Trading by the Light of the Moon

Trading by the Light of the Moon
Vincent Troncone

For millennia, the moon has been thought to have considerable
effect on life here on planet earth, especially as it relates to
humans. Now, to some, that may seem like some kind esoteric idea
or mysticism, but it may be more scientific than you think.

When you consider that our bodies are largely made up of water,
this idea isn’t so far-fetched. We can see the lunar effects
on the tides here on earth and how powerful they are, but, in my
opinion, that is not the only area affected.

“So,” you may ask, “Why is a guy who invests in the market
writing an article about the moon?” Good question!

In my research, I have found what appears to be a direct
correlation between the primary phases of the moon and the
points at which any given, freely-traded market will reverse
direction. To say the least, this phenomenon is quite amazing
and has nothing to do with astrology and everything to do with
astronomy and physics.

The cycle of the moon from new moon to new moon is called the
synodic cycle. It is 29.5 days in length.

This cycle, although invisible, appears to have quite an effect
on the markets. I would venture to say: Not only is the moon
involved but other planetary bodies in our solar system as well.

Think of our solar system as nothing more than a big clock.
Everything we do here on earth is based on cycles. Our method of
keeping time and our calendar are all based on the relationship
of the sun, earth and moon and how long it takes for these
bodies to move a certain distance over time.

Even our seasons change as a result of these relationships.

I am not a scientist or claiming to be one, so let’s move onto
the empirical evidence.

Personal Observation

It has been my personal observation that specific phases of the
moon appear to have a direct effect on when any given,
freely-traded market will reverse direction on a daily chart. A
reversal, as defined for the purposes of this article, is when
the current daily price bar close is below the previous day
price bar close when the market is trending up. Or, a reversal
is when the market is trending down and the current daily price
bar close is above the previous day price bar close.

The lunar phases I’m talking about here are the new moon,
first quarter, full moon and last quarter. Each time I tested
this concept, it worked equally well for each market tested
within the defined tolerances I have also outlined here.

Another thing to consider is that market price moves in a circle
rather than up and down.

Consider this: From new moon to new moon is 360 degrees
(Figuratively Speaking you started on a New Moon and ended on a
New Moon so you have come Full Circle).

This would mean that each quarter phase figurative equivalent is
90 degrees. 90 degrees multiplied by 4 gives us 360 degrees.
That is a cycle too and is not a cycle in essence a circle?

The Basic Premise

Take the ephemeres (lunar dates). Look at each date listed in
the market of your choice, and you will notice pivots occur on
or around that day. The pivot day, for purposes of this article,
is not the reversal day but the day just before it (also known
as the set-up day), which signals the change about to come.

I have noticed that pivots generally occur within a tolerance
range of -2, -1, 0, +1 or +2 trading days of the specific moon
phase date, zero being the actual phase date. A hypothetical
example of this would be if the next ephemeral date were August
9, 2006. The pivot day could be anywhere from the 7th to the
11th, the 9th being the zero day or actual lunar date.

A smaller percentage of the time, pivots occur within a
tolerance of + or -3 trading days, so please keep this in mind.
I have also noticed that a pivot day can occur on either side of
a phase date in the same week. In other words, a pivot day can
occur before and / or after a phase date in any given week,
creating 2 pivot days in the same week.

Please take a look at the Daily Corn Chart for evidence of this
phenomenon at the link below.

http://www.pennies-from-heaven.us/cmoon.htm

Note that holidays and weekends are not considered trading days
in most markets. So, when a phase date occurs on Saturday, we
use Friday’s date. When a phase date occurs on Sunday, we use
Monday’s date (except when trading Forex because Sunday is an
actual trading day in the Forex market).

Also, because Forex is a 24-hour market, make sure you know what
time the day session officially starts in your time zone to
interpret the phase dates properly.

When a phase date occurs on a holiday, we use the next trading
day as a point of reference. Important Note: Always use GMT for
phase dates.

Is it possible for a pivot to occur outside these tolerance
ranges? Yes. Nothing is 100 percent accurate that I know of.

Think of any market as a river. A river has life, therefore, a
rhythm. Once you lock onto the rhythm, it is possible to be on
the right side of a trade more often than not.

In today’s markets, traders always seem to be focused on the
exact moment in time that a market will turn around, and they
also want to know the exact price at which that turn-around will
occur. For this reason, the river analogy will be useful.

If I want to go up river, all I have to do is jump into the
river when the tide is going up. That doesn’t require jumping
in at the exact moment of change. Of course, if you are able to
do that, all the better for you.

It is possible to discover the moment a trend will change and at
what price within small tolerance. If you are willing to go
beyond what you think you know and apply yourself, all things
are possible.

Reprinted with permission from Vincent Troncone.
http://www.pennies-from-heaven.us.

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