LUNAR PHASE & DJIA HIGHS

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David McMinn

If you list Dow Jones Industrial Average (DJIA) market highs chronologically, they will not correlate with lunar phase. However, if you list the highs by month – day (year ignored) excellent relationships can be established. If the peaks at the beginning of a bear market occur around the same month, the Moon & Sun will be in similar ecliptical segments, giving rise to similar lunar phases (see Table 1). The only anomalous period was between September 25 and December 15, when no overall pattern could be determined. Otherwise, the connection between lunar phase and seasonal stock market highs held up very well.

Background. The annual one day (AOD) fall is the biggest one day % fall in the Dow Jones Industrial Average (DJIA) during the year beginning March 1. The dates for the DJIA highs were sourced from fiendbear.com for the period 1896 to 1996, with the 1998, 2000 and 2007 being inserted by the author. The degree on the ecliptical circle has been abbreviated to E^o, while the angular degree between the Moon and Sun (lunar phase) has been given as A^o.

DJIA Highs

If DJIA highs occur near the same date, then close parallels can arise on how the ensuing market unfolds. The best example occurred for the September 3, 1929 and August 25, 1987 peaks, both of which took place just after the new Moon and both were followed 55 days later by spectacular October panics. The violent market decline lasted only a few months, with the DJIA hitting bottom on November 13, 1929 and December 4, 1987. For 1929/1987, there was an interval of 717.0 lunar months between the spring lows, the record highs, the autumn highs, the panics, the recoveries and major post crash one day falls (Carolan, 1998, David McMinn).

Other examples may be given. The July 16, 1990 and July 17, 1998 DJIA peaks happened just prior to the 3^rd quarter Moon and were followed by AOD falls in August. Both markets declined by around  –20% and the financial distress was brief with lows on October 11, 1990 and August 31, 1998.

The DJIA highs on November 19, 1909 and November 21, 1916 were followed by AOD falls a few months later on February 7, 1910 and February 1, 1917 respectively. The market slump extended well after the peaks, with the lows being reached on September 25, 1911 and November 19, 1917.

The market highs on September 4, 1895 and September 5, 1899 were both followed by AOD falls on December 20, 1895 and December 18, 1899 respectively. Each panic experienced a major AOD rise a day or two after the fall. This was the precursor to a long, painful market decline.

The 2007 - 2008 market situation had an historical parallel. The record DJIA high occurred on October 9, 2007, which was close to the September 30, 1912 high. These were followed by a major crash 104 to 112 days later and a protracted market decline. (NB: January 21, 2008 witnessed major worldwide stock market panics, although the US market was closed on the day due to Martin Luther King Jr holiday. Even so it was taken as the 2007 AOD fall for the DJIA.)

We are currently experiencing a rather dramatic rally in 2009 - when it will finally top remains to be seen. Timing the peak will give a good indicator of the outlook for a bear market in 2010.

Summarised from Market Timing Moon Sun Research 2006 – 2009. David McMinn. Privately published. 2009.

References

Carolan, Christopher.  Autumn Panics. The Market Technician. Journal of the Society of Technical Analysts. p 12. July 1998.
fiendbear.com. DJIA Bear Markets of the Past 100 Years.
www.fiendbear.com/bearenc1.htm
McMinn, David. Market Timing By The Moon & The Sun. Twin Palms Publishing. 2006.

© 2008. David McMinn. All rights reserved.