THE PANIC OF 2011
David McMinn
Introduction
The seasonal timing of
the peak at the beginning of a bear market was a key indicator of how
the ensuing market slump would unfold (McMinn, 2010a). Curiously, peaks
in the Dow Jones Industrial Average (DJIA) on May 2, 2008 and April 29,
2011 took place with lunar phase at 321 A°. These aligned with other highs on June 12, 1901, May 29, 1946
and May 21, 2001 with lunar phase between 305 and 345 A°. All five peaks were followed by major DJIA one day falls 6
days apart between August 1 and October 15. From historic cycles, the
author was expecting another early September panic in 2011, with two
major one day falls with an interval of 6 days. This did occur, but in
early August 2011 and the forecast was out by about a month. Another
October panic was not anticipated in 2011 – an incident that was far
more likely to occur in 2015. Sixty year intervals have been strongly
linked to the timing of historic October panics and no such event was
indicated in the current year (McMinn, 2010b).
The time
assessed was 12 Noon US Eastern Standard Time on the day of the panic or
AOD rise/fall, with no adjustment being made for daylight saving time. E°
is the abbreviation used to denote the degree on the ecliptical
circle, whereas A° is used for the angular degree between the Moon and Sun (lunar
phase). This was to prevent confusion between two different concepts.
Lunar phase at 90 A°
was equivalent to the 1st quarter Moon, 180 A° the full Moon, 270 A°
the 3rd quarter Moon and 000 A°
the new Moon. For the period 1885 to 1896, the 14 Stock Average
and the 12 Stock Average indexes were used, while the DJIA was utilised
post May 1896. The annual one day (AOD) rise or fall was taken as the
biggest % one day movement in the DJIA during the year commencing March
1.
Early September Panics
Three early September panics occurred after DJIA highs between May 21
and June 12 (see Table 1) in 1901, 1946 and 2001. Each comprised
a panic and another major one day fall 6 days later. The timing
parallels between the 1901 and 2001 panics were quite remarkable, even
though the security trigger was completely different. In 1901, President
McKinley was shot on Friday September 6, causing a panic the next day.
He survived the shooting but lingered for several days. His impending
death resulted in another panic on Friday September 13 and he died on
the Sunday. In 2001, the New York Stock Exchange did not open on
September 11, due to the WTC terrorist attack and remained closed for
four trading days. It reopened on September 17 and the DJIA plunged by
7.13%.
|
Table
1
PANICS AFTER DJIA HIGHS BETWEEN APRIL 25 AND JUNE 15
|
|
DJIA
Peak
|
1st
OD Fall
|
%
|
2nd
OD Fall
|
%
|
OD
Rise
|
%
|
Panics
of 1901, 1946 & 2001
|
|
Jun
12, 1901
|
Sep
07, 1901
|
-4.43
|
Sep
13, 1901
|
-4.27
|
Sep
16, 1901
|
+4.10
|
|
May
29, 1946
|
Sep
03, 1946
|
-5.56
|
Sep
09, 1946
|
-4.41
|
Oct
15, 1946
|
+3.58
|
|
May
21, 2001*
|
Sep
11, 2001
|
na
|
Sep
17, 2001
|
-7.13
|
Sep
24, 2001
|
+4.47
|
Panic
of 2008
|
|
May
02, 2008*
|
Oct
09, 2008
|
-7.33
|
Oct
15, 2008
|
-7.85
|
Oct
13, 2008
|
+11.08
|
Panic
of 2011
|
|
Apr
29, 2011
|
Aug
04, 2011
|
-4.31
|
Aug
10, 2011
|
-4.62
|
Aug
09, 2011
Aug 11, 2011
|
+3.98
+3.95
|
|
*
Intra bear market high.
Abbreviation: OD – One Day.
|
The three peaks in
1901, 1946 and 2001 happened with lunar phase between 305 and 345 A°
(before the new Moon). The first one day fall in the 1901 and 2001
panics happened between 280 – 300 A°
(after the third quarter Moon) and in 1946 at 91 A°
(on the first quarter Moon). There was no common lunar phase for the
major one day rises after or during the panics. Remarkably, the five
highs in Table 2 all took place between 305 and 345 A°
before the new Moon (000 A°).
For the 2008 and 2011 peaks, lunar phase was the same with the Moon and
Sun in very similar positions on the ecliptical circle. Something
similar applied to the 1946 and 2001 highs.
|
Table
2
LUNAR PHASE & PANICS AFTER APRIL 25 TO JUNE 15 DJIA PEAKS
|
|
DJIA
Peak
|
Phase
|
1st
OD Fall
|
Phase
|
2nd
OD Fall
|
Phase
|
|
Jun
12, 1901
|
307
A°
|
Sep
07, 1901
|
298
A°
|
Sep
13, 1901
|
010
A°
|
|
May
29, 1946
|
343
A°
|
Sep
03, 1946
|
091
A°
|
Sep
09, 1946
|
159
A°
|
|
May
21, 2001*
|
342
A°
|
Sep
11, 2001
|
281
A°
|
Sep
17, 2001
|
004
A°
|
Panic
of 2008
|
|
May
02, 2008*
|
321
A°
|
Oct
09, 2008
|
115
A°
|
Oct
15, 2008
|
192
A°
|
Panic
of 2011
|
|
Apr
29, 2011
|
321
A°
|
Aug
04, 2011
|
067
A°
|
Aug
10, 2011
|
143
A°
|
|
*
Intra DJIA bear market high.
Abbreviation: OD – One Day.
|
In 2008, the intra bear market high occurred on May 2, well before the
other peaks between May 20 and June 15 in 1901, 1946 and 2001 (see Table
2). The 2008 high was again followed by two major DJIA one day falls
6 days apart, but in October rather than early September. The AOD rise
in 2008 happened on October 13.
The DJIA peaked at April 29, 2011 with an ensuing major one day fall on
August 4 (-4.31%) and another 6 days later of –4.62%. However, the AOD
fall (–5.55%) happened between these two dates on August 8 (118 A°)
thereby creating an anomaly. Curiously in 2008, the AOD rise occurred
four days after the first one day fall, an observation that also applied
to the AOD fall in 2011 (see Table 3).
The timing of the maximum optimism in 2008 was the reverse of the
maximum pessimism in 2011.
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Table
3
THE 2008 & 2011 PANICS
|
Panic
of 2008
|
|
1st
OD Fall
|
|
AOD
Rise
|
|
2nd
OD Fall
|
|
Oct
09, 2008
-7.33%
|
+4
days
|
Oct
13, 2008
+11.54%
|
+2
days
|
Oct
15, 2008
-7.87%
|
Panic
of 2011
|
|
1st
OD Fall
|
|
AOD
Fall
|
|
2nd
OD Fall
|
|
Aug
04, 2011
-4.31%
|
+4
days
|
Aug
08, 2011
-5.55%
|
+2
days
|
Aug
10, 2011
-4.62%
|
|
Abbreviation:
OD – One Day.
|
August to October AOD Falls
Lunar phase for the AOD falls in the three months to October 31 was quite
remarkable (see Appendix 1). For 9 falls between July 30 and
September 14, lunar phase took place from 90 to 135 A°
(after the first quarter Moon), with one exception on September 11, 2001
(281 A°)
(after the third quarter Moon). The September 15 to October 18 AOD falls
always happened from 115 to 195 A°,
while October 19 to October 31 AOD falls from 310 to 325 A°
(prior to a new Moon).
Conclusions
The seasonal timing of the DJIA high was highly relevant to forecasting
how the subsequent bear market would unfold. McMinn (2010) presented
numerous historical examples and it was essential to assess this factor in
forecasting any market declines over -20%. The 6 day interval for panics
occurring after DJIA highs between late April and mid June was certainly
of great interest. Based on the listing by fiendbear.com, there were only
two DJIA bear markets commencing between April 25 and June 15 in the 100
years to 1996. Thus, there were no exceptions and the 6 day effect becomes
far more relevant. (Intra bear market peaks occurred in 2001 and 2008.)
The causal basis of this effect in DJIA patterns remained unknown,
although presumably it involved Moon Sun tidal cycles,
Alas, the mathematics associated with the Moon Sun effect remained unknown
and thus it cannot be used to assess financial activity. These two
luminaries hold the key to making accurate market predictions years in
advance. The relevant cycles are complex, hard to decode and understanding
has remained elusive to date.
References
fiendbear.com.
DJIA Bear Markets of the Past 100 Years.
www.fiendbear.com/bearenc1.htm
McMinn, David.
2000. Lunar Phase & US Crises. The Australian Technical Analysts
Association Journal. p 20-31. January/February.
McMinn, David. 2011a. DJIA Peaks, Seasonality & Market
Outcomes. Market Technician. Journal of the Society of Technical
Analysts. p 10 - 13. Issue 68. October.
McMinn, David. 2011b. 60 Year Intervals & October panics.
Market Technician. Journal of the Society of Technical Analysts. p
13 - 15. Issue 67. June.
|
Appendix
1
DJIA AOD FALLS POST 1910 => -4.50%
Between July 25 & October 31
|
|
DJIA
AOD Fall
|
%
AOD
Fall
|
Sun
E°
|
Moon
E°
|
Phase
A°
|
Jul
30, 1914
|
-6.63
|
127
|
226
|
099
|
Aug
04, 1919 (a)
Aug 07, 1919 (a)
|
-4.79
-4.71
|
131
134
|
231
267
|
100
133
|
|
Aug
08, 2011
|
-5.55
|
136
|
255
|
118
|
Aug
12, 1932
|
-8.40
|
140
|
274
|
134
|
|
Aug
31, 1998
|
-6.63
|
158
|
265
|
107
|
|
Sep
03, 1946
|
-5.56
|
161
|
252
|
091
|
|
Sep
11, 1986
|
-4.61
|
169
|
264
|
095
|
|
Sep
11, 2001 (b)
|
na
|
169
|
090
|
281
|
|
|
|
|
|
|
|
Sep
24, 1931
|
-7.07
|
181
|
338
|
157
|
|
Sep
26, 1955
|
-6.53
|
183
|
301
|
118
|
|
Oct
13, 1989
|
-6.91
|
200
|
004
|
164
|
|
Oct
15, 2008
|
-7.87
|
203
|
035
|
192
|
|
Oct
18, 1937
|
-7.65
|
205
|
009
|
164
|
|
|
|
|
|
|
|
Oct
19, 1987
|
-22.61
|
206
|
170
|
324
|
|
Oct
27, 1997
|
-7.18
|
214
|
174
|
320
|
|
Oct
28. 1929
|
-12.83
|
215
|
168
|
313
|
|
The
annual one day fall is taken as the biggest % DJIA one day fall in
the year commencing March 1.
(a) In 1919, two almost equal % declines were recorded and thus
two AOD falls have been presented.
(b) The New York stock
market did not open on the day of the terrorist attack and was
closed for four trading days. Even so, September 11 was used as
the day of maximum panic during 2011 for obvious reasons.
Source:
McMinn, 2000.
|
|