EminiForecaster Blog and Update History

Accurate Stock Market Forecasts for the Emini SP and other Futures

Archive for September, 2008

While the congress rejected the bail out bill (barely), they did not, however, pass a bill that states that there would be no more proposition to bail out the investment banks, ie – Wall Street.

A likely scenario is that they will keep the PPT (plunge protection team) on a leash and let the market slide a bit more like it did Monday on the news of no passing of the bill.

Once the dire predictions from the establishment are realized, the congress will cave in and since there are now less pressure from the public (after losing another 10-15% of their nest egg) – they will pass this “Trillion-Dollar-Baby” like it was a walk in a park.

Is the “October Surprise” DOW declining by 1,000 points? We shall see.

No matter what the congress does it is not good for an average American – would you rather add 10% additional percent to the national debt and therefore probably devalue dollar a bit more or lose 10-15% of your 401(k), IRA, etc.?

HOW ABOUT BOTH?! Not a pleasant but a likely scenario.

When I talked to Rob the other day on his thoughts about the new “new deal” he mentioned how S&P500 was at 800 at the end of 2002 recession and we didn’t have the problems we are facing today.

Considering the market is currently at 1,200 ish – you do the math on how much more room we’ve got on the downside – 35%+!!!

I have been preaching for almost 2 years now to get supply of gold, silver and stored food – cheap insurance considering the circumstances.

Sunday Forecast Posted

The EMF update for the trading week ending October 3rd is now posted.

We have a change from Thursday’s tentative forecast due to changes in the
market.  We expect the market to go up into mid week and then retrace
before going higher.  We do see a high for the week at or about Wednesday
mid-day.

http://www.eminiforecaster.com/members/weekly.php

Please use caution this week as we (still) have Congress working over the
weekend on a “bail-out” plan.  This plan seems to be largely a secretive
as to the nature of the actual problem.  As a result of this
non-disclosure, it seems more likely there will be surprises and potential
misinformation that will keep the markets in some turmoil and heightened
volatility.  As a result, it will likely be more difficult than usual to
accurately forecast key price levels at which the market will turn
around.

Key levels to anticipate on the upside are 1263-1267 area. Past that 1279
area.  On 9/19, there were orders filled as high as 1291.25, so the area
between 1291 and the 1279 area are difficult to evaluate.  As a result,
consider 1279-1291 as an area in which upward momentum could stall.

To the downside, 1181 is key and, below that 1158 is key.

Please remember, depending on when information regarding this “crisis” is
released and depending on the nature of that information, it may result in
large moves in either direction.

We wish you the very best in the coming week!

Rob, Vadim and the EMF Staff

Much has been written about various cycles in the stock market, other commodities and investments.

One very famous example is the Delta Phenomenon, a trading book that sold huge quantities at $175 per copy (and some for many many times that). The basic idea has to do with lunar cycles.

Lunar cycles? Stock market? About now, I can hear you saying, “what a bunch of #^$%.”, but bear with me because, if you are of the hard core left brained approach to such things, I would like to point out that even the Atlanta Federal Reserve has published a white paper on the geomagnetic influences on stock market cycles (http://www.frbatlanta.org/invoke.cfm?objectid=AFD46B63-2852-4812-BE83E6D0C777F4BF&method=display).

I have done a tremendous amount of research in this area, devoting several years of my life to this very topic. Much new research in astrophysics is revealing we really live in a very electric universe (http://www.thunderbolts.info/home.htm). I have been able to achieve winning percentages in the 90% range on longer time frames using geomagnetic data to time the stock market. So, don’t knock it til you try it ;-)

Modern world culture has largely abandoned the use of what our forefathers commonly used, and that is the lunar calendar. Many ancient cultures, such as the Chinese or those of the Jewish faith, for example, still retain this tradition. Many Buddhist traditions carry certain days of the lunar month as having certain significance. This is also true in Indian writings such as the Vedas.

Is there some wisdom to counting out events according to lunar cycles instead of only solar ones as we do here in the west? Does reliance on a purely solar calendar hide things from us that would otherwise be obvious on another interval? I certainly think it does. After all, the moon, for example, surely influences fluid flow, and we are largely made, of water. The moon and sun also significantly influence charges on the ionosphere that impact our environment. So, these things all tie together. As mentioned, physics is now coming to find more detailed reasons to believe electromagnetism and gravity are really opposite sides of the same coin. For more on this, you might enjoy the articles of Myles Mathis at http://www.milesmathis.com/

There are many physical cycles we could analyze that influence human behavior as it relates to the stock market. As an exercise, let’s see if we can find any truth to stock market cycles that are based around the lunar month (from new moon to new moon). There are many such cycles we could analyze, but this one will suffice to show some interesting cycles and, how one might go about discovering them. Then, you can write me to tell me what you have found;-)

To start with, in trying to find the data to do these tests, I quickly found there was no commercially available software that could export any reasonable amount of data. So I developed my own. I call it the “Astro Data Generator.” It will generate any data you need for just about any planetary body in the solar system (ie. Declination , longitude, speed and distance etc.).

The new moon is simply an event that occurs when the sun and the moon rise at the same time. So I export data for the sun and moon and use my spreadsheet to identify when they cross. Then, from that point, I will count forward, buying and selling the S&P 500 (the best example of the tradable US stock market as a whole) at each point (daily) in the cycle. Here is what I found:

Day of Lunar Month

Return

1

1990.02

2

1799.99

3

415.57

4

321.68

5

170.84

6

715.00

7

717.81

8

710.68

9

418.36

10

1407.20

11

1127.62

12

595.04

13

136.85

14

1516.28

15

1304.88

16

1567.51

17

615.56

18

1168.01

19

1136.41

20

885.02

21

1507.10

22

14.70

23

928.61

24

244.59

25

1322.76

26

1833.98

27

464.22

28

1300.97

29

396.03

30

814.03

As can be seen in the above table, there is an excellent bias around purchasing the 23rd or 24th day of the lunar month and holding into the 4th day of the lunar month. We can also see a bias as follows:

5th-14th short, 15-17 long and 18-21 short.

As you can see, there are clearly cycles present here. In fact, this particular end of month buying and carrying over into the new month bias is well known on a calendar basis. However, I have never seen a study done identifying an end of lunar month pattern like we have done here. It is a unique study. It is often reasoned that this solar calendar effect is due to “window dressing” by fund managers to make their portfolios look better. Seeing this lunar bias makes me wonder whether it is in fact something altogether different. To get to the bottom of it would require more research that is beyond the scope of this article.

This is certainly not trading advice at this point. For example, to turn this into a tradable pattern, I would do some statistical analysis to see the distribution of trades. Either way, it tells us that much more about human behavioral (stock market) cycles that, could themselves be driven by external forces that are cyclical themselves.

Research in the area of stock market cycles that are driven by other external phenomena is a very fruitful area of research that can lead to substantial benefit. Hopefully the future will bring more thoughtful minds into this arena.

I Wonder…

original idea by Moise Levi

VIDEO of This Week’s Results

Week of 9-26-08 G-Line Results

Not a back week considering the speculation and volatility in the markets. We didn’t get as much of a lift by the end of the week as we anticipated and Friday gap down didn’t help the cause -

Intraday Highlights From This Weeks -

Monday -

Wednsday -

Thursday -

Friday -

Not that I recomend trading our forecasts intraday, I just thought I share this with you. By the way Tuesday was way off and there is no need to post it.

S&P500 Trend – Image of the Day

As a result of the proposed $700 billion US government bailout, the S&P 500 has generally rallied over the past week (up 4.5%). However, the S&P 500 still trades down over 22% from its October 2007 highs. For some perspective on the latest stock market action, today’s chart presents the current trend of the S&P 500.

For all the volatility of the past year, the S&P 500 has traded within the confines of a downward sloping trend channel. As today’s chart illustrates, the proposed government bailout came just in time to help the S&P 500 trade up from support (green line) — though the longer-term trend remains in effect until proven otherwise.

EMF Tentative Forecast Posted

The EMF tentative forecast for the coming trading week ending October 3rd
is now posted.

http://eminiforecaster.com/members/weekly.php (click Next Week button)

We currently expect the market to continue down into the Wednesday morning
area and then up from there.  At this time, the week is expected to be down
overall.

Key levels to anticipate on the upside are 1263-1267 area. Past that 1279
area.  To the downside, 1181.  Below that 1158 is key.

Looks like the bail out plan is failing, therefore keep in mind abrupt
changes in market direction can occur in the face of these new releases of
information. As a result, the potential  for changes for the official
Sunday forecast is fairly high.

Volatility remains very high. As a result, use caution.

We wish you the very best in your trading

- Rob & Vadim

Washington Mutual – FDIC Owned?!

http://finance.yahoo.com/q?s=wm

It was announced today, after-hours, that the FDIC is taking control of Washington Mutual (WM) and selling its deposits as well a number of branches to JP Morgan for $1.9 billion.

Losing $6.3 billion in the last three quarters and getting cut to “junk” status didn’t give WM many options to choose from. $19 billion in losses is projected through 2011, but some say the number could be as high as $30 billion.

Currently, WM has approximately $309.7 billion in assets, $227 billion in real estate loans and $181.9 billion in customer deposits. Additionally, there are 2,239 branches and 43,198 employees who work at WM. This acquisition now makes JP Morgan nearly similar in size with Citigroup.

We should see an Indymac-related type of run tomorrow at Washington Mutual retail banking centers. If I had money at WaMu, that’s what I would do, 6:00AM, just to get in line first.