Trading the Moon

stefan_777 · Nov 14, 2008

Are Investors Moonstruck? Lunar Phases and Stock Returns
by:
Kathy Yuan
Lu Zheng
Qiaoqiao Zhu

Ever think about how many asians have a tendency to be superstitious?

Now I have found my correlation of the day! (yeah right)

ATLien · Nov 14, 2008

Actually, if you look at the majority of published research papers (I'd even venture out to say 70%+) published in the recent years on quantitative finance, technical analysis, stock research, etc.... you'd see that they're all written by Asians either at Asian institutes or Western universities.

As a matter of fact, this goes for about most research areas. So, I don't see what your point is, other than you having shown obvious prejudice. Quite opposite to your belief, most of these grad students/professors aren't running around wearing peasant hats, smoking opium, gambling, and honestly adhering to traditional superstitions.

circadian · Nov 14, 2008

Yoohoo,

Correct me if I'm wrong, but from some of the lunar phase stuff you've posted, it seems like the market cycle alternates between the market rising from the period between the new moon and the full moon (terminating with a sell off on/around full moon, and followed selling) and the opposite, next cycle (i.e. market falling from new moon to full moon, ending with large rally on/around full moon, and follow through into next cycle)

Am I reading this right??? BTW, I enjoy the interesting posts around here. There does seem to be, at the very least, a correlation between the full moon date and very large up/down days across many asset classes. Keep the info coming. If you have anymore reference material that you would like to post, please do so.

stefan_777 · Nov 14, 2008

Quote from ATLien:

Actually, if you look at the majority of published research papers (I'd even venture out to say 70%+) published in the recent years on quantitative finance, technical analysis, stock research, etc.... you'd see that they're all written by Asians either at Asian institutes or Western universities.

As a matter of fact, this goes for about most research areas. So, I don't see what your point is, other than you having shown obvious prejudice. Quite opposite to your belief, most of these grad students/professors aren't running around wearing peasant hats, smoking opium, gambling, and honestly adhering to traditional superstitions.

My point was to show obvious prejudice.

I lived in a condo building that had a bunch of floor numbers taken out, not just good old 13.

Can you take a joke?

ATLien · Nov 14, 2008

Quote from stefan_777:

My point was to show obvious prejudice.

I lived in a condo building that had a bunch of floor numbers taken out, not just good old 13.

Can you take a joke?

Can you interpret a thread (this one) and its poster's message (yoohoo's) in the proper context? You still make it seem like all he's willing to do is look up at the moon, and go put in his trades. This thread is about fun and using something out of the ordinary.

stefan_777 · Nov 14, 2008

I was just making fun of the study.....

There some other studies that also show higher returns around new moon rather than full moon. But they admit aswell that the results are could be spurious and therefore useless to apply to trading strategies.

A good question to ask here would be whether this is just a self-fulfilling prophecy. It is a very popular old-wives tale that full-moons are bad luck. Although that might be the only psychological cause. In that case it is just relevant as any other technical indicator, mostly useless.

LEAPup · Nov 14, 2008

Quote from stefan_777:

Dude, that's exactly what you're doing. Making up your mind, regardless of the fact that the moon has no effect on people.

It just so happens that reversals are spaced out long enough that another series of stages (the moon) has an interval that that may sometimes resemble the natural pulse of the market. And even, it doesn't resemble it, reversals can happen at any time, or not happen for weeks and weeks.

Your facts are simply fantasy.

It doesn't surprise me though that the market provokes such superstition.

The Moon has no effect on people???? What??? I'm working weekend nights and some week nights (working now) as a Police Officer. I investigate violent crime, and financial crimes (such as employee theft, fraud, etc.,) at night while the business owner and I can go through the details of the crime, while the suspect employee is at home in bed, unaware of a criminal investigation going on.

I can tell you for a fact that I notice certain lunar cycles, and crime going up 20-25% in relation to other times. I have studied the human brain's chemistry, seratonin, metals in the blood that all seem to have a "reaction" on the body when certain lunar cycles are in progress. It seems the moon has some type of "pull, or even "magnetic" ability to make a person do something more extreme, and in greater detail that other times.

So, the moon, blood chemistry, and the human brain seem to be connected as far as what I have WITNESSED, and studied over the years. This is not science fiction at all!

This is an amazing topic, and I never thought of studying lunar cycles, and human emotion when it comes to entry/exit strategies! Thanks Yoohoo! YOU NEED TO WRITE A BOOK!!! ASAP!

LEAPup · Nov 14, 2008

Quote from circadian:

Yoohoo,

Correct me if I'm wrong, but from some of the lunar phase stuff you've posted, it seems like the market cycle alternates between the market rising from the period between the new moon and the full moon (terminating with a sell off on/around full moon, and followed selling) and the opposite, next cycle (i.e. market falling from new moon to full moon, ending with large rally on/around full moon, and follow through into next cycle)

Am I reading this right??? BTW, I enjoy the interesting posts around here. There does seem to be, at the very least, a correlation between the full moon date and very large up/down days across many asset classes. Keep the info coming. If you have anymore reference material that you would like to post, please do so.

Yes, I agree! Yoohoo is amazing with this stuff, and I really never thought to study the lunar cycles for trading. Amazing stuff!

stefan_777 · Nov 15, 2008

Quote from LEAPup:

I can tell you for a fact that I notice certain lunar cycles, and crime going up 20-25% in relation to other times. I have studied the human brain's chemistry, seratonin, metals in the blood that all seem to have a "reaction" on the body when certain lunar cycles are in progress. It seems the moon has some type of "pull, or even "magnetic" ability to make a person do something more extreme, and in greater detail that other times.

Haha, nice try. You're sounding like a high school student attempting to write a graduate study.

You have absolutely no scientific support for what you're claiming.
I came across this website http://faculty.washington.edu/chudler/moon.html that compiled moon-psychology studies together, and out of 66 studies on a possible lunar effect, only about 7 confirmed the old-wives tale, and they're outdated to the 1970's. The rest concluded there is NO significant correlation between the moon, and commonly attributed superstitions.

I tried to look for a neuroscience study on a lunar effect on neurotransmitters, but I couldn't find any after searching through my university's electronic resources. Did you dream that you came across an academic study backing you up?

If the moon was some how sensed in the body, the psychological cycles would happen twice a day, as with the tides. The new and full moons amplify the tides (spring tide)but they are essentially the same force, and therefore should have the same effect.

If our body was sensitive to this force just like our inner ear is sensitive to our balance in relation to gravity, the effect could be different for anyone in the world depending on how they directionally orient themselves to the moon. If I lay on my side, I would have a different exposure to this force than someone sitting down or oriented some other way. Right?

The brain functions chemically in a mechanical fashion, if something is affecting it, it has to be empirically verifiable.

We can't just use our gut feelings and anecdotes to argue things. I believe there is more to life than what we see, it's called truth, and it can't be discovered by making guesses from limited experience.

yoohoo · Nov 15, 2008

Quote from circadian:

Yoohoo,

Correct me if I'm wrong, but from some of the lunar phase stuff you've posted, it seems like the market cycle alternates between the market rising from the period between the new moon and the full moon (terminating with a sell off on/around full moon, and followed selling) and the opposite, next cycle (i.e. market falling from new moon to full moon, ending with large rally on/around full moon, and follow through into next cycle)

Am I reading this right??? BTW, I enjoy the interesting posts around here. There does seem to be, at the very least, a correlation between the full moon date and very large up/down days across many asset classes. Keep the info coming. If you have anymore reference material that you would like to post, please do so.

Good observation circadian.

The study of cycles is as facinating as it is complex and lunar cycle is just one aspect of what is pushing and pulling the market.

The easiest way for me to escape a longwinded explanation is by comparing it to linear cycles that can invert giving a double cycle. The full moon tends to have a positive effect but if the major cycle is down the positive effect only lasts for a few days and the downward cycle then continues.

What first got me to look into lunar cycles was W D Gann's discoveries. Gann needed more historic data than the stock market could provide so he used grain prices that were recorded for centuries.

The correlations he found spanning many centuries convinced him that there was a long proven history to the empirical evidences he was observing, and thus lunar cycles became an important ingredient in his strategy.

Here's an example of a Gann grain trader looking for the set up but reading the bigger cycle to see when the best time is to pull the trigger...
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CORN

"Last month, in accord with the Lunar cycle, we were looking for Corn to make a short term high mid month and then decline into the April 2nd Full Moon. When the market declined into mid month, we decided to stand aside. March 30th, the crop report was released before the opening and May Corn opened limit down and stayed lock limit down all day. We now expect a low near the 4/2 Full Moon, once the market finds a trading level, which should be by the 4/3 opening. Look for a low 4/2 -3 in May Corn circa the 3450 â 3550 area. The market should then rally into the 4/17 New Moon"
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With a bit of practice you can read the market and know if it's a quick pop up that's expected or a power move like the Dow 900 point rally after a 300 doom and gloom fall.

To keep it simple, read Gann's work on grain forecasting.