Lunar eclipse means August crash for stock markets say astrologers
Posted on 13 July 2010 with 1 comment from readers
Better luck this year perhaps for astrologers. Last year they also predicted a stock market crash in August. And actually it happened but only in China, albeit an increasingly significant global bourse.
Will they get it right this time? Apparently it is all about the lunar eclipse. ArabianMoney is not into astrology but mass psychology. Can it be that the very prediction causes the outcome? Auto suggestion on a wide scale might well be effective, or maybe it is all in the stars.
Fundamentals
We would also highlight some more down-to-earth factors that are not written in the stars but probably as important. Global stock markets have been trending lower since mid-May after a long rally from the depths of the financial crisis in March 2009.
Markets seem to have gotten well ahead of economic reality. Nothing wrong with that providing the predictive powers of the market are correctly anticipating a future reality. Get it wrong and like the astrologers on occasions the market is left with egg on its face.
Forecasting the future is a hazardous business. Last week we highlighted how the IMF saw two years of economic expansion ahead in July 2008. Indeed, the world’s central bank only admitted its massive error at the end of that year when a child could have read the economic runes.
Premature warning?
August sounds a bit premature for a resumption of the stock correction. October is usually the month when the proverbial hits the fan. That said the unpredictable can do some unpredictable things.
Well, if stocks crash in August remember where you read it first, or kindly blame the astrologers for scaremongering if nothing happens.
In any event the ArabianMoney red flag remains aloft and cash, gold and short ETFs are our preferred investments. Kindly consult our monthly newsletter for advice about how to put this analysis into action.
1 Comment posted by readers:
Unless some big war starts and disrupts the oil flow, the USA stock market will be up at least 10% between now and the end of this year. The investor class is in less of a fear mode, now that they see that Europe won’t collapse. As long as the big companies are making money, they don’t care about US unemployment, unless it begins to threaten US social stability, which won’t happen with food stamps, welfare, and earned income tax credits for the unemployed and underemployed.
The new stock market is based mostly on a herd instinct, so the rally will last until a pride of lions appear. It is Las Vegas East. With programmed electronic computed trading, the era of long term value investing is over, for all but a few stocks. Watch how fast the DOW gets back over where it was before the European debt panic. Tomorrow it will turn positive for the year. My year end DOW target is 11,900.
I am assuming that the Europeans are smart enough to bail out their bad banks, which I think they are, after witnessing what happened with Lehman.