Lunar cycles & the market?...
internetstockreport.com
Put On Your Crash Helmets
By Paul Shread
June 13, 2001 - If you believe that lunar or solar cycles have any effect
on the stock market, you might want to pay attention to this column. If
not, you might find this column a little ... spacey.
Several years back, a cycle watcher named Steve Puetz attempted to see if
eclipses and market crashes were somehow related. He studied eight of the
greatest crashes in financial history, from the Holland Tulip Mania of
1637 to the Nikkei of 1990. He found that market crashes tend to occur
near full moons, and that the greatest number of crashes start after the
first full moon after a solar eclipse, when that full moon is also a lunar
eclipse. Puetz found that all eight crashes occurred six days before to
three days after a full moon that occurred within six weeks of a solar
eclipse. The odds of that being a coincidence, Puetz calculated, are less
than 1 in 127,000.
Puetz was not saying that so-called "Puetz windows" always lead to
crashes, but that if a crash is going to occur, a Puetz window would be
the likely time frame in which it would happen. Puetz windows tend to
occur every year or two, while crashes are rare events.
The interesting thing about this summer is that two Puetz windows will
occur very close to one another, according to cycle watcher Heinz Blasnik.
The first window is June 21-July 5, and the second is July 30-August 7. If
a significant top is going to occur in the market this summer, those are
the likely windows, Blasnik says.
It is interesting to note that a Puetz window with a total lunar eclipse
occurred from July 1-July 16 last year. July 17 turned out to be a major
secondary top in the Nasdaq (4289), and the start of a sharp, 18% pullback
in the index. However, the Nasdaq's relentless sell-off did not begin
until the index marked a second, slightly lower top on September 1 at
4259. A second Puetz window, with a full moon that was not a lunar
eclipse, occurred from July 31-August 15 last year.
Another Puetz window (albeit two days longer than the required six-week
interval between solar eclipse and full moon) occurred in August-October
1998, right before the plunge to the lows of the Asian crisis. Others in
January and July 1999 coincided with relatively mild pullbacks (10%-15% on
the Nasdaq).
Whether lunar and solar cycles can affect individual or mass psychology is
a subject that has been debated for centuries. Stock traders have long had
a saying, "Sell the full moon, buy the new," and it is remarkable how
often new and full moons can mark a turn in the market within a day or
two.
Just looking at the last few years of data, a Puetz window appears to be
most effective when it occurs against a backdrop of economic crisis or
weakness. Given the difficult state of the economy and corporate earnings,
the two Puetz windows this summer might be worth keeping an eye on. |
