THE ULTIMATE

BOOK ON

STOCK MARKET TIMING

VOLUME 4

SOLAR/LUNAR CORRELATIONS
TO SHORT-TERM TRADING REVERSALS
GEOCOSMIC SYMBOLS AND ABBREVIATIONS USED IN THIS BOOK

Throughout this book, abbrevaations and symbols a.re used to identify the various
planets in the solar system. and signs of the zodiac. Those abbreviation s and symbols are
liste:;l below. The name of the planet or s;ign is given first, foUowed by its abbreviation,
and then foJlowed by its trologica l symbol. The abbrev iations and symbols are
consistent with those used in the study of astrology.

PLANETS SIGNS

SUN SU e ARIES AR T

MOON MO }) TAURU'i' TA

MERCUR ME G EMINI GE )
Y (
VENUS VE Q CANCER CA g
g
MARS MA cf LEO LE

JUPITER JU 4 VIRGO V1 w
SATURN SA ii LIBRA LI
URANUS UR >&< SCORPIO SC
111-
NEPTUN NE If.' SAGITTARIU SA .
E S /
PLUTO PL e CAPRICORN CP "

AQUARIUS
PISCES
AQ
PI
-
. .....
)(
 TABLE OF CONTENTS

Geocosmic Abbreviations and Symbols

Acknowledgemen ts . . . . ... ...... . .. JI

Introd uct ion .................

Chapter I : The Study 7

Cha pter 2: Overall Analysis - The Entire Time Field 2
Dow Jones Ind us.trial Average 23 3
NASDAQ Composi te 30
N ikkei 31
Chapter 3: Sun i n Aries Results 4
Chapter 4: Sun i n Taurns Results 5
Chapter 5: Sun in Gemi ri i Results 9
7
Chapter 6: Sun in Can cer Results 18
Chapter 7: Sun i n Leo Resul ts 93
Cha pter 8: Sun i rt Virgo Results 15
Chapter 9: Sun i n I ibra Results 01
Chapter Sun i n Scorpio Results 1l
10:
Chapter Sun i n Sagitta rius Results 13
1Chapter
1: Sun i n Capricorn Results 41
12:
Chapter 1 Sun i n Aq uari us Results 51
3:
Chapter Sun i n Pisces Results 61
14:
Chapter Mercu ry Messages 1
1 S:
Chapter Venus Volat iljty 29
16:
Chapter Solar-Lunar High1ights 2
17:
Chapter Sorting Resu lts by Sun Signs 2
18:
Chapter ] Short-Term Trading MethodoJogy 2
9: 2
Charts 2
3
 ACKNOWLEDGEM ENTS

I would like to thank Aimee and Mike Nolan of Chicago, Illinois. Ai mee is my o!
dest daughter, and a pretty sharp trademark attomey. Mike is her husband, and the Chief
Operations Officer (COO) of one of the major online tradi ng companies. They have
always opened their house to me as an escape from the demands and distractions of daiJy
busi ness. Without use of their house to run to at times when [ needed a quiet 1-2 weeks to
develop a thought for this book, these studies might never have been comp[eted. They
both work hard and long hours. so this provided ample opportu nity for me to also work
long and hard hours i n perfoct solitude.

l would also like to tha nk Carlos Almeid a, who created the software program for
FAR for the Galactic Trader. His contin ual updates of fonnulas within this program has
made i t possi ble for me to cond uct the stud ies w hose results )"OU see within this hnnlc.
His designs are elegant, and his work is flawless. And besides that, his patience and
happy disposition mak e it him pleasure to work with. You just don't find these
combinations in most program mers_

Because of these people, th is book is possible.

.
.
.
,,
_,...
 INTRODUCTION

Jt is the same feeling every t lme. Whenever I complete a new book on the
relationship of geocos m ic signatures to finan cial markets, l am i n utter amazement. I am
amazed at the 1;:Gns.istency of these sig11atures to the actual times of market reversals. In
every instance, it is like a whole new discovery. and I think ·How can l possibly share
this valua ble i nformat ion with others? It is too good to make available for $95.00
(or
$1 SO.CO, or even $500.00).1 shGu ld j ust keep it to mysd[ "

Bu t inevitably !real ize that l derive more personal joy in sharing these discoveries
with others than I do i n keeping it for my ow n pri vate u . And so I contin ue with what I
con.sider one of my pri mary missions in life: to write the Ult imate Books on Stock
Market Timin g.

This part icular volume -Vol u me 4 I n the series of 5 to be written -focuses on

the shortest-tenn market timi ng factors i n the field of geocosmic studies. lt is written for
those traders who seek the ideal situat ion that an serious traders seek. That is, all traders
seek a tool that provides a high probabili ty of success wi th a minimal amou nt of market
exposure (risk). The tools presented i n this book do just that. They identify l -2 day
periods (sometimes J -3 day periods) that have a high probability of correlating to an
isolated iow or high, from wh ich stock ind ices will reverse a minimu m of 4% in a
very short amount of time (usually 1-3 days afterwards).

Now before l exp\ain how to do rhis, let me stan with a little background.

Back in the early 1980's, l started notici ng correlations between Moon signs and
reversals in financia l and com modity futures markets. The only problem was that
d ifferent Moon signs seemed to correlate with d ifferent markets. Howevert many were
related markets as well. For exam ple. 1 noticed m!l.ny instances where the stock and T
Bond markets. as weU as silver prices, would fall as the Moon moved into the sign of
Leo. This phenomenon happened so quent ly that l began to suspect that it was no
simple coincidence.

Dr. Ruth Miller, a grain trader from Indiana, once gave a speech at the Astro
Economic Conference in Chicago (back i n the late I 980's 1 believe). These were exciting
annual conferences that were organized by Financial Astrologers Grace MOITis and Carol
Mull. In this particular speech. Dr. Miller reponed an interesting observation in the silver
market. She noted an unusually frequent number of occasions when the price of silver
would drop at least 1 cents from its opening on the firs1 day the Moon entered
before it rallied to over 3.5 cents above that opening. If memory serves me correctly, the
Roted this i n the last 17 instances prior to that speech,
 It takes the Moon approximately 29 days to orbt the Earth (New Moon to New
Moon), and about 27 days to traverse in its spherical orbit th rough the 12 signs of the
z.odiac. Since there are 12 zodiac signs, that means the Moon spends, on average.
slightJy less than 2-112 days per month (or every 4 weeks) in each sign of the zodjac.
Thus, the Moon enters the sign of Scorpio for 2-112 day periods, about 13 times a
year. lf Dr. Ruth Miller had observed this phenomenon in the silver market for the
past 17 consecut ive instances1 then that means it had been operative for about 1 S-16
months. I quickly looked up my ephemeris for those dates when the Moo n was jn
Scorpio for the past 16 months, then looked up a price chart on sliver furures. and
noted that Dr. Miller's observ ation was ool'n'Ct. When the Moon entered Scorpio, the
price of silver would drop at least 7 cents before it ra1lied 3.S cents above the
operiing of that day.

After that, I continued to monitor this phenomenon. lt work ed very reliably {I would
estimate about 75% of the time) for the next couple of years. ln fact, the d rop i n silver
prices was frequently a lot more than 7 cents. It was frequently as much a:s 1 5-30 cents,
if extended over the next 2-7 trading days. Howevtlr. after a couple of years, the Moon
in Scorpio correlation to falling silver prices started to become mo re and more u
nreliable. I still watched it, even after irs frequency dedined to about a 50% over the
fol!ow ing 2-3 years.

Then the pattern began picking up again -or su I though t. 1 haven't done a
study on it lately, but it st ill !;eems to work over 50% of the time.

ShortJy after Ruth Miller's presentation, I had the opportu nity to ta l k with one of
my clients who was doing her own studies on the relationshi p of highs and lows jn the
stock market to the l unar cycle. This client aked me to watch for certajn reversals i n
the S&P stock index. biisOO on her observations_ Specifica lly, she thought the stock
market formed a high at the various phases of the Moon (New, First Quarter, Full. u r
Last Quarter) based on the quality of the sign the Sun was transjting t h rough. {In
Vol u me 2 of this series, 1 discussed the qualitie and element· of the signs).

Briefly, every third sjgn belongs to the same qual ity. The signs that start each of
€he seasons are known as the cardinal signs, or the cardinal qualities. They include
A ries (spring), Cancer (su mmer), Libra (fall), and Ca pricom (winter) _ The signs t hat
follow are the fixed signs. or the fued qu(I/ity. These incl ude Tau rus, Leo, Scorpio,
and Aquar i us. The last signs of each season are known as the murable s i1s, or the
mutable quality_ Thee include Gemini, Vi rgo Sagittarius, :md Pisces _

What this client noted was that when the Sun was in card inal signs, the S&P
would oftentimes make a noticeable crest when the Moon was i ri Libra (a card i nal
sjgn). It would then make a noticeable trough near the time the Moon was jn
Capricorn (an other card inal sign). This meant that when the Sun was in Aries, a <:
rest of i m portance would fonn near the Full Moon (Sun jn Aries, Moon in the
opposite sign of Ljbra), and a trough would fonn around the Last Quarter Moon (Sun
in Arjes Moon in Capricorn}. But when the Sun was in Libra, the crest would form
under the New Moon (Sun and Moon both jn Libra) and the trough would fonn u
nder the Fir!lt Qua.rtr lunar phase (Suu i11 L1bn!, Moon in Capricorn). She noted
simi1ar correspondences when the Sun was in fixed and mulable signs. (Edilor'.r note:
Fm· further discussion 011 how these lunar phase.s are
2
determined, plea.se refer ro the author'!.' work on "Basic Principles of Geoco1mic
Studies Related to Finand al Market Timing" i).

[t wasn't long after that another cl ient pointed out a simi]ar lunar relationshi p i n
the grain market. Albert Sefcik was a large grain farmer from Pocohantas, Iowa. He
had been farming and trad jng grains all of his adult l ife, and was pretty successful at
both. He firm ly believed that the secret to m ak ing mo ney i n the grain mC!f kets
was to have knowledge of astrology. To Sefcjk, astrology was the only study that
could eons!stently and acc urately forecast weather far ahead of time. Astrology could
forecast temperatures
- extreme hot spells or early freezes. Astrology cou ld forecast floods and drought
conditions . Of thi s, Sefcik w as ab!:>olutely certa in. The only pro blem was that he d
idn't k now how to read an epherne:r[s. He neeJeJ an astrologer to tell hi m when the
planets were i n fire signs ( hot), or water signs (wet). or earth signs (cold ). He needed
an astrologer to tel! him when the major planets were in aspects to one another that
would jnd icate prolongeJ periods of rain (hard aspects to Neptune), or jdea l growth
conditions. He would then either plant early, late. or hedge his crop accord ingly.

He would also trade grai ns based on the lu nar cycle of New. Fu ll. and
Quarter Moo11s. He knew whe;n one of these Moons was occ urri n g because he
either looked up in 1he sky at 11 ight where h e could actually see the Moon•s phase,
or he would refer to a sim ple calend ar. Most calen dars woulJ ljst the dates of New.
Full, and Quarter Moons. For Sefcik. the phase5 of the Moon and their relat ionship to
changes in grajn pri.;:(!:S operated l ikc clock work every year during the growing
season of May through September.

] followed Sefcik for many years, as I was his broker from 1986-l 994. That was
the extent of my caree r i n that field, whi ch l ended as an Accounts Vi ce-
President of Com modity Fulures for a major WaU Street brokerage house. By the
late 1980's, 1 rea lized Sefcjk was on to somethi ng important. New Moons, Full
Moons. and Quarter Moons d id freq uently correlate with tums in the gra i n markets
during the growing season. Another client and grajn fanner - George Thom pson
of Angola, Ohio -opened an accou nt in the late 1980's, and he too had done some i
nteresting private studies jnvolving Ute relationshi p of planetary movements with
grain prices. He refined the lunar cycle based on its relationship to both Jupiter and
Satu rn. The three of us spent many conference ca l1s sharing ideas and refining our
ti ming indicators for trading the grain markets.

I began to watch a ll these (and other) markets on a daily basis over the ne
several years after Ruth Miller's presentation. I was partfoularly interested in the silver
market, as [ had written a book on the gold market in 1982. Silver was Like gold's
sister mark.et. When gQld m oved, si]ver usuaUy followed. or vice..versa. They were
intertwjned. Besides the Moon-i n-Scorpio corre]ation, l began to note other patterns.
For instance, when the Moon was. in Sagittarius, it seemed that silver prices would
first jwn.p, then faU, 15-30 cents. But not always. The probability seemed to be
about three. out of every four instances. That is, when the Moon entenxt Sagittari us
(once a month, for 1 to 3 tmding days), the price of silver would usually begin an
11·30 cent ra11y (usually the first day). Thjs was then followed by an 1 1-30 cent dedine
( usua1ly between the second day and the mi dd le of the Moon in Capricorn, 1-3 days
later).

3
 I also observed that certain Full Moons and New Moons had a higher than
expected condation with 11-30 cent moves in silver over a 1-3 day period. This
seemed consistent with the ideas shared by both my trading clients referred to above.

The day finally came in l 992 when I said to myself: ''Enough! Either 1 am
imagining things that I want to be there, and therefore they are, or there really js a
pattern, a co.rrelation between lunar cycles and the price of silver." There was only
one way to find out. and that was to go back over several days of data (like over l 000
days). and see if there really was a solar-J unar reJati onship to highs and lows in
sliver, and significant rallies or declines that foJlowed (or staned).

But there was another problem. How would you design such a study? What
would qualify as a significant, tradable rally or decl ine? Should it be i n percentage
terms? And if so1 a percentage of what? The close, lowj or hi gh of the day the rally or
decljne began? And if sot what should that percentage be? Or should the measu rement
be from a low or high that feJI within carefully defined time intervals? Perhaps there is
a significant crest over a 6-week period, but from that high, there were no declines
exceed ing, say. J%. Would this .stiJl quaJify that h ighest price of the past 6
weeks as somethjng of a significant reversal?

I d.ecideld tc do 11 study that might most efft:l:ti lit.::ly blend ThMe two frames of
measurement. I would first take the lOtal n u mber of days i n the Silver study (in thjs
case, 6 years, or about 1,500 tradi ng days). J would then calculate what percentage of
change would yield an average price reversal of about once cwry 1 5 trading days. As
a trader myself, I knew that my 11 comfort i.one" was staying with a tra<le for aboul 3
days to J weeks. I also liked to take sjlver trades in which J believed the proba bi Uty
was greal for a minimum l 5-cent move.

After hours of searching th rou gh dai ly prices and performi ng mathematical

cakulations, I decided upon pr ice changes measu ring at least 3% from t he lowest
price on the date of the reversal This satjsfied my basic needs. On the one hand, si
lver was trading around 15.00/oz. i n l 992, so a l 5-cent move re presented close to a
3% increase or decrease. And it so happened lhat a 3% move occurred with about a
7T8% frequency. That meant that on average there would be a 3°/o or greater price
reversal about once every ]2-14 trad ing days, or about oac every 2-l /2 t{) 3 weeks .
This was perfect for my trading style; and the styie of mo::.L of my clients_ The resu
lts of that study were rpD rted in the book tjtJed: The Sun, The Moon, and Thf!
Silver Marker : Secrers of a Sil\'er Trader.1 It was pu bUshed i n late 1992, and sti ll
works well today _

The basic premise from which th is study began was thal certain lunar cycles
(New, Full, and Quarter Moons) and certain lunar sjgns (signs thar the Moon would
be in) would correlate consistently wirh either tradable highs or lows in silver
prices. This hypothesis proved to be true, but not in the ways I expected for the
most part. For inslancet the "Sagittarius Factort 1 I alJuded to earlier did in fact prove
to be present. That i5, when the Moon transited th rough the sign of Sagittarius.
the sHver market did fiequendy undergo a 3% or greater reversal -more so than it
did with any other s1gn_

4
However, the Moon \n Scorpio phenomenon did not show up as freq uently as I wJd
have expected when the time rrame for observation was extnded over a -year pc:n
But what did show up was that the Moon \n Taurus had a hi gher corre]atio to lows m
silver prices than any othe r sjgn. However, not every Moon in Taurus was rehabJe. ft
wa.r reliable {Jn/y when ihe Sun was in certain . igns, but not in orher.s .1

An<l th us l realized that the correlation was n ot just to lunar phases, or only to
the Moon jn signs. Then: were particuJar combi n at ions of Sun and Moon signs that
showed a greater correlat ion to ere.s is and troughs than others . A nd there were Sun
and Moon com binations that correlated far Jss than expccte<l with crests or troughs in
silver prices. Wi th th is infonnation, ! wa able to develop a gujdeli ne by which Icould
rate every day as ha v i ng a low or high probability to a crest, trough, or either (i.e. j
ust changet or reversal) in the s.ilver market. 1 would know whfoh days to Jook for a
trade, and which days to not expect any great m<wement or rt:vt:rs.a L

To a trader. this i nformatjon \vas inval uahle . lf a trader knew that a SunMoon
com.bjn ation was approachin g whjc h had a higher than average correlation to a
significant low in sfrvcr prices. and silver prkes ha<l been fa!Hng into th is 2day lunar
period, then th e t ra<ler would have more confi dence i n lra<li ng fro111 the long side.
That is, one could confide ntly look for sjgns. 1hat a low was formfog, in silver, in
anti cipat ion of a 3% or greater rall y. By the method s discussed i n that book. one
would look for an isolated low to form. That is, whjle t he Moon was in that sjgn, the
price of silver wou ld take out the low of the previous day. Th is was the first step to
identifying an isolated low, a necessary critedo n for a reve:rsal. Thi s new low would t
hen have to hold the next day. Thus you had a <lay i n which the lowest price was
lower than the previous day, and lower than the foHow i ng day. Th i s creates an
isolated low. Once an isolated low is cated ) one can then assume that prices will rally at
least 3%, before iifalls aga.i n below that !ow. After 3% is achjcved, the trader then
looks for an i nd iation to exit the posit ion. This can be anyi,:vhcre from 1 to 1 5 days.
later. I n some cases, the move will last longer. Locating a Sun-Moon sign com bi nation
that correspond 10 a crest shortly thereafter will help the trader <leterm ine whe n to lake
profit .or even reverse to the short side.

After identifying Sun-Moon combinati ons rhat correlate with short-tenn highs and
lows in silver prices, I began to n olite something else. Many of these isolated lows or
highs wou ld achieve the mi nim u m 3% reversal i n far less than the 12-15 day interva]
that the stu<ly was designed to identify. Remember: the 3% criterion was the minimum
price swing used in thi s study. That is, once an isolated low or h igh formed, the price of
silver had to mo Ye a minimum of 3% from the lowe::.t pri.;e of that day, it then had to
form aq isolated high from which prices then decJ ined a mi nirn wn of 3%. If no declines
achieved a 3Cl m i nim um, 1hen the ''"."ave 11 wo.uld contin ue into the future unti]
prices did finalJy decli ne at least 30Y(l from an isolated hlgh. It cou ld take several weeks
in some instances to form such 3.Jl isolated high before prices dropped at least 3%. Or it
could take one day in some jnstan:ces. oever -and here is the val uable part -1ne 3%
rally would usually be accompbshed mJUSt a couple of days. It wouldn1t necessarily
form an isolated ere@ in just a cou ple of days, but it would usually soar at least 3% off
that low in just a couple of days (the noouple of daysn means about 1-4 trading days).
Thus, even though the averap interval of lintt: between these iso]ated crests aml
troughs of at least 3% swings was about 12-15 tradi ng days, the profit objective
(3%) was usually attained in far Jess time.

5
J
'Hxnfore- this market timing tool became a great indicator for a short-term trader, and
eve11 a day trader. And of course, my clients. Loved this because a futures trader's goal
is to try to capture as much profit as possible in as short a time as possi ble.

I wondered if these same tech niques would work with the stock market? I suspected
they would. But then I wondc if the SunMoon com binations wouJd be the same for
the U.S. stock market as they were in the Silver market? I doubted it. But there was onJy
one way to find out. And that was to do the study and write this book. A nd so, here it i.s.

If you are a trader, keep this book handy. Jt shouJd serve you well for many, many
years. Ifl were you, Iwouldn 1t lend it out. Itjust might never return ©.

lhfen:nces:

1. Merriman, Raymond A., Basic P,.inctples of Geor:osmtc S1udies for Financial Mark.et Timing.
Seek-It Pub1ications, W. BloomfieJd, Ml 1995.

2. Merriman, Raymond A., The Sun. Moon, ond Silver Marker: Secret. of a Silver Trader, Seek
Jt Publi(:a.ttons. W. Bloomfield, Ml 1992.

6
CHAPTER ONE

THE STUDY

What you are about to read could change your trading patterns considerably. At the
very l east, the material presented i n this book will provide a very vauable "leading
i n<licator" for making trading decisions. After all, that is the val ue of market tim ing.
Market timing is a lea<l ing indicator_ lt tells you in advan ce when a cycle crest or
trough is most likel y, when the proba bi l i ty for a pr ice rever<>al is most great . Once
the market enters that t im e ban d, you becom e epecially alert for that cycle to
culmi na.t. You are prepared and rea<ly to i nlt Late a trade. Y ou know the \i kely ti me
band for a reversaJ, and now you look for th1: techn ical sign al to support yo u r entry or
exit poi nt.

The problem , of cou rse, is developing the s.kill to accu rately identify these time
bands. A nother probli::m may Ile i n the s.k ill of knowi ng which technical signals to
use once you are in that time band . But the first issue is more im portant, for as many
traders are fond of saying. " Timing is everything . 11 A lthough l don't entirely agree
with this con vent ional wisdom, there i s no dou bt that timing is valuable. In favt) I
believe time 1s more important than price -but p rice (technical analysi s) is i mportant.

l n the previous vol umes of this series. I have focU5.ed more on Longer-tenn
market t i ming tools. These books have demonstrated how the study of cycles can be
used to consistendy outline time ban<l of expected crests and troughs in the stock
market. These ti rne bands can be narrowed down considerably by the overlap of
particular planetary cycles. That is, a stock m arket cycle covers a period of time
during which it is due to un fold . Dur i ng that interval, there may be several geocosmic
signatures in effect that also have ·orbs of time" i n which they have been note<l to
correlate with crests and/or ttoughs in the stock market W here these two cycles (market
and planetary) overlap defines a narrower time band i n which the actua1 market cycle
is most likely to occur.

As shown in the previous works (especially Volume l ), there are several stock.
market cycles, ranging from 6 weeks (major cycle) to possibly 72 years (or more). All of
the prior books in this series have focused upon those cyc]e intervals. However, it is a
weUwknown fact that millions cf peopJe in the stock market are traders. Many investors
enjoy the challenge of trading to some extent. And of course several million people ue
just traders who Slmply don't have the temperament (or interest) in staying with a trade
fr very_ lo?g at alL Buying .and selling stocks or ind ices every week, or even multiple
ttmes w1thm the sarne day, 1s the frame of reference whic h is most agreeable to them.
This suits their personality. their value system, and their temperament. Many could care
less about building a portfo]iu, al least at this polnt in their life. In fact,. holding onto
.a profitab]e stock may be one of the most difficult things to do in the world of
investing.
7
No one enjoys seeing profits evaporate, and the fear of losing that profit is what drives
most investors to sell -usualJy too soon.

So the question arises: is there anylhing in the study of cycles or geo1;osmics that
can
be of value to the short...teJm trading community?

The answer is: •yes_ "

The same principles that have been applied in Volumes 2 and 3 can be applied to
very short term trading and even day trading. However, the importance given to the
field of cycles anaJysis is far less in this reduced tjme frame than it is in the Longer
time frames. described in the other books. And, the importence given to the field of
geocosmic stud ies
:is much more pronounced in this type of trading. Fi nally, the field of tech nical anaJysis
is
just as important -and probably more important -in short-term trading than
longcr tenn investing. A rule of thumb here may be the foJlowing: Th e field of
technical analysis assumes increasing importance that is inversely proportional to the
time of the cycle being stud ied. That is, the Longer the cycle, the less important are
tec h11 ical studies. The shorter the g.rde, the more important are technical studies.

SHORT-TERM CYCLES

The shortest stock market cycle discussed in th e prevcous. books was the
major cycle. It was identified as a 6-wet::k cycle, with an orb of J ·2 weeks. That is,
every 4-8 weeks, the U.S. stock market formed a major cycle trough with fa i rly high
consistency (83.6% freq uency). Jn fact, the majority of thes.e cases formed tJ1e[ r major
1
cycle trough iri the 5-7 week interval {72.7% frequency}.

As disc ussed in Volume J , one of Lhe principles of cycles is. that they arc
comprised of sub-cycles, or "phases," which are divisions of the greater eye le by the
number 2 or 3. When it is d ivisible by 2, it is then com prised of two "h<i lfwcycles.."
When it is d i·v isibl e by 3. the cycle is then comprised of three phases. to th at
grcaler cyde. The e:.;act title of that sub-cycle is referred to by its mean cycle LengL h _

In the case of a 6-week major cycle, i t may be comprised of two ha lf-cycles

Jasting about 3 weeks each. or three phases lasting about 2 weeks each _ For
convenience. these sub-cycles within the major cycle are referred to as '1trad ing
cycles. " That is, approximateJy every 2-3 weeks, there wiJl be two or three trading
cycles, ot phases. of the major cycle.

These toot can be sub-divided further. Each trad ing cycle its.elf is comprised of
two or three sub-cycles, or phases. lasting abouL 4T9 days each (average is about 6.5
trading days). And of course, these two can be sub-divided into smaller cycles yet.
ad infinitum. The shortest cycle that J've come across is a. 50-minute scock market
cyde, as. related by well-known cycles analyst Walter Bressert 1n his private
workshop fot day traders. Obviously the shortr th cycle, the Jess percen t of cha nge
in price. Thus ic gets very difficult k> identify extremely short-tetrn cycles (like less
than 1 day), and there is a
8
serious question as to their value to a trader (let alone investor). Even a trader needs a
minimal price change in order to make a profit after com missions.

There are other problems, too, with analyzing extremely short-term cycles. As
stated in VoJ ume 1, shorter-term cycles are more prone to d istort (ie_ contra or
expand) when a longertenn cyde comes due_ Obviously, the shorter tile cycle the
more frequent a longer-term ycle wiU 1;:ome due. Extreme short-tenn cycJes thus d istort
very fre.quent_ly,. which makes them Jess usefu l i n actual trading ituations. Cycles
shorter than the maJor cycle (i.e. less than 4 weeks) arc thus not likely to be very
useful, and those sub-cycles with i n the trad i n g cycJe itsdf are of less value yet
There is simply too much variation to the time band when they wiU actuaBy u n fold,
relative to th e time frame of the expected trade, to be considered a reiiable or vaJ uablc
trading toot

GEOCOSMICS

Just a.s markets mo-.·e up and down in d ifferen t cyclic periodicities. so too do
planets in thei r orbit around the Sun, and the Moon in Its orbit around Earth. The
planets and Moon move within different cycle periodicities. lt takes Pluto 248 years to
orbit around the Sun, while it ta kes Earth 1 year tu do the same. And, it takes the
Moon about 29 days to orbit the Earth. lr 1akci;; stlgll!Jy move than 27 days for the
Moon to traverse "through the zod jac." Th reason it takes a couple of Jnore days to
orbit the Earth th a.n to traverse the wdiac is due to the fact that the Earth is also
movi ng along in its orbit of tbe Sun, wh i!e the Moon is orbiting the Earth.

As the Moon orbit arou nd the Earth, it "passes through" (or, "transits") each of
the 12 signs of the zodiac, for about 2-112 days each . This lunar cycle is very
consistent. regular, and pred ictable. One knows years ahead of t ime just when the
Moon will transit lhrough any given sign of the zod iac, on any given date. Unlike
market cycles, there is no distortion in the time when the Moon will pass through a
particuJar zodiac sign. It spends aJmost exaclly the same amount of time in each sign
from one month to the next It will enter each sign at approxi mately the same i n
terval of time from one month to the next. Its cycle is consistent, and its duration of
time spent in each .sign is consistent. Therefore, it provides an excellent frame of
reference for the study and/or measurement of any potential cycles andJor reversals
in financiaJ markets. All we have to do is ldentafy what we are Jooking for. and then
see the frequency i n which that criterion was met during each lunar sign.

And therein lies the first problem of this -and reaHy, any -study. Just what are
we looking for?

HYPOTHESIS

Every study should have a hypothesis. This book is written more in the form of a
k-or-traders. and. Jess i n the format of scientific research study." This fonruit is
mtentional for the simple reason that very few scientific researchers buy books on

9
I
_J
trading, and very few trade.rs are interested jn reading a research study reported in the
customarily dry academic fonnat. Yet, it is stiJl important for me to outljne my goa1s.
That is basically the purpose of a hypothesis. And the purpose of this book is to see if
there are cmy correlaJ.ion3 between re\J ersals in ihe U S stock market and lunar
cycle.s. If so, what are they? And if so, how may we use them to enhance our trading
of the stock indices?

Thaefore, our hypothesis is as foJlows: There i.s a correlation between certain

solar-lunOT sign combinations and 4% or greater swings in the . tock markets. Now, we
need to create a study that wi H test this hypothesis - either supporting or refut ing it.

DEFINING THE STUDY

I know, I j ust said [ wasn tt interested in wr iting a scientific. academic,

researd1 paper. And now here J go using a format consistent with such a paper. Iam
going to teU you how I designed the study that led to the resul ts yo u are about to read.
Why? Beca u e l would be remiss i n my duties of provid ing you a book of val ue if I
didn't explain what the stud ies actually say. And to do that, Ihave to explain the design.
lt is not as simple as just saying, 11The Moon i n Capricorn usually correlates with a low i
n stock prices." Wel l, what kind of a low? A major cycle Lrough? A n isol ated low
from whic h p rices ral ly a t Jeast .1%? Over what perjod of t ime did the study lake
place? Does jL gjve the same results over d ifferent periods of tjme? If so, w hy? If not,
why no(1 So I will try to be brief in describi ng the design used jn this study, b ause I
k rtow you wanl to see Lhe results and learn how to use these results to enhance your tradi
ng.

The study was designed usjngfi/tered wc1ves that measu red price swings of at least
4%. fi1tered waves are ljnes. drawn from the bo ttom to the top of a prjce swing. and then
back down to the bottom of the next mov.and then back up to the top of the next move,
and so on (see Figu re 1 for an exam ple of a fiJ len:d wave).

Each point on the filtered wave had lo meet a 4% crite rion. That was defined as
foHows: The size of the line (i.e. t he change in price from the isolated low to the isolated
high of the line in th e filtered wave) had Lo be at l ea.st 4% of the vat ue of the lowest
price on that line . W hy not ju t measure a 4% chang1:? Because a 4% decline in prices
req ui n:s a greater price range than a 4% rally i n prices. and therefore there would be a
skewered result. There would be more cases of fillered wa ves going up un a less
amount of price change than there would be filtered waves going down_ For instance,
conside r a case where the prji;e of a stock moved from 100 to 120, wbich would give
you a 20% gain. However, let us now say that the price of thal sam e stock d eclind
from 120 back to l 00. It is the same 20-point range (reversal), but the pri ce has
decreased on ly 16. 7%. This. is. because the difference in a decline in prjce would be
calc ulated as a percentag of the change from the highe.st price (120), whereas an
increa. e in price would be calculated as a percentage of the change to lowesc price
(100). Although the amou n t of price differential is the same, the percentage d ifferentia i.,.
cons.iderable. In lradjng, we aJ'e not so much ooncemcd with the percentage: of a r ist:
ur a fall i n prices as we arc m the aclual number of poi nts {dollars) involved.

JO
lfilllllilll:.1 .""::'-- _

- -All
!

1eaxioo
i

lllllHQ

lll1Xtl2

Figu re 1.E.a.m ple of filtered wave of 4% or greater jn DJIA. as used in this :Study.

Therefore, we needed to construct a study that measured a percentage from a

cornmon reference point, and jn this case. we chose the lowest price of the fihered
wave
-regardless of whether that was an 11up11 wave or a ''downi. wave. By doing thisj we
are abJe to determ ine more useful results, or results that will useful fur the purpose of
trading.

The next concern was the type of market to u:se. Traders usua11y trade either in
futures, or options on indices, or ind ividual stocks. The probJem with futures or
options is that they have expi rat\on dates, and hence a 11time premium 11 is bu ilt into
them. That is, all oth er things considered equal, the further away from expjration
date. the more "Cimc valuet1 that is added onto the cost of that futures or option, The
closer one comes to the
expiration or first notice date. the less time value the option or future has. So using
futures, and even more so options, w m skewer the results., especially when one comes
dose to the point where the contract or option is '1rol1cd over11 i nto the next month 1 or
next series.
l1
 To avoid that. we need to use a cash" vehic1e. one that measures. price only i n
terms of pie:sent value, with no time value premium built into it. This wouJd bring
us co individual stocks. But this too creates a problem. There are J iteraJJy thousands
of stocks 1raded on dozens of stock exchanges throughout the world. It would be very
difficult to conduct a study on every :.toe or even the top 50 stocks. There simply
isn't the time or space to do such a study and report. Besides, which stocks would one
choose? The top four or five stocks tend to change over short amounts of time. The
uni vers.e of ind ividual stocks is just too large to consider this as a vaJid option
that would answer our hypothesis.

That leaves us with a stock ma.Jket index that is not in the form of a futures
controct A stock market index is simpJy a reflecti on of the vaJ ue (price) of a basket
of stocks. The stocks themselves a.Je traded, but no one actuall y purchases the
cas.h index i tseJf. However now with advent of certain exchange traded ind i ces on
the AMEX (American Stock Exchange), one can come c.Jose. Today one can buys
shares of the DIA, known as the '•Diamonds," which closeJy reflect tht! value of the
Dow Jones Ind ustrial A verages. One can aJso buy shares of SPY. known as
"Spyders," whic:h reflect the change i n vaJ ue of the S&P 500 cash index. Or one can
buy the QQQ, which reflects a perce ntage of the NASDAQ index. There are other
exchm1ge-traded indices available too. but these arc Che major ones used today (in the
year 2002) .

Tt is these ash indices that uJtimacel y gi\'t' vaJ ue ro!he i11dex futures or
oplions or ex.change-traded indices that many traders do trade . And thcs ind ices are
com prised of the most popula.J stocks that in vestors and traders buy nd sell aJl the
time. Thus, as. a cash index goes, so (presumably) do the index fu tures. and options,
and in most cases. so goes even the majority of individual stocks.

Another concern chat arist!s is whether there mi ght be d i ffcrencc-s bet ween
stock indices from one cou ntry to another. One \vould chi n k chat if th underly ing
i nfl uence behind a reversal did indeed reJate to g.eocosrnic factors, then th is
1.:orrclation shouJd show i n a variety of stock markets - and 11ol just chose of one
<:om1lry . Th is nrny or may not be true. For instance. perha ps. swingS, up and c..low n
i n stock m atkt!ls aerns" the world do happen close in tlmc to one another. But do
they h<}ve to each make a simi Jar percentage of change in price? Mayb(; not Wt!
decided to test this possi biJ ity by doi ng studies on a cash stock index outside of the
USA as welL

Thus it was decided to use three well-know n cas.h stock ind ices for t his study.
The mos.t well known cash index is the Dow Jones Ind ustrial Average. And for
compa rison, we have chosen to aJ.so anaJyze the N ASDAQ Compo.!l i t(; and the
Japant!se Ni kkei stok index. The Dow Jones Jndustrial A verage. or DJ IA, <md the
NASDAQ Compoi;ite. measure two different types. of stock market sectors. The
fonncr is com prised of the established) leadi ng ind ustrial com panies. in Che USA,
whereas the later is heavily comprised of newer technoJogy issues_ Thu.s it would
not be surpr ising to see some differences between the two ind ices. The Nikkei index
is aJso hca viJy weighted with rechnoJogy stocks and is said to trend closely to th e N
ASDAQ Com posite_ I lowever. it is in a different country, on the opposite side of the
globe to the USA . Eve" if the results do not concur from one exchange to the other,
it wiJI be interesting to note if ea.ch has particular com binations of Sun-Moon signs
that stand oul rema.Jkably in some way.
12
SOFTWARE PROGRAM USE D FOR TIDS STUDY

There is on y one sofiv.•are program thal I know of that could possjbly be used to
cond uct this sludy. And th i s is the only type ot' study that ] can imagine that wouyt ost
dosely reflect the co"elations. that mighl actua l ly exist between .solar-lunar combinations
and tradab!e turni ng points in t he slock ind ices. h lS the FAR for the Galactic
Trader
program, prod uced by p _ AS_ , I m:: . i n SL A ugu st ine. Florid a. The FAR part of the
pro was designed by mysel f. 1rnd consists of several director ies that run off L
he Galact ic Trader pl.atform . One of lht:sc directories is lilkd •'Filtered Waves ." It
plots the fi Jtered waves onto Lht: bar cliart of a partiL:u l ar stock. com modity. or i ndex L
hat the user has on the screen, according. lo t he parameters the user inputs-

f'or this study. 4% parameters were established _ Th us. ti ltcred wa\/es were drawn
from isolated ows to [solaled highs in which t he movement was equal to or greater than
4 3/o of the l owest p rice on l he wave . The program then rnn the '"frequencies" of
these fillered wave dates.

To do that, the dates of the h gh!i and lows t hat defined each 4% filtered wave, were
then dropped into lhe 1,;ak u.Laliu n pa rt of the FAR program. A pr i ntout was prod uced
- in tab!e or gra phic form -of a l l lhe i nstances in w hi ch each planet occurred
withi n each sign, during the em rc {ime frame fo r whi ch t he data was anal yzed. ln
other words) if one's dala started on Jun I . 1990 , and it ended on May l , 2002 , the
program analyzed a ll th e dates d uri ng t his per iod i ri w h.ich the filtered wave tops
and bottoms formed, and
<:a lculated t he n u mber of imtam:s i n .,.,.·hich each planet fell i n each sign . Thus we
had lhe rsuh of a qua nt ltati ve study, w hich will be referred to as the 'study grou p.''

For those who w ish to calculate a statistical study. the program can also perform a
''baseline" study. That is. FA R can add u p the total nu mber of tradi ng days that
were present in {he en{i re time band u.sed for the .srn dy, and indicate how many
times each pla net was in each sign. One can then com pare the n u m ber of instances
that fu lfilled the stud y group crileria (:Start. and en d of a 4% or greater reversa ls), over
the number of days that were possi bl e within the study (the baseline group). By
determi ni ng the percentage of occu rrence of the cri teria dates for each planet-sign
combination, one can establish whether the quantitative resu lts truly have the potentia l to
be statis.t ically significant.

The focus of this study was first to determine the freq u ency of occurrence of the
criterion being met accord ing to Sun signs. That is, we first of all wanted to see how
many instances of 4% or greater rcvc:r>als occu rred when the Sun was i n each sign of
the tropical zodiac , during the time frame of our stu die. From there. we wanted to
also determi ne which Moon signs---wirhi n each Sun sign--<.:onta ined the greatest (and
least) number of occu rrences per our criterion _ ln other words. it was not especiaHy
important to us that over the cou rse of the entire sludy, the most freq uent occurrences
of 4% or greater moves m.a y have occurred when the Moon was i n Aries or
Aquarius. It WH
im portant. howe\/er, i f the Su n-in-Ari es with the Moon-in Aquari us contained the most
frequent nu mber of 4% or greater reversals of au the Moon signs studied with ltu Sun
in Aries. Lt was aiso important if the Moo n in Virgo contained the least number of
4%
13