CHAPTER 1
Astrology Basics forthe Market Trader
Astrology is an ancient science that describes the influence of the planetson events of nature and behaviour of mankind. This ancient science isrooted in thousands of years of observation across many civilizations.
• The ancient Sumerians, Akkadians and Babylonians between the4th and 2nd centuries BC believed the affairs of mankind could begauged by watching the motions of the stars and planets. Theyrecorded their predictions and future indications of prosperityand calamity on clay tablets. These early recordings form the veryfoundations of modern day astrology.
• Ancient Egyptian artifacts show that high priests Petosiris andNecepso who lived during the reign of Ramses II were revered fortheir knowledge of astrology. The Egyptian culture is also thoughtto have developed a 12 month x 30 day recordation method fortime based on the repeated appearances of constellations.
• Ancient Indian and Chinese artifacts reveal that astrology hasheld an esteemed place in those societies for many thousands ofyears.
• Hipparchus, Pythagoras and Plato are revered names fromthe Greek era. Historians think Pythagoras may have assignedmathematical values to the relations between celestial bodies andPlato may have offered up predictions relating celestial bodiesto human fates. Hipparchus is thought to have compiled a starcatalogue and in so doing was the first to popularize astrology.
• During Roman times, astrology and divination were used forpolitical gain with important military figures surroundingthemselves with seers and diviners. Ptolemy and Valens standout from the time of the Roman Empire as writers on astrology.In 126 AD, Ptolemy penned four books on the influence of thestars which collectively are called the Tetrabiblos. In 160 AD,Valens penned Anthologies in which he further summarized theprinciples of astrology.
But, following the conversion of Emperor Constantine to Christianity, in312 AD, divination and magic became a crime according to the Churchand astrology began a slow retreat to the sidelines where for the mostpart it remains today. However, despite this sidelining by a Church seekingto protect its authority, astrology has been used in more modern historyby leading thinkers such as Galilei Galileo, Tycho Brahe, Nostradamus,Johannes Kepler, Sir Francis Bacon, Isaac Newton and Benjamin Franklin.Indeed we owe much of our current state of scientific advancement tothese brave souls who refused to let astrology fade away and become adistant memory.
The Zodiac
In our solar system, the Sun is at the center. The Earth, Moon, planetsand various other asteroid bodies all collectively comprise our planetarysystem. The various planets and other asteroid bodies rotate the 360degrees around the Sun following a path called the ecliptic plane. Picturea gigantic band that encircles the 360 degrees of the planetary system.Divide this band into twelve equal portions of 30 degrees each and theresult is what astrologers call the zodiac. The twelve portions of thezodiac all have names including Aries, Cancer, Leo and so on. If thesenames sound familiar, they should. You routinely see all twelve namesin the daily horoscope section of your morning newspaper. The startingpoint or zero degree point of the zodiac sign Aries is deemed to be at theSpring Equinox of each year as shown in Figure 1-1.
Geocentric and Heliocentric Astrology
Astrology comes in two distinct varieties—geocentric and heliocentric.In geocentric astrology, the Earth is taken to be the vantage point forobserving the planets as they pass through the signs of the zodiac.Owing to the different times for the various planets to each orbit the Sun,from an astrologer's vantage point on Earth, it appears as though fromtime to time certain planets make distinct angles (called aspects) with oneanother and also with the Sun. The aspects that are commonly used inastrology are 0, 30, 45, 60, 90, 120, 150 and 180 degrees.
In heliocentric astrology, the Sun is taken to be the vantage point and toan observer positioned on the Sun, it likewise appears as though variousplanets are making angles with other planets from time to time.
I use both types of astrology to compliment my trading activity, but Ido find I am slowly developing a preference for the heliocentric variety.This may be because it is a bit cleaner than the geocentric method, forheliocentric astrology does not worry about features such as Ascendant,Descendant, MC and IC. Most of the examples you will see throughoutthis book are based on geocentric astrology, but you will also see howheliocentric astrology plays a role in trading the markets too, especiallywhen it comes to commodity futures. After reading this book, I encourageyou to take a look at both methods. Like me, you will probably find thatyou start to develop a preference for one method over the other.
Ascendant, Descendant, MC and IC
As the Earth rotates on its axis once in every 24 hours, an observersituated on Earth will detect an apparent motion of the zodiac.Astrologers further apply four cardinal points to the zodiac, almost likethe north, south, east and west points on a compass. The east point istermed the ascendant and is often abbreviated Asc. The west point istermed the descendant and is often abbreviated Dsc. The south pointis termed the Mid-Heaven (from the Latin Medium Coeli) and is oftenabbreviated MC. The north point is termed the Imum Coeli (Latin forbottom of the sky) and is abbreviated IC. These cardinal points are oftenused when applying astrology to the markets. For example, when theNew York Stock Exchange officially opened for business on May 17, 1792,it had its ascendant in Cancer, its MC in Aries, its Descendant in Capricornand its IC in Libra.
Mythology and Meanings
Throughout history, various stories and characteristic behaviours havebeen assigned to the 12 signs of the zodiac. The diagram in Figure 1-2provides a visual rendering of the 12 signs and the traditional imagerythat relates to each sign. What then follows is an amusing bit ofmythology for each sign.
Aries (0 to 30 degrees, 21 March-20 April)
According to Greek mythology, Nephele, the mother of Phrixus andHelles, gave her sons a ram with a golden fleece. To escape their evilstepmother, Hera, the sons mounted the ram and fled. When theyreached the sea, Helles fell into the water and perished. Phrixus survivedthe ordeal, the ram's fleece was dedicated to Zeus who then raised theram into the heavens and made it a constellation.
Taurus (30 to 60 degrees, 21 April-21 May)
According to Roman legend, Jupiter took the form of a bull and becameinfatuated with the fair maiden Europa. When Europa decided to ride thebull, he rushed into the sea and whisked Europa off to Crete. Jupiter thenraised the bull into the heavens where it became a star.
Gemini (60 to 90 degrees, 22 May-21 June)
In Greek mythology, the twins are considered to be Hercules and Apollo.In Roman legend, the twins are said to be Castor and Pollux, the twin sonsof Leda. Pollux was the son of Zeus, who seduced Leda, while Castor wasthe son of Tyndareus, king of Sparta and Leda's husband. When Castordied, Pollux begged his father Zeus to give Castor immortality, and hedid, by uniting them together in the heavens.
Cancer (90 to 120 degrees, 22 June-23 July)
Roman legend says that Cancer is the crab that bit Hercules during hisfight with the Hydra and it was placed in the heavens as a star by Juno,the enemy of Hercules.
Leo (120 to 150 degrees, 24 July-23 August)
Legend says that Hercules battled with the Nemean lion and won. Zeusraised the lion to the heavens and made it into a star.
Virgo (150 to 180 degrees, 24 August-23 September)
Legend has it that Virgo is a constellation modelled after Justitia,daughter of Astraeus and Ancora, who lived before man sinned. Afterman sinned, Justitia returned to the heavens.
Libra (180 to 210 degrees, 24 September-23 October)
Libra was known in Babylonian astronomy as scales that were held sacredto the sun god Shamash, who was also the patron of truth and justice.In Roman mythology, Libra is considered to depict the scales held byAstraea, the goddess of justice.
Scorpio (210 to 240 degrees, 24 October-22 November)
According to Greek mythology, Orion boasted to Diana and Latona thathe could kill every animal on Earth. So they sent for a scorpion whichstung Orion to death. Jupiter then raised the scorpion to the heavens.
Sagittarius (240 to 270 degrees, 23 November-22 December)
In Babylonian legend, Sagittarius was the God of War. In Greek legend,Sagittarius is denoted as a centaur (half man, half horse) in the act ofshooting an arrow. In Roman legend, Sagittarius was a centaur who killedhimself when he accidently dropped one of Hercules' poisoned arrows onhis hoof.
Capricorn (270 to 300 degrees, 23 December-20 January)
In Greek legend, during the war with the giants, the Greek Gods weredriven into Egypt. In order to escape the wrath of the encroaching giants,each Greek God changed his shape. The God Pan leapt into the river Nileand turned the upper part of his body into a goat and the lower part intoa fish, a combination deemed worthy by Jupiter who raised him to theheavens.
Aquarius (300 to 330 degrees, 21 January-19 February)
According to legend, Deucalion the son of Prometheus was raised to theheavens after surviving the great deluge that flooded the world.
Pisces (330 to 360 degrees, 20 February-20 March)
In Greek legend, Aphrodite and Eros were surprised by Typhon whileplaying along the river Nile. They jumped into the water and werechanged into two fishes.
As we can see, astrology dates back many millennia. Ancient societiescorrelated their events and future activities to the planets. Modernsociety, however, has put astrology on the back burner. But, slowly, tradersand investors are starting to accept it again.
Now, let's see how lunar astrology can be used as a tool to trade andinvest in the markets.
CHAPTER 2
Trading Using Lunar Astrology
Look skyward on any clear night and you will see the Moon in one of itsvarious phases. The Moon is the closest of all the planetary bodies to theEarth and has long been held in fascination by mankind.
In traditional astrology, the Moon is associated with changing mood or health.In 6th century Constantinople (modern day Istanbul, Turkey), physicians at thecourt of Emperor Justinian advised that gout could be cured by inscribingverses of Homer on a copper plate when the Moon was in the sign of Libraor Leo. In 17th century France, astrologers used the Moon to explain moodchanges in women. In 17th century England, herbal remedy practitionersadvised people to pluck the petals of the peony flower when the Moon waswaning. During the Renaissance period, it was thought that dreams couldcome true if the Moon was in the signs of Taurus, Leo, Aquarius or Scorpio.
In modern times, the Moon continues to be recognized as a powerfulcelestial body. And there exists a fascinating correlation between theMoon and financial market behaviour. My observations have shownthat for selected stocks lunar phenomena when used in combinationwith technical chart analysis can add a whole new dimension to tradingand investing. This chapter examines lunar phases and variations in theMoon's distance from Earth. These phenomena are closely related to shortterm changes of trend on stocks and commodity futures. This chapteralso looks at the North Node of the Moon and its influence on marketsas it changes signs of the zodiac. The scientific relation between lunarphenomena and the markets is elusive but if the gravitational pull of theMoon can influence tides, surely it also influences our emotions of fearand hope which in turn rule our investment buying and selling decisions.
Lunar Phases and the Synodic Month
The phases of the Moon are well-known in scientific circles for theireffects on the ocean's tides and on the mating behaviour in certainspecies. The Full Moon is known to psychologists for bumping up therates of violent crime and irrational behaviour. In fact, the terms 'lunacy'and 'lunatic' are drawn from the widespread observation of the way theMoon affects mental and emotional states. Many serious gardeners alsoknow that the phases of the Moon affect suitable times for planting,fertilizing and harvesting.
Much like the planets orbit the Sun, the Moon orbits the Earth. The Moonorbits the 360 degrees around the Earth in a plane of motion called thelunar orbit plane. This orbit plane is inclined at about 5 degrees to theecliptic plane of the Earth. The Moon orbits Earth with a slightly ellipticalpattern in approximately 27.3 days, relative to an observer located ona fixed frame of reference-the Sun. This is known as a sidereal month.However to an observer located on Earth, during one sidereal month,the Earth has also revolved part way around the Sun, making the averageapparent orbit time longer than the sidereal month at approximately 29.5days. This 29.5 day period of time is known as a synodic month or morecommonly a lunar month.
To an observer located on planet Earth, the Moon can be seen makingvarious angles or phases to the Sun as the Earth journeys around the Sun.In fact, there are eight such phases of the Moon that astrologers workwith. The New Moon occurs when the Moon is 0 degrees (or conjunct) tothe Sun. The Crescent Phase occurs at a Sun-Moon angle of 45 degrees.The First Quarter Moon is at 90 degrees. The Gibbous Phase is at 135degrees. The Full Moon is at 180 degrees. The Disseminating Phase isat 225 degrees. The Last Quarter Phase is at 270 degrees. The BalsamicPhase is at 315 degrees. For example, on February 25, 2012 the Sun,relative to an observer on Earth, was seen to be at a zodiac location of 6degrees Pisces. The Moon was seen to be at 6 degrees of Virgo. This is aseparation of 180 degrees and indeed February 25,2012 was the date of aFull Moon.
When considering the Moon in the context of the financial markets, thetwo most impactful phases are the New Moon (0 degrees to the Sun)and the Full Moon (180 degrees to the Sun). Eclipses are also very potentevents for market traders to be alert to. The following diagram takenfrom Business Astrology 101, by Astrologer Georgia Stathis illustrates thevarious lunar phases.
With an Ephemeris in hand one can easily track Moon phases for a givenmonth. The illustration in Figure 2-2 depicts a page taken from the NewAmerican Ephemeris for the 21st Century. The arrow in the image pointsto the section of the page that provides Moon data for the month inquestion (December 2012). In this example, one can see the New Moonwill occur on December 13 and the Full Moon will occur on December 28which also happens to be an eclipse date.
To help you quickly identify lunar dates, Appendix A presents New Moon,Full Moon and Eclipse data for 2013 and 2014.
Full Moon, New Moon and the First Trade Date
The Moon has the greatest impact on those stocks that began tradingfor the very first time (the first trade date) on a financial exchange duringa Full Moon or a New Moon. Appendix F lists first trade dates for the60 largest stocks on the Toronto Stock Exchange and the 30 Dow JonesIndustrial Index components. For a more complete listing of first tradedates, see the website www.investingsuccess.ca and look for the tabcalled Astrology. This tab contains a sub-section called First Trade Dates.Once a stock's first trade date is known, look up that date in an Ephemerisand see whether it coincides with either a Full or a New Moon. If the firsttrade date aligns with a New or Full Moon, then that stock is a goodcandidate for a lunar trading strategy.
Consider the example of Teck Resources which trades on the TorontoStock Exchange under the ticker TSX:TCK/b. Teck Resources is a largeglobal coal, iron ore and base metal miner with headquarters in Canada.Teck Resources made its debut onto the Toronto Stock Exchange onMarch 25, 1952, the date of a New Moon. The daily chart in Figure 2-3illustrates the price action of Teck Resources for the 12 month periodcommencing September 2011. Dark shaded arrows denote New Moonswhile un-shaded arrows denote Full Moons.
Note how New Moon and Full Moon dates align very closely with swingsin price action. These lunar dates obviously do not account for 100%of all the price swings on the chart as there is only one New Moon andone Full Moon event each month. But the correlation between priceinflection points and lunar events is uncanny nonetheless. Thus, whenwatching price action of Teck Resources, as a New Moon or Full Moondate draws near one should use technical chart analysis on short termcharts to identify signs of a trend reversal that offers a short term tradingopportunity.
