Mercury returns to Direct motion in the coming week, which will help put a stop to the spurt-and-reverse activity of the past few weeks.
According to research by Kaye Shinker, the Dow Jones Industrials have a distinct tendency to end the Mercury Rx period with prices back within 1% of where they started the cycle.
If that tendency plays out, it should put the SP500 somewhere between 1370 and 1350 on Wednesday.
Last weekend, we pondered why the Fed would goose markets with Wall Street back in the bubble zone which marked the 1999-2000 and 2007 “irrational exuberance” peaking range … and the chances of Mario Draghi having to revisit his hairy-chested “whatever it takes” bravado of the week before.
SuperMario, who presided over the Bank of Italy while the country was going bankrupt, went from pit bull to lapdog within a week as all his “will act” talk made the transition to “may consider” and a dozen other weak phrases.
The markets tanked … and then turned again just as suddenly, purportedly on good hiring numbers in the USA (numbers which will, like MachoMario, have to be revisited when Mercury goes Direct).
Since the Mercury Rx cycle started in mid-July, the “trend” has reversed every few days. Mercury Direct should put us back on a more stable course – one way, or the other.
Let’s begin this weekend by reviewing where we are within the SP500′s long-range planetary prices. Firstly, trace the grey Neptune marked with 1411 and the orange Node line marked with 1319 from the current price bar back to the top left of the chart.
During the 2007 topping process, these two planetary lines underscored the final stages of the Bull run. For the moment, the Neptune barrier continues to provide formidable resistance.
We may be talking about faraway planets, but there’s no rocket science involved with the price targets. Last month found support at the Node line and this month, so far, the dark blue Pluto line is providing that function – with Neptune as the upside barrier.
Using a weekly Bi-BB chart (below), we get a reasonably similar view from a purely technical viewpoint. For a few weeks, the upside was contained by the middle band. The breakthrough then opened the first layer of the upper tier as a target – and it has been met. IF we get a weekly close inside the higher layer, there’s a strong chance Pollyanna will make a new High
On a technical basis, the chart suggests a new High is probable, rather than merely possible. The fast MACD looks healthy enough … and the candlesticks are leaving long tails, indicating Bullish buyers step in just as the Bearish crowd threatens to take command.
The MACD readings on the daily chart are not quite as healthy and the height of the histograms continues to decline with each new peak in the price. I mentioned last weekend that the price of the last low before the high – 1391 – should provide strong resistance the first time it was hit.
Monday hit that level and produced a strong reaction downwards, which Friday’s strong rally reversed, regaining all of the losses and then some.
We’ve been chatting recently about Pollyanna’s tendency to run in cyclical timeframes linked to divisions of 30 calendar days, which are the dashed blue verticals on the chart above. Starting from the high price on April 2, we can see the index declined 60 days … and then rose for 60 days into the peak early last week.
But, now we have a new peak and have to ask the question whether, despite the Bradley Model turn date and the astrological expectations of a Bear wave developing, the index is in a longer-running cycle that might last for 90 days.
Well, the targets for that scenario are clearly spelled out on Pollyanna’s long-range planetary chart – or by the technical markers on the Bi-BB template. And it all depends on whether we get treated to another spurt-and-reverse Mercury Rx move before the planet goes Direct again midweek.
The FTSE, too, perked up on Friday after being disappointed by a Bundesbank-chastened Draghi on Thursday. The oscillators weren’t as giddy about the move as price was. The index is trying to catch yet another ride higher along the angle of the rising Sun line which kicked into gear in early June.
I suspect it’s going to fail … but, just in case …
The FTSE Weekly Planets chart is shown above – with the upside target marked if price can hold the 5756 Saturn line. As with the 500, the fast MACD is showing no warnings of a imminent demise.
I mentioned over the past couple of weekends the ASX200′s long-term love affair with Neptune price lines. She not only finally made kissy/smoochy with the line last week, but ran to a false break above Saturn, before settling back into Neptune’s embrace. And, once again, no warning klaxons from the MACD.
So, we have a situation where the normal Mercury Rx mode should bring prices down again by midweek, but the technical picture across three indices points towards further intermediate gains and the potential for a retest of last year’s Highs.
Apart from Merc’s change of direction, a 3Q Moon, and a Venus sign change accompanied by a trine to Neptune, there’s not much happening with The Spooky Stuff in the coming week.
There will, however, be a major fireworks show the following week when the New Moon concides with Venus setting off the Uranus/Pluto square and Mars conjuncting Saturn … when forward “drive” runs into a brick wall.
Images: Flickr (licence attribution)
About The Author
Randall Ashbourne is a former journalist and political strategist, author of the eBook, The Idiot & The Moon, which aims to provide newbie traders with the skills they need to start trading confidently.
While the book concentrates its main techniques on orthodox technical signals, Ashbourne also outlines a lunar cycle trading system he calls The Moods of The Moon and plots intermediate and long-range price targets for various indices using the planetary position of what he calls the Old Gods.
His website includes a free weekly column in which he explains the potential impact of looming astrological aspects and whether the expected symbolism is endorsed by the current state of technical conditions.