Trading Techniques  |  SEP 1997

Sunspots and Market Activity by J. Katz, Ph.D.

Is increased sunspot activity a precursor to market volatility? As any amateur radio operator can tell you, one of the major influences on long-distance radio transmissions is sunspots, which appear to the observer as, literally, dark spots on the surface of the sun. Why they occur is not known, although theories abound. One theory holds that they are produced by certain peculiarities in the gravitational influences of neighboring planets on the sun’s tidal rhythms, while another theory attributes sunspot activity to shifts in the sun’s magnetic poles. During periods of high sunspot activity, short wavelength radio transmissions, which normally carry only as far as line of sight, bounce off the ionosphere and may span distances of up to several thousand miles. This phenomenon is referred to as skip. You may have experienced skip when watching televi-sion, when a signal from a distant station appeared superim-posed on the signal from the station you were watching. Conversely, during periods of low sunspot activity, long-distance communication is much less likely to be achieved at short wavelengths; if you are trying to achieve long-distance communication, you will need to go to a longer wavelength when the sun is quiet.

by J. Katz, Ph.D.