DJ
TECHNICALLY SPEAKING:
More Market Upside Is In The Stars
By
Shaheen Pasha Of DOW JONES NEWSWIRES
NEW
YORK (Dow Jones)--Some investors follow technical charts and fundamental
analysis to determine the trajectory of the equities markets. Arch
Crawford, editor and publisher of Crawford Perspectives, looks to
the heavens for guidance.
Crawford,
a longtime technical guru on Wall Street relies on zodiac charts
and lunar eclipses, in addition to the typical technical indicators,
to time major moves in the markets.
Crawford
is not the only successful "financial astrologer" - Bill Meridian,
a U.S. fund manager based in Abu Dhabi, who invests money for wealthy
Arab investors, comes to mind.
But
if Crawford's record is any indication - he accurately predicted
the October 1987 market crash as well as the post-Sept, 11 selloff
- then investors might want to take to heart his prediction that
the recent rally in the equities markets has more room to go. But
expect some bumps along the way.
"We
may get some pullback in the near term and I would advise traders
to short for the next day or two for a minor corrective phase of
one to two weeks," he said. "But the market is much stronger than
people expect and all the indications are better for several weeks."
On
a technical basis, Crawford said the major indexes have climbed
above their 200-day moving averages, with the Dow Jones Industrial
Average forming an ascending triangle pattern. Crawford said the
pattern, which consists of higher lows, shows bullish signs for
an upward breakout. Technical strategists see an upside breakout
of a triangle pattern as an indicator that the index will continue
to climb higher.
Crawford
added that the market's breadth, as determined by the New York Stock
Exchange advance-decline line, is also showing strength. On Monday,
advancing issues outnumbered declining issues 1,850 to 1,398 on
the NYSE.
But
the heavens may portend some choppiness in the weeks ahead, particularly
with the market facing a lunar eclipse on May 15 and a solar eclipse
on May 30.
"An
eclipse series tears up whatever pattern is in place in the market
and brings in uncertainty," Crawford explained.
According
to the stars, the lunar eclipse will occur at the same time as Mars
conjoins with Neptune. For the non-astrologer, that means the markets
could be faced with earthly mishaps such as accidents at sea, an
attack on currencies, earthquakes or tsunamis. Interestingly, the
lunar eclipse will take place the night before options expirations,
which should bring in an excess of volatility during the options-driven
trading session on May 16, Crawford warned.
Crawford
said investors may want to wait until after the May 30 solar eclipse
before going "200% long on the market using full margin."
He
said jitters surrounding an eclipse often create better technical
market indicators that would benefit investors.
It
may sound kooky to the skeptical investor, but it's stellar formations
such as these that have helped Crawford make some prescient calls
on major market events. A huge planetary alignment in May 2000 of
Saturn opposite Pluto warned Crawford that there would be a decline
in economic activity, resulting in an extended bear market. In 1987,
Crawford said a rare planetary cluster of the sun, moon, Mercury,
Venus and Mars predicted that the markets were set to crash.
As
for natural occurrences, Crawford accurately predicted the onset
of Severe Acute Respiratory Syndrome in his December newsletter.
"Mercury
squares Neptune and Mars as Mars conjoins Neptune Station (resulting
in) news of unusual airborne infections of unknown origin," Crawford
wrote in his 2003 outlook.
So
with some choppiness expected in May, what areas may investors want
to dip into?
Commodities
are the way to go in the near term, Crawford advised. Gold and oil
plays benefit from the cycles of Jupiter and Neptune while the configuration
proves to be weak for the equities markets. Crawford predicted that
gold and oil stocks would jump on May 1, as Jupiter and Neptune
began to oppose each other. Both the price of gold and crude oil
climbed on that day, making the sectors among the strongest performers
of the session.
Crawford
expects gold and oil stocks to surge around May 26 and May 27 as
the Mercury/Venus conjunction of planets squares against Jupiter,
which is opposing Neptune. Oil and gold will likely top out On June
1 or June 2 as the Jupiter ends its opposition to Neptune and will
retreat over the next two or three months with gold hitting a seasonal
low in August, he said.
While
many market participants may outwardly scoff at Crawford's unorthodox
methods of market prediction, Crawford is certainly not worried.
"There
are a lot of Wall Street professionals who don't care what you do
as long as you've got the bottom line," Crawford said. "My newsletter
subscription exploded this past year because when everyone started
losing money, they started finding me. I'd tell the critics to stick
that in their pipe and smoke it."
(Shaheen
Pasha covers the stock market and writes regularly about technical
factors that either do, or could, affect individual stocks, sectors
or the entire market.)
-By
Shaheen Pasha, Dow Jones Newswires; 201-938-2312; <mailto:shaheen.pasha@dowjones.com>
shaheen.pasha@dowjones.com
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