Bradley Bottom?by hattery on June 15th, 2008 at 4:09 pm |
I once read a quote supposedly by JP Morgan that said “millionaires don’t use astrology, billionaires do”. I’ve heard that it’s been revealed (although kept quiet and mostly denied) that many of the former presidents have had numerous astrologers. And in ancient times we know they had a lot more “prophets” and “oracles” using astrology to make bold predictions. Then again, that stuff could just be something that people repeat over and over again until people believe it. I really am uncertain of how accurate it can really be, but planets do have a certain order, they do go through certain patterns, and perhaps these patterns do correlate with patterns of life, or perhaps planets are good reference points of patterns that exist as calander time is an opinion and limited, while real time is relative to what’s moving around it, and changing. Perhaps this is all bogus and it’s more of the “Placebo effect” and people want to believe it works, but by convincing themselves that it gives them an edge, their beliefs changes their behavior to reflect the belief that it is beneficial. Or perhaps it’s somehow legit. I have seen 2 indirect scientific studies that when put together logically seem to support the idea that planets can effect our thoughts and emotions, but to stay focused, I’ll talk about that in another post.
This concept certainly is bizzare and interesting. Since Alpha brought to our attention The Delta Phenomenon fairly recently, I’ve been doing some thinking and some reading, although I have read some things about it in the past as well, so this idea is not completely foreign to me.
From http://www.amanita.at/e/faq/e-bradley.htm
The Bradley siderograph was developed in the 40ies by Donald Bradley to forecast the stock markets (link book). Bradley assigned numerical values to certain planetary constellations for every day, and the sum is the siderograph. It was originally intended to predict the stock markets. The noted technical analyst William Eng singled out the Bradley model as the only ‘excellent’ Timing Indicator in his book, “Technical Analysis of Stocks, Options, and Futures” (source: Astrikos).
It is crucial to understand what the siderograph is about since almost all traders (and even and even financial astrologers!) misunderstand it. Over the decades it has been observed that the siderograph can NOT (!!!) reliably predict the direction but only turning points in the financial markets (stocks, bonds, bonds, commodities) within a time window of +/- 4 calendar days (in a few cases up to +/- 7 days). Inversions (i.e. a high instead of a low and vice versa) are quite common. Also, it is not a timing tool for short-term trends but rather for intermediate-term to longer-term trends because the turning window is rather wide.
I have read that in the past the Bradley has been nearly 70% accurate within the trading window of +/- 4 TRADING days. Also, it usually implies a sector rotation, and some sectors will hit a relative “top” or “bottom” and new leaders will emerge.
Unfortunately, often these dates are close together, and by the time you actually can figure out the direction, it’s entering another bradley date. Fortunately not all bradley dates are created equal. There are some dates that are very significant. In 2008 these dates are 6/7 and 12/14.
I prefer to consider it a “Bradley date range” then a specific date. That puts the 6/7 date range anywhere from 6/3 to 6/12. And look at the calander… we just went through it. The next Bradley date is not until 9/9 and 9/20 after that.
So was 6/5 a “top” as seen in the Nasdaq? Or was 6/12 the bottom? I was definately expecting it to be a top, but personally say it’s too early to tell.
As you can see, It can be very difficult to game this until after the fact. If you thought we were going to breakout of the nasdaq significantly and rally into the top, and tried to get a quick trade you were blindsided. If you then said, okay, it topped early and tried to sell, the last two days you would have gotten wacked… So It’s not really much of a predictor to make trades, as it is a indicator that works best in hindsight. You’re probably better off trying not to make short term trades to rally to the top or bottom, and to try to flip it around at the top/bottom. You’re better off selling/shorting into rallies, and buying/covering into declines. You want to take profits earlier than usual, perhaps be more neutral than usual as well, until the bradley range has past and you have a significant inclination that you have already made the top/bottom.
Of course if you are rallying up significantly into the bradley turn date range and through it until the 2nd to last date in the range, and you confirm and fall from that point, and continue to fall, I would say you have a pretty clear top. In the opposite, a decline into the date range, continuing till the last day and rallying from that point on, I think you can say it’s resonable to take most of your short profits, and add to some long positions.
In this situation, I’m not willing to say it’s a bottom, but if I had to guess, I would say bottom. Not that I’m one to agree with Cramer, but according to Cramer the S+P oscilator was oversold and we are getting set to rally. The oscillator has been fairly accurate. The play might be to buy the strongest stocks in the weakest sectors, if you think the sector is going to bounce, rathe than POS beaten down stocks like Cramer suggests. The only time beaten down stocks could be bought is if there’s a lot of shorts, a high put/call ratio, and extreme volume on a third leg down in an undervalued stock. For prudent investors, just to be patient and wait for a new leader to emerge, or at least show significant strength.
A good resource to use when looking for sector strength is http://www2.barchart.com/sectors.asp?base=industry
Now to start with take a look at some of the poor performing sectors and look for a bounce. If the sector is so bad that there is no stock that is even up, I’d stay away from it. Be intelligent about it. You can’t expect airliners to recover and rally significantly unless the price of oil drops, and even then, most of them are still in trouble. You could also take the top 100 stocks and put them into a watch list, and screener and then search for those that have shown a lot of 1wk or 2week weakness last week, but maybe 2 day strength. Perhaps you look at shortsqueeze.com and you find the stocks with huge short interest with few days to cover.
There’s lots of ideas, but I think at this point, you should at least have some long ideas ready in a variety of sectors. It’s why I prepared a list of IBD 200 stocks that have strong upward breakouts (high price targets), that have upwards earning revisions (Zacks), and that’s why I showed you which stocks were remaining at each step/screen. If fertilizers and oil+Gas remain strong, and the market shows strength leading into the week, I say the 3 names MOS, ARD, and WTI are excellent considerations. If ags manage to breakdown, if the dollar shows strength and oil+gas are down, you might want to go look at the wider selection of names, particularly those in sectors thatare just begining to emerge.
Of course, if the market breaks down below it’s recent 6/11 lows, the plan is to stick with shorting the garbage, most likely the financials and regional banks. Fly has put together an excellent list. In any evnt, I still advise having both shorts and longs, and you should look towards sectors potentially breaking down, and/or showing a big declines (financials, aerospace) for shorts, as well as the best sectors for longs (fertilizer, oil+gas). We might have new losers and new leaders emerge in any event, so keep an eye out.
From this point on, I would watch the sector losers and leaders from 6/12 and onward. If markets fall below the 6/12 point, then the top occured early, and it doesn’t look very much like a top, other than maybe the nasdaq.
Is this Astrology just bullshit? Perhaps, but I consider it generally good advise in oversold conditions with bear market and crappy market outlook to let things sort themselves out, so it couldn’t hurt.
I would still consider this next week an excellent indication on whether or not you should be primarily a dip buyer or a rally seller for the next 3 months. Bull market or bear market, IBC should be an excellent place to get some great picks
the dow and spx were declining into that bradley turn date. some of last yrs turn date were downright spooky. also, in march, the 3.5 yr cycle bottom.
June 15th, 2008 at 8:30 pmhttp://www.astroecon.com/
yeah, I’m not only good, I’m the best in the business.
June 15th, 2008 at 8:53 pmAstroman, your site seems to suck because everything I clicked on wanted a username and password. How can we find out you are the best in the business BEFORE we pay you?
June 15th, 2008 at 9:51 pmHeres a partial sample of the week ahead.
June 16 Monday
Moon trine Uranus and sextile to Jupiter.
Sun trine Neptune.
Venus Pluto opposition beginning to kick in .. merger activity seems a valid way to interpret this. and with merger emotions become a desire to bid things up in anticipation of more. This is I got to have it energy. Seems something is going on at Lehman’s and it could be bad.. OR could be another bear sterns type deal being made.
June 17 Tuesday
Venus Pluto opposition is inside one degree of exact
I would look at this as a takeover fever of some sort and overall would be considered a bit.. er maybe a LOT bullish. This is a major greed aspect.
June18 Wednesday
Moon conjunct Pluto and in and opposition to Venus AND the Sun as well..
A big astro day on a full moon with Sun and Venus opposed to a moon a Pluto conjunction. MARS WILL BE IN ORB OF OPPOSED TO NEPTUNE also which is an aspect of covert activity or dirty tricks.
Mars quincunx Uranus. Train wreck or nervous wreck? Maybe this depends on how how bullish the first few days of the week have been. Seems a time of a squeeze.. We will see squeeze WHO is a good question. In a normal time period the astro would be bullish.
June19 Thursday
Sun opposed to Pluto.
Mars opposed to Neptune in a day or two.
The mars Neptune kicking in is kind of like a day when you get the first signs of “coming down with something”. Cannot say it will be a down day because it would stand to reason the pressure will be on to keep prices at optimum levels with options expiring.
June20 Friday
OPTION EXPIRATION FRIDAY.
A moon Jupiter conjunction just before the open.
Mercury goes direct this day. Glad of that.. maybe the Spam will stop.
Sun Pluto opposition exact also. all the ingredients are in place for an EXTREME of some sort and considering the pattern maybe having hit retrace targets early in the week it would be wise to consider the bulls have squeezed bears BIG leaving an air pocked below. At least that is how I intend to play it until proven otherwise.. Possible day to get some puts on if there is a sense of massive overshoot in optimism such as a high above or a challenge to the June 5th highs. Heads up on Gold and the 820 support area also here. Seems to me like maybe a LOT of black gold has been bought with the yellow metal recently when the two diverged and if so we could see the final correction low in gold and the blow off top in oil VERY near term.
CONCLUSIONS
I still see a rally potential into July but frankly the upside targets are now lower than SPX 1500 and we are flirting with an all out crash now albeit that would be early in terms of timing .. In a crash scenario where it happens sooner than expected the highs up at 1425 have potential of being actual relief highs of a major wave TWO and what we just had recently was a wave ONE of THREE down and the wave TWO OF THREE HIGHS into option Friday 6/20 will be the tipping point. That scenario pushes the pattern of the 3 of 3 down crash wave in front of August into nearer term.
As I have stated I have to be continuing the watch for a July high at a better relief level than we hit so far BUT I will not argue with the market over that.
I try to be as optimistic as possible as far as seeing what is coming by considering a less than maxed out calamity ahead as the higher odds.. This is not easy. Seems at times that things could not be playing out worse even if it was purposeful. So above all we must be on our toes and not let things catch us with our pants down.
I am loathe to get VERY VERY bearish just yet simply because it would be out of seasonal patterns AND the astro is quite clear about August having crash potential.
The week ahead seems likely to get a rally attempt going. The merger astro seems the likely stimulant. Venus Pluto stress creates a LOT of desire and desire is expressed by greed in markets. GOT TO HAVE AT ANY PRICE type thinking. IF this gets a big head of steam early in the week a top would be likely Wednesday and maybe a hanging up there into Thursday or Friday in the AM. As usual taking advantage of an overshoot would be hard considering having to carry a short position or puts over a weekend.
June 15th, 2008 at 10:36 pmThanks Astroman.
June 15th, 2008 at 10:39 pmTo summarize:
Markets will go up, unless they go down.
LOL. Can I get my palm read too?
June 15th, 2008 at 11:40 pmAstroman, thanks for the weekly sample, the original comment seemed very spammy, but you made up for it. Do you have any actual specific stock reccomendations? Often times I find this stuff like riddles, might mean something but it’s hard to figure out an actual way to trade it. I often here “extreme” moves but no direction. The only real way to trade it is with options, and more complex things like strangles, buterflys and iron condors. From what I can deduce from your comments, a straddle or strangle (both puts and calls) on LEH and maybe XLF seems practical sometime this week. Sounds like a major move one way or another, right? Couldn’t the “I got to have it” be a good thing for LEH, like some steller earnings? Maybe some sort of takeover rumors? Then later on in the week, could the “dirty tricks” be accounting fraud? Or perhaps a bear raid on LEH the way of Bear Sterns? Definately seems like something significant going on. I was an idiot and sold my calls protecting my put pre earnings on LEH. I bought it as protection, not as a trade, but between the big move and the IV, I couldn’t help myself. Now I think I’ll think about adding a call when I get a chance, but it sounds like how I usually play a potential catalyst when I don’t know if it will go through or fail, a straddle or strangle. Should be able to get a cheap June speculative straddle, especially post earnings after the IV crush. I would hate to bet heavily on one side only to get crushed, although I feel LEH is going to join Bear Sterns. The continual loss of market capital has got to be crushing them, among other things. Combined with the potential Bradley Bottom, it seems to fit the theme. LEH takes the hit for the market to get a chance to rally.
I have been reading MMAcycles.com’s weekly preview. I think someone awhile back had a “resources” list and it was on there.
According to the disclaimer, the free weekly preview is not intended to be used for trading, but to educate you on what effect certain “geocosmic signals” has on human activity. It says that the subscription service does intend on predicting the future movements of various financial markets.
Has anyone subscribed before?
June 16th, 2008 at 12:26 amI’m definately hesitant to subscribe to something without having a free trial, especially with something this esoteric, but if someone has, I would be very interested to hear what you have to say about it, or perhaps if someone has subscribed to some other astrological service I would like to know what they thought.
I’ve read from MMAcycles that Pluto rules debt markets, so it seems banking related throughout the week. The “coming down with something, could that be oil? Neptune rules oil right?
This makes me like Cajuns watchlist of a put on DVN even better.
This will be fun to watch, I’ll definately have to keep an eye out on your sample to see how it plays out
I don’t do stock recomendations. I read heavenly body alignments/relationships to determine their effect on the humans psyche. Astrological influence is one piece of the financial market puzzle. Used in congruence with fundamentals, technicals, whatever your knowledge strength, its a powerful addition because it is out of mainstream acceptance and so provides a powefrul edge, if used correctly, hence the reference by JP Morgan and billionaires.
Regarding Neptune and oil:
BECAUSE NEPTUNE IS INVOLVED I LOOK AT OIL AS A FOCUS for this very special astro energy. This may be the astro associated with a speculative peak … a ramp up to 150 a BBL.. OR some political interference in oil trading that in the long run could accelerate the shortages. Maybe we have a hint about RATIONING based on some political changes. I lived through the odd / even rationing in the 70s. I waited in gasoline lines for hours. Saturn was in Virgo from July 1978 till August 1980 as it is NOW being one full 29 year cycle later until October 2009 . The problems then INCLUDING the Iran hostage crisis did not conclude until Saturn left Virgo. Hummm.. If we hit 150 on a massive short squeeze in oil and then laboriously drop to 100 most people will think that is great right? Until they consider the reason.. It will be either a collapse in demand OR an attack on speculators who may be short oil already at lower than 100 and thus over leveraged wont be able to deliver on the oil they have sold forward when it hits 150. Enron had a problem like this also with their energy trading. In today’s casino style derivative markets there is obviously more oil being sold than actually exists. I am NOT advocating selling oil futures on this because doing so is very dangerous when a squeeze can push prices way out of line with reality.
June 16th, 2008 at 5:33 amBefore we all jump out of our sealed glass boxes, here’s a guy who says Cramer’s S&P Oscillator Oversold Indicator doesn’t mean very much:
http://stock-index-options-alert.blogspot.com/
and this guy doesn’t understand what Cramer’s getting so excited about:
http://stockchartist.blogspot.com/2008/06/again-s-oscillator.html
June 16th, 2008 at 12:28 pmHey “donk”
June 16th, 2008 at 8:21 pm“markets go up unless they go down” is one thing.
“Markets will go up significantly for the next 3 months or down significantly for the next 3 months” is another, and much more useful.
Why does iBankCoin have a post asking if Astrology is bullshit?
June 16th, 2008 at 8:48 pm^good question.
June 16th, 2008 at 9:16 pmive been looking at this guys stuff for a while now
August 9th, 2008 at 3:17 pmand he has been on top of the mkt for the most part
worth looking at some of his work
http://www.tradersaffiliates.com/WEEKLY%20UPDATE.htm