Stock trading is likely to become a lot more volatile in the next few weeks
In the past two editions, I outlined the price targets and potential time turns for what seemed likely to be no more than a significant dead cat bounce within a new, long-term Bear market.
Now that the probable targets have been hit, I wish to talk, just a little, about The Spooky Stuff.
Mars, the planet of drive and energy, goes retrograde next weekend until late in June. Mercury, which deals with thinking and communicating, goes retrograde on April 28 for about a month.
Long-term readers know that any trend which starts within a day of two of Mercury going Rx is likely to reverse course again about 1.5 to 2 weeks later; And that we're prone to making mistakes, so need to double-check before hitting the Buy or Sell buttons.
Mars is another matter entirely. The symbolism is simple: Mars is Drive; when the planet goes Rx, Drive slips into Reverse.
It doesn't happen every time. But. If the circumstances are in place, that slipping of the gears from Drive into Reverse can see indices backing off a cliff!
Below is a monthly chart of Pollyanna, the SP500. As I've remarked many times, Polly moves up and down within Martian channels. If we look at the Bull peaks in early 2000 and late 2007, we can see the big Mars channels which defined the overall angle of the entire Bull runs.
And we can see the same impact almost all the way through the 2009 to 2015 Bull market. Now, note those little "blips" along the lines ... they're the retrograde periods. In the two previous Bears, prices slipped out of the main rising channels ... and started to crash badly when Mars Rx came along. Those two instances are marked with the yellow ovals.
And we can see from the current price position of the index, such a danger period is now immediately ahead of us. It is not guaranteed, of course. But if it does take hold, the index tends to fall sharply down declining Mars channels, even more easily than it climbs the rising channels. You can see the impact during the two previous Bear markets.
Miss Polly isn't the only index driven up and down by Mars channels. Despite some positive divergence in the oscillators at the time of writing the March edition, the ASX 200 hit the lower limits of the weekly price targets I showed then ... and, instead of hanging around to fill in "time", as Polly did, it just started sliding down a primary Martian channel ... making its actual Highs and Lows very close to long-range Neptune price lines (grey on the chart below).
A drop below the blue Saturn lines, right where it finished last week, leaves a large hole to fall down.
Safe trading - RA
(Disclaimer: This article is not advice or a recommendation to trade stocks; it is merely educational material.)
Copyright: Randall Ashbourne - 2011-2016