same time the markets are moving counter intuitive to those indicators.  This week we are going to outline the indicators and put our perspective into what this means for the markets going forward.  below is Jeff’s technical indicator, Chris’s options conundrum, and the wild card aspect in the astrology that suggests–volatility.

  • Technical Long Term Bear market, Short Term and Mid Term Bullish
  • Uncommonly inconclusive Long Call/Married Put profitability and Covered Call/Naked Put losses.
  • Pluto/Uranus square and volatility

The market gap up on Friday was unable to hold, closing lower and showing some consternation confirming the Bulls have a challenge in convincing this market is about to breakout much higher .  The confusion is confirmed in the technical analysis.  Jeff’s timing signal for the Short and Mid Term flipped Bullish a couple of weeks ago, while the long term trend remained very Bearish.  When this occurs it usually signals a “Sell” in the markets, similar to what is called a dead-cat bounce.  At the same time the Covered Calls and Naked Puts became unprofitable, signaling also a Bear market.  That was several weeks ago, now,  to throw a curve to this analysis, the Long Call/Married Put Index, which signals a strong Bullish trend, is currently profitable, which only happens in a strong Bull Market.

The combination of these factors is further emphasized by the looming Pluto/Uranus square that will peak on December 14th.  Jeff’s chart illustrating the time frame of each prior Pluto/Uranus square shows how the volatility has materialized, both Bullish and Bearish, near the peak dates.  we have a total of 7 exact squares between these two  celestial bodies with the final exact square March 16, 2015.

spx

I  have projected a very bullish move in the markets in mid December.  (more…)

By Chris Ebert

It’s difficult to predict the future; some might say it’s impossible. The stock market, as with any process that involves predicting the future, is, as one might expect, very unpredictable. But unlike natural processes that are difficult to predict, for example predicting where and when a storm might strike, the stock market’s unpredictability is intentional.

Whereas a storm may be unpredictable, the inability to forecast its path with 100% accuracy is a result only of a lack of data; the more data – the more accurate the prediction. That’s because, presumably, nobody is steering the storm. If some force outside nature, perhaps some form of consciousness, were to steer a storm, it would not matter how much environmental data was collected, it would not be possible to predict its path without also being tuned to the consciousness controlling its path.

hurricaneAccordingly, it is not possible to predict stock prices with 100% accuracy without understanding the consciousness controlling those prices. Moreover, it is downright impossible to collect enough data to understand the collective consciousness.

Predicting the Future

There will always be unknown variables that push folks to take trades. Your reasons for taking a trade may be quite different than mine, even if we both happen to buy the same stock at the same moment in time. Furthermore, it is possible for you to earn a profit while I take a loss, on the same stock, purchased at the same moment in time. The end result of each trade depends on how long of a time frame each of our trades encompasses.

One of us may intend to hold the stock for several years and the other for just a few hours. Without knowing each other’s intentions, it is impossible to predict the other’s reactions to movements in the stock price. One might be inclined to exit the stock after just a few ticks in the price; the other may have no intention of selling, ever, no matter what the price, unless the funds are needed for another purpose, e.g. retirement.

No matter what our intentions, the ultimate goal of every participant in the stock market is exactly the same – to benefit from probability. A long-term investor who holds stocks for several years or decades is dependent upon the probability that such action will be profitable in the future, simply because it was profitable in the past. Past performance predicts the probability of future results.

If holding stocks for 20 years has always returned a profit in the past, the probability is high that buying stocks now and holding them for 20 years will also be a profitable endeavor. If entering a Position Trade on a breakout above a Darvas Box has had a high probability of profitability in the past, chances are good it will have good results in the future.

The same can be said for buying the dip in an uptrend, selling the rip in a downtrend; buying the 30 RSI, selling the 70 RSI; buying a break above the 50 SMA, selling a break below the 200 SMA; buying support, selling resistance, buying the 61.8% FIB, selling the 161.8% FIB. Whatever the method, the only reason a trader uses it is because it has worked in the past. Even seemingly unusual methods, if they have an historical track record of success, are bound to influence traders. Traders who base their decisions in astrology, for example, are no different than those who trade using traditional technical analysis or long-haul investors who use no analysis whatsoever. Each is using past performance to predict future results.

Stock Market Unpredictability

There is no single right method for trading in the stock market. That’s because there are countless millions of methods that work well. All those successful trading methods have one thing in common; none of them can predict the future with 100% accuracy, and each of them makes allowances for errors.

There are countless methods for being successful in the stock market, but only one way to fail. A trader who attempts to predict the future, without making allowances for errors in the prediction, is doomed to fail eventually. A trader who depends on past performance being a guarantee of future results may survive for a time – with some uncommonly good luck, perhaps a very long time – but eventually the luck will run errorout.

On the other hand, a trader who makes allowances for errors can generally expect to do no worse than to break even over the long term. It is certainly possible for a trader to experience an awful string of bad luck, in which every trade results in a small loss. Repeated hundreds or thousands of times, death by a thousand paper cuts is not entirely impossible, but it’s an exception. Even with a thousand paper cuts, it often only takes a few really good trades to heal all the wounds.

Survival in the stock market depends on nothing more than taking the best shot at predicting the future, and then ensuring the damage on any one trade is small enough, if the prediction proves to be incorrect, that there will be enough funds available for many more trades to come.

Unpredictability is an Agenda

The future of the stock market is not predictable with 100% accuracy. That’s because the collective consciousness that drives the stock market is one that is dependent on unpredictability. No matter what method one uses to make predictions and enter trades, someone else’s profit depends on the failure of that method. Essentially, the stock market behaves like a storm, with one monstrous exception the stock market‘s agenda is to cause the most damage by being the most unpredictable to the largest amount of participants.

Presumably, a storm such as a typhoon or a tornado does not have a mind of its own. It moves in a way that follows the laws of nature. That a storm causes damage, no matter how seemingly targeted such damage may appear, does not prove that the damage was intentional. Damage in the stock market is a different story; it is definitely intentional. Everyone who participates in the stock market depends on damaging other participants as much as humanly possible, whether by taking profits away from others or by causing outright losses for other traders.

The stock market thrives on unpredictability. So, it is important to note instances of unpredictability, particularly unusual instances. Each instance of unpredictability yields a clue as to who is causing the stock market to veer off its path. Who is currently benefiting the most from the current path?

The following analysis uses options traded on the S&P 500 stock index. It is presented here weekly as a means of identifying who is currently being fooled the most by the stock market. Someone is always being fooled; there is always someone whose prediction isn’t working. Option traders are in a unique position to identify the bigger fool. By identifying the bigger fool, traders may avoid becoming the fool themselves, or at the very least make preparations in case it becomes unavoidable.

Click on chart to enlarge

  (more…)

By Poly

This is an excerpt from this week’s premium update from the The Financial Tap, which is dedicated to helping people learn to grow into successful investors by providing cycle research on multiple markets delivered twice weekly. Now offering monthly & quarterly subscriptions with 30 day refund. Promo code ZEN saves 10%.

2014-11-21_0931

The Dollar stubbornly refuses to fall, even though it too (like crude/bonds) is very deep into its Daily and Investor Cycle timing. Technically it is weakening, as seen within the indicators on the chart below. I believe this is a sign that the dollar has topped and is about to begin falling. When it eventually does fall, it will probably not look back for many weeks.

Such setups in the past acted as bullish consolidation before launching higher, mainly because they occurred earlier in the Investor Cycle. This time around, being that we’re so far past the normal timing band, I expect this is more about the Cycle knocking on support lines that are destined to eventually give way. In the later part of any Investor Cycle, these types of setups normally break to the downside.

11-19 dollar daily

Related Posts:

Stairs Up And Elevator Down?

Crude Has Likely Hit Rock Bottom

Plenty Of Reasons To Explain Recent Selling

By Chris Ebert

Stock prices tend to act like a spring. The further they are stretched to their limits, the further they tend to snap back in the opposite direction.

SNP Temperature 11-20-14

The opposite is also true. When stock prices are not stretched very far, they don’t recoil nearly s far in the opposite direction when the stretching force is removed. This is particularly true of large baskets of stock – stock indexes such as the Dow, Nasdaq or S&P 500 – since the forces that can move an index are limited. Earnings or other news can move an individual stock, but for a large index the news tends to be anticipated and slowly baked in, limiting it’s overall effect; thus recoil is often one of the largest forces affecting the movement of an index such as the S&P 500.

Without a Bear market to stretch stock prices too low, there is simply not as much force to propel stock prices higher when temporary bouts of selling tension are released. This past October saw a rather substantial period of selling tension, but even at the lowest of the lows, the S&P 500 barely met one the most lenient criteria of a Bear market – one such criterion being the lack of profitability of $SPY Covered Call options.

Other criteria, including the ubiquitous definition of a Bear market being a 20% decline off the highs, were not met this past October. Now that the stock market seems to have heated up once again, it may be helpful for traders to consider just how much tension there was in the spring. In other words, how much upward momentum do current stock prices have considering effect of the rather meager pullback from October?

One way of measuring the snap-back momentum is to look not just at how hot the stock market currently is, but how hot it has gotten, historically, after meager pullbacks like the one that just happened a few weeks ago. From the following chart, it becomes clear that few rallies get so hot as to exceed the 10%-above-Bear level, and only then when the rally was preceded by a significant Bear market. The current rally in the S&P 500 may therefore be reaching it’s upper limit, temporarily perhaps, but reaching a limit nonetheless. If past instances are any indication, the current rally may have used up nearly all the momentum it gained from October’s pullback. Historically, it doesn’t get much hotter than this – hotter than 10% above Bear (at the current level of the S&P 10% above a Bear market equates to about 200 points). It does not get much hotter than this unless it follows a significant Bear market.

SNP Percent above Bear 11-20-14a

Click on chart to enlarge

The following levels are each 10% above a Bear market:

Nov. 21, 2014 S&P 2038
Nov. 28, 2014 S&P 2052
Dec. 5, 2014 S&P 2089
Dec. 12, 2014 S&P 2132
Dec. 19, 2014 S&P 2145
Dec. 26, 2014 S&P 2149
Jan. 2, 2015 S&P 2120

Without a Bear market to release spring tension, each of those levels would be difficult to surpass, based on historical performance of the S&P 500 following minor pullbacks, such as the one that occurred this past October, when such a pullback did not materialize into a significant Bear market environment.

*Option position returns are extrapolated from historical data deemed reliable, but which cannot be guaranteed accurate. Not all strike prices and expiration dates may be available for trading, so actual returns may differ slightly from those calculated above.

The preceding is a post by Christopher Ebert, co-author of the popular option trading book “Show Me Your Options!” He uses his engineering background to mix and match options as a means of preserving portfolio wealth while outpacing inflation. Questions about constructing a specific option trade, or option trading in general, may be entered in the comment section below, or emailed to OptionScientist@zentrader.ca

twitter

 Related Options Posts:

All-Time Highs Possible in Bear Markets

Options Give Perma-Bears Shadow of Doubt

Options Define Limit of “Dead-Cat Bounce”