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Cycles vs. The FED

and the war continues. Cycles push the market one way, via seasonal downward pressures, and the FED pushes markets the other, via the MoneyPump. Who wins? Not traders it seems.

091513pump

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Stock prices have closed the gap with the MoneyPump in the past few weeks. We can see how the pump has gone relatively quiet in recent weeks. I'm now lagging the pump by seven days on the chart, as that seems the best fit between renewed S&P rallies and pump surges as shown with the arrows.

091513anal2

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091513anal1

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091513anal3

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I've added the 1929 comparison chart to this analog set. It's just amazing how similar the patterns are in years where prices topped on or near a late summer new moon. We are now at the equivalent point to the Yom Kippur highs of both 1987 and 1929 (green arrows).  Do we crash now?

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That Summer Analog

We've written before about the tendency for markets to peak on summer new moons, and for markets to have autumn crashes. Both phenomenons occurred in 1929 and 1987. But 2012 saw a summer, new moon peak without a corresponding crash. Our observation today is that these years with summer, new moon peaks seem to follow similar paths following those peaks, with twin lows near the subsequent full and new moons. Here's a comparison of this year with last.

090813log1

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