Eclipse

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Stocks & Commodities V. 9:12 (512-515): 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.
MECHANICS OF ECLIPSES
Eclipses are alignments of the sun, moon and the Earth. The plane of the Earth's orbit around the sun,
called the "ecliptic," is used as a reference plane for astronomy. This plane always passes through the
Earth and the sun . The moon's orbit tips about five degrees to this plane. As the moon travels around this
orbit, it crosses through the ecliptic. This crossing point is known as a "node." Since the moon crosses
through the plane once from above and once from below on each orbit, it has two nodes—the north node,
when the moon crosses from below, headed "north," and the south node. The Chinese called these two
nodes the "dragon's head" and the "dragon's tail," and thus, the moon's cycle of passing from north node
to north node became known as the draconic cycle. On average, the draconic cycle is 27.212221 days
long.
Article Text 1 Copyright (c) Technical Analysis Inc.
Stocks & Commodities V. 9:12 (512-515): Trading The Eclipse Cycle by Hans Hannula, Ph.D., C.T.A.
FIGURE 1: The effect of an eclipse, direct or indirect, can be seen here. Here, the market opened with
a dramatic 100-point plus noisedive, which ended abruptly at 10:15.
FIGURE 2: A lunar eclipse occurs when the Earth blocks the sun's light and casts a shadow on the
moon. A lunar eclipse has also been shown to have an effect on the markets.
Stocks & Commodities V. 9:12 (512-515): Trading The Eclipse Cycle by Hans Hannula, Ph.D., C.T.A.
Eclipses affect markets because eclipses mark points when the
moon exerts maximum influence on the flow of energy from sun to
Earth.
The moon also makes a "synodic" cycle. (Synod means "coming together.") When the sun, Earth and
moon come together in a straight line, we have new moons or full moons. Since the sun lights up the
moon, these are easy to observe. The lunar synodic cycle averages 29.530589 days.
Much of the time, the moon is above or below the ecliptic plane when it is at new or full moon. These are
ordinary new or full moons. Sometimes, however, the moon is very close to the ecliptic, and eclipses
occur. Figure 2 shows a lunar eclipse, when the Earth blocks the sun's light and casts a shadow on the
moon. Figure 3 shows a solar eclipse, when the moon blocks the sun's light, casting a shadow on the
Earth.
ENERGY FLOW AND THE ECLIPSES
The shadows of light are not the most important things about eclipses; what is important is the effect the
eclipses have on the energy flow from the sun.
My theory of how physical cycles affect markets is explained in Figure 4. As the planets orbit the sun,
they exert tidal forces on the gases of the sun, much as the moon raises tides on Earth. In Figure 4, this
tidal effect is shown as planets 1 and 2 rotating around a gaseous portion of the sun's surface. These gas
swirls cause several solar effects, including sunspots and solar flares. These combine to vary the amount
of radiation that leaves the sun.
The solar radiation travels toward Earth in two ways: as direct radiation, such as sunshine and radio
waves, and as particles, carried by the solar wind. This flow of charged particles forms a torrent of energy
that blasts Earth, creating a bow wave and a wake, just the way a boat going upstream does. This bow
shock wave forms a magnetopause between the Earth and the sun and interacts with Earth's magnetic
field, shaping and adding energy to it. At the north and south poles, the charged particles follow the
magnetic lines of force and enter our atmosphere, leading to an atmospheric condition called an "auroral
oval," which produces our northern and southern lights.
The bow wave also creates an envelope about Earth called a "magnetosphere." As the solar wind flows
past the Earth, the magnetosphere forms a teardrop-shaped envelope of trapped particles, ending in a
"magnetotail."
As the solar radiation varies, so does the Earth's magnetic field, atmospheric ionization and temperature.
A host of relationships have been tracked down between these events and a variety of earthly phenomena
such as climate, weather, crime rates, plant growth rates, frequency of thunderstorms, blood PH levels
and psychiatric emergencies. My research has correlated these events with market action as well.
Eclipses affect markets because eclipses mark points when the moon exerts maximum influence on this
flow of energy from sun to Earth. During a solar eclipse, the moon is actually outside the bow wave and,
at the exact time of the eclipse, does its best job of blocking the energy flow from the sun. During a lunar
eclipse, the moon is in the plasma sheet behind the Earth, where it normally reflects not only light but
Article Text 2 Copyright (c) Technical Analysis Inc.
Stocks & Commodities V. 9:12 (512-515): Trading The Eclipse Cycle by Hans Hannula, Ph.D., C.T.A.
FIGURE 3: A solar eclipse occurs when the moon blocks the sun's light, casting a shadow on the Earth.
FIGURE 4: As the planets orbit the sun, they exert tidal forces on the sun's gases, shown here as
planets 1 and 2 rotating around a gaseous portion of the sun's surface. These gas swirls cause several
solar effects, including sunspots and solar flares.
Stocks & Commodities V. 9:12 (512-515): Trading The Eclipse Cycle by Hans Hannula, Ph.D., C.T.A.
ionized particles back toward Earth. At the precise time of the lunar eclipse, this reflection is temporarily
stopped. These energy flow disruptions affect the electromagnetic field, which affects traders, who effect
changes in markets.
STUDYING ECLAPSE MARKET HISTORY
Figure 5 shows an annotated chart from my study of eclipses. I examined all eclipses since 1900, looking
at their effect on the DJIA. As shown, eclipses occur in clusters of solar, lunar and "near" eclipses. A near
eclipse is an approximate alignment of Earth, moon and sun that falls short of being an eclipse, but is
close. The eclipses are marked with different height lines. The tallest lines are solar eclipses. The next
tallest are lunar eclipses. The third tallest are near-solar eclipses and the fourth tallest near-lunar eclipses.
Looking at this chart, one can see that eclipses do appear to affect the markets.
These charts were used to build a spreadsheet database. Each eclipse was classified as having no effect, a
minor effect (less than 10%), or a major effect on stock prices. Studied were percentage of movement,
duration of moves and plausible contributing causes, such as time of the year, and planetary alignments.
A sample of the statistics generated from this information is shown in Figure 6.
Fully 51% of all eclipses appear to move the market. Of that 51%, 18 % of the eclipses appeared to have
caused major market moves, while 33% caused minor moves. Further, if one only looks at the clusters of
eclipses, more than 90% have a minor or major effect.
Figure 6 also shows several other factors. Solar eclipses appear to be more effective than lunar eclipses
by more than 10 percentage points. This may be because solar eclipses should be more effective, because
they are directly blocking the flow of solar energy while lunar eclipses deal with reflected energy. Near
eclipses may be just as important as solar or lunar eclipses. Modeling the energy flows suggests that these
near eclipses should be important, and this appears to be the case.
So there is statistical evidence that eclipses affect markets. But traders can do more than just watch each
eclipse helplessly as it comes. A trader can:
Find the times of the solar eclipses (found in almanacs, many calendars and in astronomical almanacs)
Mark those times on a price chart as a dot, placed either above or below the price
Sketch the cycle as a straight line between the dots, adding inversion points as necessary at the
mid-points or third points between dots
Use this information to anticipate the next eclipse point turn
Complement this with other techniques, such as trendlines, to trade the eclipse cycle
Figure 7 shows how this technique was used to anticipate a low in the Nikkei in July 1991. In this case,
the index was running on the half-eclipse cycle, turning near eclipses and halfway between them.
Eclipses are important natural cycles. Careful study and correlation with market action will permit the
serious market student to derive important trading rules from the appearance of eclipses. These rules,
coupled with basic cycle analysis and other technical tools, can aid a trader in his or her quest for success.
Hans Hannula, (303) 452-5566, publishes the Market AstroPhysics newsletter. He is an engineer,
programmer and trader with more than 25 years' experience and writes frequently for STOCKS &
Article Text 3 Copyright (c) Technical Analysis Inc.
Copyright (c) Technical Analysis Inc.
FIGURE 5. Here, an annotated chart from Hannula’s study of eclipses, from 1900 on. The various vertical lines represent
different types of eclipses.
ECLIPSE STATISTICS
SOLAR SOLAR NEAR LUNAR LUNAR NEAR ALL
Major 22.50% 18.60% 14.20% 14.70% 18.00%
Minor 34.00 35.70 31.50 30.90 33.00
None 43.50 45.70 54.30 54.40 49.00
Major + minor 56.50 54.30 45.70 45.60 51.00
FIGURE 6. Here, an example of the spreadsheet database. Fully 51% of all eclipses appear to move
the market. Of that, 18% appeared to have caused major market moves, while 33% caused minor
moves. Solar eclipses appear to be more effective on the markets than lunar eclipses.
PERCENTAGE OF MOVE TYPES BY ECLIPSE TYPES
Copyright (c) Technical Analysis Inc.
FIGURE 7. The eclipse trading technique was used to anticipate a low in the Nikkei in July 1991. In this case, the index
was running on the half-eclipse cycle, turning near eclipses and halfway between them.
Stocks & Commodities V. 9:12 (512-515): Trading The Eclipse Cycle by Hans Hannula, Ph.D., C.T.A.
COMMODITIES.
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Blizzard, J. B. "Lunar Newsletter," Boulder, CO. 1986-1990.
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Smithsonian Institution.
Danby, J.M.A. [1962]. Fundamentals of Celestial Mechanics, Wilman-Bell, Richmond, VA.
Gann, W.D. [1927]. Tunnel Through the Air, or Looking Back from 1940, Lambert-Gann Press.
Gleick, J. [1987]. Chaos: Making A New Science, Viking Press.
Hannula, Hans [1991]. "The seasonal cycle," STOCKS & COMMODITIES, November.
___ [1991] Trading the Eclipses, MicroMedia.
Herman, J.R., and R.A. Goldberg [1985]. Sun, Weather, and Climate, Dover Publications.
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Matlock, C.C. [1977]. Man and Cosmos, Development Cycles Research Project.
Meeus, J. [1985]. Astronomical Formulae for Calculators, Wilman-Bell.
McCormac, B.M., ed. [1983]. Weather and Climate Responses to Solar Variations, Colorado Associated
University Press.
Old Farmer's Almanac [1990]. Yankee Publishing.
Pugh, B.H. [1928]. Science and Secrets of Wheat Trading, 6 volumes.
Shirley, J.H. [1988]. "When the sun goes backward," Cycles, May/June.
Temple, R.K.G. [1987]. The Sirius Mystery, Destiny Books.
Thompson, L.M. [1988]. "The 18.6-year and 9.3-year lunar cycles," Cycles, December.
Figures 4 Copyright (c) Technical Analysis Inc.

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