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"No one ever
went broke by underestimating the intelligence of the American
public." The continuing crisis in
the US financial sector led to yet another major panic in the Dow Jones
Industrial Average (DJIA) with the -4.40% collapse on September 15,
2008. This was due to the bankruptcy of Lehman Brothers and the sale of
Merrill Lynch to Bank of America. Deals for these moves were arranged on
Sunday September 14, which had been called Black Sunday by several market
commentators at the time (ref). However, this only proved to be a forerunner of
even more
severe one day panics on: Lunar
Phase & AOD Falls
The
most amazing correlate in Moon Sun finance arises between lunar phase and
the timing of major US panics. The accompanying diagram shows
the relationship between lunar phase and the annual one day (AOD) falls
over 4.50% for the Dow Jones Industrial Average (DJIA) during the 1915
to 1999 era. Lunar phase nearly always occurred in two quarter segments,
between first quarter & full Moon and third quarter & new Moon,
the only exception being in 1930. This diagram was first presented by
yours truly in 2000 and published by the Australian Technical Analysts
Association. (NB: The annual one day fall is the biggest one day % decline
in the DJIA in the year commencing March 1.)
Source: McMinn, David. Lunar Phase &
US Crashes.
Of the total 31 major DJIA AOD falls since 1910, only the June 1930 and October 2008 events did not have lunar phase in the two quarter segments noted in the diagram. The finding was extremely significant (p < 10-6) and would be like tossing a coin 31 times and getting 29 heads. This and many other correlates support a very strong Moon Sun effect in market activity, thereby creating a major problem. According to modern economic theory, financial markets are both efficient and random in their movements and such Moon Sun correlates could never arise. One of the theories has to be wrong traditional economics or the Moon Sun hypothesis. Curiously, the lunar phase effect did not appear in DJIA trends pre 1910 nor in AOD falls < -4.25%. It also did not show up in FT30/FT100 daily data since 1935. Lunar
phase for all
September - October DJIA AOD falls (> -3.50%) since 1910 has fallen
between: 2008 was also anomalous as it occurred in an even ended year, where as all DJIA October AOD falls (=> -3.60%) and October panics listed by Kindleberger (Appendix B, 1996) happened in odd ended years. The latter occurred in an 18/56 year cycle - odd ended years (see Appendix 2). There are two 18/56 year grids - one for odd ended numbers and another for even ended numbers. October 9, 2007 Record High If you list 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. When the peaks occur at a certain time of year, the Moon & Sun will be in similar ecliptical segments, giving rise to similar lunar phases (see Table 2). The only anomalous period was between September 25 and December 15, when no overall pattern could be determined. For the remainder of the year, the connection between lunar phase and seasonal stock market highs held up very well. Remarkably, there were 16 highs from January 15 to October 15, all of which had lunar phase between 230 and 015 Ao, a range of 145o (highly significant p < 10-5).
If two or more DJIA highs occur near the same date, then remarkable parallels can arise on how the ensuing market unfolds. The best example was 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 massive October panics. The violent market decline lasted only a few months with the DJIA hitting bottom on November 13, 1929 and December 4, 1987. The interval of 717.0 lunar months was evident between the 1929 - 1987 spring lows, the record highs, the autumn highs, the panics, the recoveries and major post crash one day falls (Moon Sun Parallels - The Great Panics of 1929 and 1987). Other examples may be given. The July 16, 1990 and July 17, 1998 peaks happened just prior to the third quarter Moon and had an interval of 99 synodic months (one Octaeteris cycle) were followed by AOD falls in August. Both markets declined by around 20% and the financial distress was brief, with DJIA lows on October 11, 1990 and August 31, 1998. The highs in 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 registered on September 25, 1911 and November 19, 1917. The market highs of September 4, 1895 and September 5, 1899 were followed by AOD falls on December 20 and December 18 respectively. Each AOD fall was followed by an AOD rise one or two days later. The 2007 - 2008
market situation has historical parallels. The record DJIA high occurred
on October 9, 2007, which was close to September 30, 1912. Each were
followed by a panic at around January 20 of the following year. The
ensuing bear markets for each of these events was long and catastrophic. The US
market was closed after a major panic on July 30, 1914, due to the outbreak of WW I, while 2008
witnessed Black October and a near collapse of the world banking system.
One
of the most consistent features of late September - October panics was for
them to occur in years ended in odd numbers (see Appendix 1),
especially in 7 and 9 ended years. The October 15, 2008 DJIA AOD fall
contradicted this rule for whatever reason. The 9/56 Year Cycle. McMinn (2007) established that financial crises tended to
occur in the around the same month every 56, 112 and 168 years. The seasonality associated with the 56 year sequences
was well documented and has held up reasonably well over
hundreds of years. For Sequence 23, the crises
occurred late in the year, as did crises in Sequence 24. In Sequence 25,
crises happened early in the year, as well as in August - October in
1897.
In
Summary Isnt
American cowboy capitalism wonderful? The whole system is seriously corrupt and
fails the most fundamental test in economics - that is efficiency. © Copyright 2008. David McMinn. All rights reserved.
Appendix 1 The following 9/56 year grid contained many of the major panics and crises in US economic history - 1792, 1819, 1837, 1857, 1873, 1884, 1893, 1920, 1929, 1931, 1933, 1987, 1998 and 2007.
Table A gives the 18/56 year cycle (Odd numbers) which is a variation of the 9/56 year cycle and includes only years ended in odd numbers. Denoted in red are the years containing major September 18 - October 31 panics as classified by Kindleberger (Appendix B, 1996) (1799, 1847, 1857, 1907, 1929, 1931, as well as all DJIA AOD falls (> -3.6%) since 1896 (1897, 1903, 1927, 1929, 1931, 1937, 1955, 1987, 1989 & 1997). All dates happened in odd ended numbers and therefore took place within the 18/56 year cycle. The first exception arose with the DJIA AOD fall on October 15, 2008.
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