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.The World At Large
Week beginning December 21, 2008
by Randall Ashbourne

Astrological conditions affecting stock markets combined with technical analysis

Click here for a printable version of Week beginning December 21 report including all QHT harmonic planetarty price line charts and technical charts in PDF format.

World stock indices remain trapped in a narrow sideways range, with most of them unable to make any meaningful breakout higher.

As we head into the final two weeks of one of the worst years in stock market history, most traders will by now have given up any hope of a Santa Claus rally.

In fact, most indices appear to have developed a rising wedge pattern which is potentially rather Bearish.

Beneath the surface, however, money-flow indicators I do not use as a tool in our normal charts each week, continue to suggest the picture is not quite as bleak as the chart patterns suggest.

Astrologically, the Sun leaves Sagittarius this weekend to enter into Saturn’s domain of Capricorn and it will be followed there next weekend by Mars. Which means, of course, that the major aspects over the next two weeks will be the Sun and Mars conjunctions to
Pluto.

The symbolism suggests new “light” and new “drive” will be given to a radical overhaul of traditional industries and the entire financial system. So what else is new?! We’ve been in that process for months and nothing appears to be working terribly well.

The biggest problem remains the hoarding of cash – not just by those funds which receive regular monthly superannuation money to invest, but by the battered banks.

Forget consumer spending. It is a superficial argument that consumers drive an economy. Industry spending drives economies. Consumption is the result of production, not the creator of it.

And the problem remains that while the banks have been given billions of dollars in various forms of bailouts and capital injections, they are not lending the money out – and, specifically, not to those companies which are sound but which need capital to
expand.

The narrow focus of the banks on their own self preservation runs a serious risk that the dire predictions of a massive global recession will become a self-fulfilling prophecy.

In the short-term, despite holiday-interrupted trading and low volumes, we should remember that the next two weeks will literally be the “end-of-year” period for some funds that’ll be anxious to cook their books and indulge in some creative windowdressing.

In other words, we may yet get the Santa Claus rally.

S&P 500 [click for complete printable PDF report including all charts]

(Note: charts can be zoomed in for larger viewing when viewing in the PDF format)
s & p 500

This is not one of our normal charts. I used it last week to show what appeared to be a triangle pattern forming in the Wall Street blue chip index and made the remark last week that “it is now rapidly approaching the point where it simply must break clear of
Resistance at the 900 mark, or the rally becomes extremely vulnerable.”

It’s obvious the index finished the week at the point where it must breakout or breakdown.

The relatively high level of the Ratio Oscillator and the fact that last week’s High was recorded with slight negative divergence in the height of the indicator peak, suggest a lot of weakness.

We’ll take a different view of the same chart, which suggests the same thing …

500 Wedge [click for complete printable PDF report including all charts]

(Note: charts can be zoomed in for larger viewing when viewing in the PDF format)
S & P 500 Wedge pattern

And it’s this … a Bearish rising wedge, with rising Lows, but prices unable to break out to the topside.

The peaks in the fast-moving RSI 3 have been dropping steadily.

And yet, we have a contradiction … the slower RSI 14 has been gradually improving. As I indicated earlier, that improving underlying support also shows up in the money flow indicators.

They’re not exceedingly Bullish, but nor are they as Bearish as both of these charts tend to suggest.

So, let’s consult our normal chart …

S&P 500 [click for complete printable PDF report including all charts]

(Note: charts can be zoomed in for larger viewing when viewing in the PDF format)

You might notice that on the previous charts I was extremely generous in the placement of that rising trendline.

This one, I think, is more attuned to reality – and it compounds the more negative scenario for pricing as we enter the holiday-shortened trading period ahead.

All three indicators are showing signs of wanting to head south.

So, what we have so far on all three daily charts, are signs which lean more towards the negative than the positive – coming into the period when most professional managers are looking forward to leaving their desks until next year.

Let’s look at the weekly …

S&P 500 Weekly [click for complete printable PDF report including all charts]

(Note: charts can be zoomed in for larger viewing when viewing in the PDF format)S & P 500 Weekly

And it highlights the breakout/breakdown point at which we’ve now arrived.

Neither the MACD signal line, nor the histograms, have yet given a Buy signal and the Stochastics still can’t decide whether to rise, or fall back into the Bearish zone below 25.

Too, the slower, red CCI line has yet to make it back to the Zero level, let alone cross it to the topside.

The blue line, however, is much more optimistic about the very short-term.

However, I warned last week both the technical patterns and the planetary price lines do suggest any further rally in the 500 runs a high risk of topping out near the 940 level.

So, while the professionals prepare for holidays, the markets will be in the hands of players … and the fund managers who want to do some end-of-year window-dressing.

Which means … we may yet get a slimmed-down Santa rally, but it will be largely meaningless and there will be great danger in locking-in Long positions thinking that a bigger, intermediate-term rally is underway.

S & P 500 Harmonic Planetary Price Lines [click for complete printable PDF report including all charts]

(Note: charts can be zoomed in for larger viewing when viewing in the PDF format)

Technically, we know the Support/Resistance lines come into play at particular price levels … that they’ve been in play now for a couple of months … and that they link back further to price levels near the bottom or the previous Bear.

Astrologically, there are a couple of Pluto lines that have been constraining price rises.

The 500 broke to the other side of the downtrending, dashed Mercury line that we’d been hoping might take the index down to make a firm, tradeable bottom at the Mars/Saturn price crossing, but it didn’t co-operate and simply tracked sideways under the Pluto line.

And we may see more of the same. Any topside breakout is likely to be halted by the downtrending Mars mirror – and a drop down could be rescued by the rising, red Mars.

In short, we have no clear direction – and both downside and upside appear to be quite limited, suggesting the indices will remain trapped within a narrow trading range until 2009 gets underway.

Volatility Index [click for complete printable PDF report including all charts]

(Note: charts can be zoomed in for larger viewing when viewing in the PDF format)

The medium-term decline in the VIX, the fear index, continues. Despite Friday’s wavering reaction to the US car industry’s temporary bailout in the Wall Street indices, the VIX dropped to its lowest level in months.

Curses and unseemly sailor language, of course, because the CCI and the Stochastics suggest volatility could rise again this week, even while the more intermediate decline continues.

The Bollinger Bands are narrowing; the bottom band is curling upwards; and this drop below the red horizontal may prove to be a “false break”.

There were a couple of bright notes on Wall Street last Friday … the small cap Russell 2000 improved and the Nasdaq Composite behaved better than the Dow Jones Industrials.

NASDAQ Composite [click for complete printable PDF report including all charts]

(Note: charts can be zoomed in for larger viewing when viewing in the PDF format)

Technically, there are a couple of interesting points.

The short-term triangle pattern appears to have been invalidated. But, the rising Bearish wedge is not – at least, not yet.

To the topside, the blue line at 1600 limits the rises, even while the Nasdaq continues building along a rising red trendline, which may be the bottom of a developing channel.

The indicators are not decidedly Bearish, even with some small negative divergence.

As with the 500, however, the planetary price lines suggest not much further upside – and not much strong downside.

NASDAQ Harmonic Planetary Price Lines [click for complete printable PDF report including all charts]

(Note: charts can be zoomed in for larger viewing when viewing in the PDF format)

On the Nasdaq, it is a Neptune line which has capped prices recently, while index prices have been following the general thrust of a rising Mercury.

The lines indicate any rally would run into planetary resistance at 1650 … but that support will come into play in the high 1400’s.

Overall then, nothing dramatic has happened that suggests we did not make “the” bottom on November 21 … but the rallies on various indices have not retraced very much
of the downturn, either.

This pattern is repeated on most of the worldwide indices in Europe, Asia and Australia.

In fact, the ASX has been hovering just below the Fibonacci 23.8 level for weeks – and not 23.8% of the major range down from last year, just the drop from early September.

It’s hardly an indication of great strength!

ASX 200 Weekly [click for complete printable PDF report including all charts]

(Note: charts can be zoomed in for larger viewing when viewing in the PDF format)


Signs of a slowly-improving outlook do show up in all three technical indicators, especially the CCI.

The 200 reconnected last week with the fast downtrend line from October – and backed off.

It points to the risk that this sideways pattern has merely been a pause, a consolidation, before resuming the fast trend down.

The state of the indicators suggests that interpretation is unduly pessimistic.

It’s a question one would prefer not to see answered, either way, during the final two weeks of the year – since the lack of volume and the distraction of the holidays means
we probably can’t trust anything that happens.

A reminder anyway … we enter an important Fibonacci turning point cluster zone over the next two weeks and we have a New Moon in Capricorn at the end of the week,
another combination which suggests whatever is done now may be undone in January.

FTSE [click for complete printable PDF report including all charts]

(Note: charts can be zoomed in for larger viewing when viewing in the PDF format)


As with all the other indices, London’s FTSE has remained trapped in a very narrow range … and we now find out which line holds and which breaks – the red uptrend line or the
blue horizontal Resistance line.

The indicators are pessimistic.

I’m not certain they’re right; it depends on how badly fund managers want to make things look prettier by December 31st.

***


The World At Large will not appear again now until early January, while I take a break.

My best wishes go out to all of you.

During the break, I will give some thought to making some changes for next year. Please feel free to write to me with your suggestions. I’m thinking our friends in Singapore
would probably like to see coverage of the STI reintroduced and I’d like to know if our Canadian friends would like to see the TSX covered.

Warm regards and best wishes – RA, ra@astrologicalinvesting.com

 

Click to download the World Week Beginning December 21, 2008 Report with all charts and comments. (PDF format)

*NOTE: Jeanne Long, professional trader and a leader in the research of financial astrology, was a student of the works of W.D. Gann. She has authored several books on financial astrology and developed the principles used in all the Galactic Investors Astrology software.  Randall's technical charts and the planetary price line charts included in this report are created using the Quick Harmonic Trader Software, by P.A.S. Astro-Soft, Inc. makers of Galactic Investor Astrology software.

The World At Large is delivered in advance to Astrological Investing Premium Member subscribers.  Randall Ashbourne is a former journalist and political strategist who trades the Australian market..

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