|  DEC 1991

Trading The Eclipse Cycle by Hans Hannula, Ph.D., C.T.A.

Trading The Eclipse Cycle by Hans Hannula, Ph.D., C.T.A. The ancients saw eclipses of the sun and moon as something mysterious and magical. The high priest of the day controlled the masses by telling them: ""Look out, there is an eclipse coming. Do as I say to avoid its ill effects."" The modern-day equivalent, the modern stock market adviser, advises the trading and investing masses much the same way: ""Look out, there is an eclipse coming. Trade and invest as I say to avoid its ill effects."" And sometimes there is an effect. Look at the Dow Jones Industrial Average (DJIA) for August 6, 1990, for an example. The intraday chart of August 7 shows that the market opened with a dramatic 100-point plus nosedive, which stopped abruptly at 10:15. At 10:10 that morning, a lunar eclipse peaked. The trading masses were somehow affected. But often there is no effect. Do eclipses really matter, or are these high priests simply repeating the folklore handed down by others? Do eclipses really cause trend changes? Do these trend changes really occur regularly, or is this just market folklore? Is there a rational explanation of how eclipses could affect markets? Let's look at the eclipse cycle.

by Hans Hannula, Ph.D., RSA, CTA